All Forum Posts by: Matthew Law

Bill Gulley Thanks! I think I get what you're saying. I'm still new, so I'm trying to stay as open to different perspectives as I can. I'm fully prepared for the fact that I may booger this whole thing up, but I want to do everything I can to avoid that. Kind of along the same lines, Matt Faircloth had a Facebook live video yesterday, and he brought up that, the way he improves he rehabs, he is able to charge above market rent. Between that and what you seem to be saying, my eyes are opening a bit and I'm doing a little more research in the market, which isn't dying. For example, I now know that I can improve QOL for my tenants, improve the property and its value, and potentially get $100 more per unit per month if I just add central air. I might even get better tenants in the process. I got that just from researching the market a little more. There is potential to improve the market rather than letting it dictate my every move. I don't want to get stuck in analysis paralysis, but I do need to work on how I view these deals as I go. And if I'm completely off track, I hope you folks will continue to help me as graciously as you have during this discussion.

Woah! @Bill Gulley could you elaborate a bit? I did do a quick search of your posts, but I definitely don't want to be classified as a slumlord. I mean, I'm sure most landlords don't set out to be slumlords, but I don't even think I could stand that perception of my business.

To explain a little further, and to build off @Mike Cumbie, this is a personal loan, with the justification of "buying property" (or something to that effect), to cover a significant portion of the purchase and rehab costs I cannot cover out of pocket. Then, the plan is to refinance and hold, because that's how my numbers seem to be working. I may sell if the numbers work that way, but this is not really a hot market either.

I don't believe there is anything wrong with using current market rents to justify why I can only put so much into the property. The property is perfectly habitable. However, I can do a significant update and make the right repairs with the numbers I see right now, but I cannot justify over-rehabbing when the intention is to hold as a rental and in a market where it doesn't make sense.

I don't mean to sound defensive, but please tell me if I'm missing something here.

Actually, I feel like that deserves a little bit better explanation, because I'm sure other people are in the same situation. So, if I was looking to sell this property, maybe I would invest a little bit more in the repairs and bring the value up more. But I'm looking to rent this property the students who are used to paying between $400 and $650 a month for rent. If I repaired more and brought the value up more, I would have to seriously rock that boat to get my money back that I've invested. That's why am sticking to a lower value repair. Does that make sense?

@David Faulkner and @Mike Cumbie You know how prices can change from street to street? That's where I am right now, and it's not for reasons that would make me shy away from the deal.

Don't get me wrong, I'm hoping to be pleasantly surprised by the post-rehab appraisal, but I'm not banking on it.

@David Faulkner that's interesting, and I get it. Honestly though, I don't think this market will support such a hefty value increase. The rents won't support it, and it doesn't make sense for the market. We're talking city-proper location, walking distance to a college campus.

@Ryan Murdock also an interesting thought. I honestly haven't put much value into finishing the paperwork for my LLC (Which is why it's pending - I'm just dragging my feet while I focus on the other stuff). Maybe I'll look into this at some point.

Hey folks,

Yet another question. I'm calling general contractors in a market where I haven't worked before to screen and get quotes for a buy and hold duplex.

One of them said I should just hire subcontractors for the work I need done (roof, paint I/O, floors are the bulk of it) and save money.

I'm sure someone has done this. What are the pros and cons? Especially when I'm dealing long-distance...?

@Account Closed and @Steve Vaughan Thanks for the clarification. The loan purpose box does need to be checked, and some (like LendingClub, even though the funding is different) actually have a box for buying a house. It's usually used to finance a down payment, but I guess my current purchase is what many use as a down payment. 

@Chris Purcell I think the credit hit depends on some things more than just taking out the loan. In my recent experience borrowing from SoFi (they should pay me for this stupid post, but, no, they aren't) for refinancing and consolidating, I thought I was going to take a hit. However, I actually jumped up about 80 points total once the dust settled.

I'm not saying that taking out a personal loan will boost your credit score, but if you have good credit and are doing the right things, I don't think it will kill you.

Of course, Steve gives good advice. It's important not to overextend. I'm only doing this because the numbers work for me. (You're not my mom, Steve!) :P

@Brandon Turner and @Mike Cumbie

Thanks! So I'm not crazy. I honestly thought it sounded too good to be true to finance this quickly on decent terms without messing with HMLs. 

My inlaws looked at me cross eyed, but they're not investors, sooo...

I was hoping to find someone else who has done this, but I haven't seen any posts. I'm buying a cheap property to fix and hold, maybe BRRRR in the end. I'm still waiting on quotes from contractors, but the initial cost will likely be less than $50k. I don't see any HMLs through my initial research that lend less than $50k. Honestly, 70% LTV puts me just over $50k. So has anyone just used a personal loan to purchase real estate? I've seen people post about using it for repairs, but purchase? I've done business with SoFi before, and they have me approved for the right amount. My credit is excellent, and I have a day job, so I know that helps. So what's the deal? Is it reasonable to use an unsecured loan to purchase and fix real estate, then refinance into a conventional loan?

Thanks Joel, that's how I feel as well. I know we aren't in the business of repeat customers per se, but I think it's better to treat the people we do business with as such anyway. I prefer to be honest.