All Forum Posts by: Lauren Cutchen

I am looking to purchase a single family home and turn it into a rent-by-the-room situation. PadSplit is suggesting to take away common spaces like the living room and dining room and turn them into bedrooms. I think this is an interesting concept, ran the numbers, chatted with the company, and it all seems good so far. I've identified a property that I can comfortably do this with. I need to install hard flooring throughout (probably vinyl), paint, and put up walls in a few rooms turning this 3300 sq ft, 4 bed, 3 bath house into a 9 bed, 3 bath house. I also need to expand and create access for parking. 

My question is the best way to finance this property. I do not qualify for a traditional loan...yet. Our goal would be to eventually refinance and take some money out for another project. So I have questions about the appraisal. 

Details: 

Purchase price $250,000

ARV (assuming cosmetic updates only) $300,000 - not a great ARV

Traditional Rent $1500/month - it was a rental house for years 

Rent by the Room @ $150/week (1 month min) $5400  - assuming fully occupied and before padsplit fees, expenses...

Cash flow: $2500/month

Estimating $50k for rehab - extremely conservative and we plan to frame and do the drywall, and painting ourselves. Large house = large budget. I'd prefer to finance construction costs, but can do this out of pocket if we needed to. 

1) Hard Money Loan - I would need to refinance after construction costs and updates. How will this kind of property be appraised considering we eliminated a living room, dining room, and bonus room? Would we refinance this into a commercial loan? 

2) My MIL is willing to finance this with 20% down and do an investment loan. Could we roll this over into an LLC or refinance into an LLC? I don't mind having a partner with this project, but I want part ownership of the property.

3) See if a bank wants to keep this in house? Would I show them a business plan for this project? I've contacted 2 banks that have said no. 

How would this property appraise after construction? I want to put an offer in ASAP. I prefer to do this myself without the help of my family. And if we did go the family route, what's the best structure for that? 

Ah, next time then! 

@Jasmine Myrick get in front of as many people as you can. Don't just sit behind the computer. Network, especially see if there's a local BP meet up group. I'd attend other local group meet ups too. Support them and have a network of small/local businesses.

@Patrick Thomas Dickinson I just closed on a house for a client there 2 weeks ago. I also had a tenant looking there last weekend. Rent was between $1475-1650 and there were 7 to choose from at the time. It's affordable housing for sure. The closer to Conroe, the less those prices are available to rent. Its extremely hard for tenants to find houses in that price range that's an actual house and not a mobile home.

@Patrick Thomas Dickinson it's a great place to be a landlord. What type of neighborhood are you looking in? Price point? Goal? I've seen a few transactions lead to rentals and make pretty good cash flow.

@Miguel Urquiza

Hi, realtor here in the area. I would love to discuss your goals and what you have in mind. Fast growing area with lots of options. I'll message you.

@Jonathan Boustania I'm a realtor in the Conroe/The Woodlands area. Message me and we can talk about what you're looking for, budget, and we can narrow down the area. I look at deals all day around here. A phone call might be easier than all the writing back and forth.

I created this event in Facebook too. Hope it will attract more like-minded folks!

https://fb.me/e/1Ec66WkQC

Glad I stumbled upon this meetup! Looking forward to meeting you all Thursday.