All Forum Posts by: Magnus Wikström

You mean 10% down on a rental property? I think you'll struggle to find that.

Hi Stephanie,

Here's more or less what you should aim at in terms of financing in my opinion:

1. Financing for the purchase + refurbishment
- My advice is go for a lender that gives you high leverage and better is if you can defer financing costs, all or some, until you refinance the property. It will increase the return on the equity you put in, and you'll likely want to keep liquidity. You should be able to have 75%-90% of purchase and 100% refurb costs funded by a lender. Careful with junk fees often appearing when you're about to close the financing deal.

2. Refinancing when ready for occupancy
- There are lenders that will give you up to 80% of the property value in a Debt Service Coverage Ratio Loan, DSCR, you can easily Google it to learn more. You want to stay >1, below 1 is not gonna give you a sufficient cash flow. Expect an interest rate around 9-10% in these times. Therefore - If you get a good uplift from the refurb on your property, consider selling. It's also gonna be a prepayment penalty for terminating the loan, likely within 5 years, if you wish to sell it. The higher the value the property appraises at after completion, the more costly your DSCR-loan will be.

You're welcome to message if you need any more help.

Best,

Magnus

Hi @Ian Porter

I work with contractors building their own projects, both setting up the financing and bringing in external equity investors, although this will be more in place in a few months when I plan to start bringing investors from Sweden. I'd be happy to hear more about your projects and potentially look at the financing side. Message me and we can have a call. 

Hi @Sarp Ka

I work primarily with contractors in SW FL but have a few contacts that build for very competitive prices in Miami, used to working with investors. They have architect contacts, so I would start with the contractors, as it rarely is the opposite. PM if of interest.

Hi @Olga Daisel,

I think this sounds fairly easy to be honest. I know one lender that still defers all interest payments plus origination fees until maturity, and 4 more who did this in June but has since stopped deferring anything, which says a little bit about where the market is at. Your equity value in the lot even outweighs the project costs. This shouldn't be difficult. 

Hi Daniella,

You're obviously business minded, having made that money and wanting to go into real estate ASAP. I did the same.

When I now 11 years after my first purchase look at it - sure you learn a lot by doing all yourself, but be certain - you will make mistakes. Therefore my view has changed a bit over the years. And I think I'm not alone saying this. Depending on what your goal is, I think you should opt for a strategy. House hacking and such, sure it's a good starting point but I doubt you'll keep that strategy after 10 years. Be sure that things will come up, that's just how life is.

I've switched now to - let the pros do what they do best. For me that means partnering with contractors that build cheap and sell at market price, with a good track record, where we can rather easily forecast the timeframe of the project. And time is key, plus if you're counting the return on your project, leverage is even more key. Financing is probably more than 50%. If of interest, I can hook you up with contractors in the South FL area (this is my focus area) that I help with financing their projects, that build for other investors, and that have solid track records. This is what I do. So the possibility is there to see their ongoing projects, meet the builders and partner with industry pros. You'll certainly learn a lot. You should expect to earn at least 60% on your money within a 9 month time frame, depending what project you opt for.

One of the abosolute advantages of your position in cash and age is that you're actually able to do both strategies, which means you'll learn twice as much, and a couple of years down the road you'll be ahead of others in your age by a real distance. You can become an actual industry insider. Feel free to reach out if you want some more info on the partnering strategy or other advice.

Hi Chen and all others,

The US is an absolutely unique market, thanks to its hard money lenders, make no mistake.
Can you not start off with $40k and live off it in 10 years? You surely can.
My background is in the European real estate finance space. I'm a foreign national myself. The name of the game is leverage.
I'm planning on bringing investors from Sweden in a similar situation as yourself (although more experienced and likely a bit deeper in cash but $40k works) for my business. It's about working with the right people who can build cheap and fast that are open for collaborations and using the best financing conditions in the market. You can expect to make 60%-90% on your money and likely have the project sold within 6 months from start, if we do an affordable housing project. You'd be on title for the project together with the GC. It's easier if you do it through an LLC but it's possible as an individual too. Feel free to reach out if you want more info.

Hi Malcolm,

I'm a foreign investor myself. You can easily set up a US LLC, get an EIN and then set up a bank account. Reach out if you want any tips.

Hi Alina,

Not sure if you're doing your projects individually or through an entity. I use Wise for my entity. They could probably individuals too. Thus far it works well. I'm a foreign national.

Hi James,

I'm a foreign investor with a background in the European real estate finance industry, mostly for institutional sized deals, debt & equity / JV.

I was overwhelmed by arriving to the US financial landscape and the opportunity it provides. Short story - I wanted to do a project myself and found better financing than the builders I was in contact with, building their own spec homes. I'm now setting up financing for their projects.

Yes - you can defer interest payments. Origination fees too. Only in the last couple of months, 3 of the few lenders I know that do this ended their programs. So it may be an idea to act if you value this feature. It makes an extraordinary difference on IRR or your ROE to not have this affecting your equity. You're welcome to contact me if of interest.

Most lenders are average, and most people use average lenders. That's why they don't do it. I know a couple that do this feature. They are good.