All Forum Posts by: Joshua Lester

Thanks guys. I will continue to look into that option. Purchase price is $300k, renovation budget $50k. ARV should come in around $450-500k. I was planning on 20% down payment. I have about 115k on hand to work with, without tapping into other investments, emergency reserves, etc.

Dan,  Thank you.  I'm in the process of working this angle as well.  This property is in another state, so my relationships are limited, but I do have a working relationship with a bank on the commercial side. 

Keep the suggestions coming.  Thanks.

Josh

All,

I apologize I have not been back here recently.  I just posted a question on a personal property I'm working and remembered to update here.

I'm still trying to work the same multifamily almost a year later.  We thought we had a contract and at the last minute the seller backed out and pulled the property from the market.  They couldn't wrap their head around the tax ramifications and what to do to limit those.  Currently I'm trying to work an owner finance deal that will allow him to slowly make the decisions he need to make for asset allocation and end of life planning, without an instant tax consequence.

This has been a brutal process and I've learned a lot.  It doesn't help that lots else is going on in life with day-job changes, starting side businesses, consulting, etc.  The real estate search has had to take a bit of a back seat.  I have been under contract on two other properties that did not work out (I backed out due to hidden renovation costs).

I hope everyone is having a happy and prosperous 2016 so far.  All the best.

Josh

Thank you in advance to all the biggerpockets members.  I've been lurking here for years and have learned a lot. 

Looks like I will be under contract this week on a property and having a bit of trouble understanding what direction I should go in for financing.  The property is a distress sell (ugly divorce) that I was able to grab before it went on the market.  The couple recently "gutted" the house in preparation for a full interior renovation.  This property is a deep water home overlooking a marina and  may become our primary residence.

All renovations are cosmetic and I intend to do most work myself.  I'm an engineer with construction and project management experience and have renovated my own home and a flip.  I have the funds for a healthy down payment and renovation costs, but know it will be a challenge to finance the purchase without a working kitchen or bathrooms.

So my question: Is there a conventional way to finance this without renovation costs included, can I use a Fannie HomeStyle or FHA 203K without using they're funds (or very little) towards the renovations? Is there some combination I'm not aware of? Seems like I could finance the purchase and ~$10k of the renovations (to be done by a contractor) and do the rest of the renovation myself and out of my own pocket. Not sure how to handle this with the lender as they don't seem to understand my needs. Should I just be looking at HML to get this done quickly and refinance?

The numbers on this should be the easy part.  My credit and income make this deal easy.  After renovation the property should be worth $150k more than purchase+renovation.  I'll end up with 60+% equity at the end of the day.  The basic problem here is financing without a kitchen.

Thank you for any advice you can give.  I have searched and found little to explain how the 203k inspection, valuation, loan value, etc. work and if there is a way to borrow far less than the renovation is going to cost.

Thanks Dave.  Still looking and running numbers daily, just nothing I've found makes as much sense as the multi I'm looking at right now (from a cashflow and equity perspective).  Definitely open to any deal that makes sense.

Josh

Thanks for the welcome Chris.  Its a shame that Charlotte is on a real rebound and not a time of the cycle that I want to be jumping in.  

Paul, thank you very much for the data points and the welcome.  I'm amazed at the wealth of information here.

Elizabeth, thank you for the welcome.  We just couldn't find many single family deals here now that cash-flowed the way I wanted.

Dave, Jon, Natasha - Thank you and great to "meet" you.  This is a great community.

Best, 

Josh

Hello BiggerPockets.  My name is Josh Lester.  I'm wading into real estate investing and thought it was time to introduce myself here.  I've been a long time podcast listener and lurker here, but haven't engaged until now.  

I've been reading, researching, and running numbers for about two years and am just now jumping into the game.  This is a long term buy and hold plan to diversify further and help set up "early retirement" and enable us to focus more on entrepreneurial endeavors and less on my "day job".   We are hyper-savers and are growing more and more restless with lack of freedom and control over business decisions.  The writing is on the wall, its time to call the shots and do what we want, when we want.  We are working on establishing my wife's consulting business, real estate is the next step, and then likely buying some sort of business with "needs" in the future.  I doubt I"ll ever allow myself to really retire.

I'm a mechanical engineer by education and work in the commercial utility business (power plants).  I currently hold an executive role in sales and strategy.  This has given me a major taste of freedom and in many ways I function like an entrepreneur on someone else's dime.

Being a bit frustrated with my market here in Charlotte, I started looking elsewhere for deals several months ago. I started focusing on areas with "good" transient populations (military, hospitals, colleges, etc.). I was looking at duplexes to start, but came across some larger multi-families quickly. Being an engineer, I spreadsheet the hell out of everything. I quickly realized the numbers made much more sense on the larger properties. I'm currently in negotiation on a 22 unit townhouse complex. The Inc-Exp Ratio is strong, the CapRate is pretty good, and the ROI is "decent". The real upside is that the place has been kept in very good shape, is in an excellent location, and the rent is significantly below market. Now we just need to come to a price that keeps me happy and allows my lender to stay optimistic.

In the weeks to come, I will start a new thread, and as time allows, chronicle my experience as we move forward with this deal or start looking for another.

Thanks for reading this long winded intro and I look forward to contributing at least as much as I have gained.  Please feel free to ask questions and I will attempt to answer all.

Josh Lester