All Forum Posts by: Marion Lee

@Dennis M.

Can you expand on your response a little?

I’m working with a seller that I know owns the property free and clear. I’m thinking of asking them to carry a portion of the purchase price and using hardmoney for the remainder the purchase and rehab. I’m sure I’m not the first person that’s thought of this. Can anyone share their experience with this approach?

@Cody Neumann

The simplest way is to use the BRRRR calculator. When I'm doing a deal I also look at the estimated mortgage and required reserves to make sure the deal will meet my cashflow target

@David James

HMLs all have their own lending parameters. On your first deal you'll probably be able to get 85% LTV on purchase and 100% of rehab cost.

Given your friend’s apprehension about being the primary investor/lender I would use a combination of your capital (5k), a smaller amount from your friend and hard money. The hard money may be a little more “expensive” (higher interest rate) than your friend funding the whole deal but they’ll help you. They’ll ask questions that you may not have thought of yet and they won’t lend if they don’t think it’s a good deal, which should be a red, at least yellow, flag to you.

@Mo Muigai

I’ve used smartmove and cozy. I prefer smartmove. When screening tenants I tell them that application (a google form) is free and credit and background checks are $40. The $40 per adult is paid directly to the smartmove or cozy.

You mentioned that you have the property under contract and haven’t purchased it yet. Do the numbers work with you replacing the roof now?

Do you plan to use the BRRRR exit strategy?

If the numbers work with the roof replacement cost now and you plan to BRRRR I would replace it now for 2 reasons.

1. You address it now and you don’t have to worry about it for the next 30 years (again this is assuming the numbers work)

2. Appraisers are slightly unpredictable (I've had to challenge 2 appraisals and won) and a new roof can assist in you receiving the appraised value that you need to BRRRR

Similar to what @Todd Rasmussen has said, as you add properties your debt to income ratio is affected. The debt to income ratio MAY cause an issue with putting 10 consecutive properties in your name.

It may just be the lender I was working with but they (lender) only considered 70% of the rent I received from a property towards my income in the first 2 years of owning the property.

I didn’t create a true master on one of my flips. I thought “the bathroom is right outside the bedroom” but the lack of a master was the main feedback I received.

Holding costs have largely eaten away my profit but in escrow now with a closing date shortly after the new year.

@Alexander Gonzalez

If the rooms are indeed illegal they may not be counted in the HELOC appraisal.

It sounded like the concern in the original post was the wrong comps being used to appraise the property to which I am saying a new appraisal will be done for the HELOC. The HELOC appraisal is the appraisal that needs to use 5 bedroom comps to get the 300k+ value. In my experience, the HELOC lender will not look at the original appraisal

The points made about the additional rooms being illegal may be true but if your main concern is the property appraising at a higher value for the HELOC, I don't think you should be concerned about the original appraised value. When you go to do your HELOC the bank/lender will do their own appraisal and "magically", like it did before, the appraised value will be what you need it to be for the HELOC.