All Forum Posts by: Justin Hammerle

@Dante Ritchey - Sounds like you are using a conventional bank?  If so, have you spoken to any private lenders?  Some will forego the appraisal altogether.  You can finance the buy with a short term private loan and refi once the repairs are done and converted to MFH. If not done already I would speak with a few.

@Joan Garcia Hernandez - include cost to raze the property and soft costs to permit a new build with of course your hard costs to build.  Based on your hurdle rates, you can play around with what you can offer on the land, if anything.

@Jodie Sherwood - its great to get equity accumulating with added sweat equity as soon as possible.  Rates are high though so a mortgage may end up being more expensive than rent.

@Andrew Burrell - Welcome to BP!  This is a great place to gain knowledge and connect with industry players.  A lot of activity in the Boston forums so definitely worth spending some time here.

best of luck!

Yeah I would start speaking with some other property managers in the area.  As an out of state investor the worst thing you can have is an unreliable team managing your property.

Not wrong at all - as a landlord you dictate whether or not upgrades are done whether cosmetic or not. Its not really at the discretion of the tenant.  Especially things like shower heads because you could end up messing up the rough plumbing if you don't know what your doing.  This should be laid out in the lease agreement.

Of course If its not working then it would be your responsibility, unless otherwise specified in the lease agreement.

@Ryan Olson - 

Capex is specifically for repairs that increase the value of a property. These funds are set aside automatically for future use.

Repairs are funds used for maintenance that add no value to the property but are needed for operation.  These are costs that you generally experience and are not set aside automatically but should budgeted for regardless.

@Brittany Voccio - You could buy a MFH fixer upper with a private rehab loan and look to refi into a conventional.  If the margin is there on the refi; some banks will be comfortable without a significant down payment or any at all; you will of course have some admin and origination costs.  You will also be paying points (1-4%) and a higher interest rate on the rehab loan (8-14%). 

Its a bit risky but an option to explore and think on.  best of luck

- why is it that the hard money loan, on which I paid interest-only, is now higher than when I got it? I've been paying the interest, so...? Is there a construction component that you are drawing from?  Some private loans will have increased rates built in at certain maturity dates as well.

- the loan company sent a term sheet to me based on my appraisal guesstimate. This makes no sense. I am not a professional appraiser, of course I think it's worth more. They assured me this is standard practice 'to get the ball rolling' before they sent an appraiser. Is this how it's done? I think you'll find that private lenders all have different processes; not universal process like conventional banks, the one I was working with didn't even require an appraisal.

- they also wanted my credit score, so that I could give a personal guarantee on the business loan. Again, they claim this is standard practice. Is it? Are they running your credit or just want to review your FICO score?  Yes - personal guarantees are common with private lenders.

@Marietou P. - I think the towns you are looking in are great markets for BRRRRs relative to others around Boston. I would keep at it - sometimes its just a matter of timing and circumstance in finding the right property.