All Forum Posts by: Mike Sattem

@Chris Schuler,

A few options.

1. If you own any of your vehicles outright, take out a loan on them.

2. Most banks will offer quick and easy Lines of Credit for up to $50K with near instant approval. While you may not be able to use this money as the down payment, you can use it to cover other expenses while using your own funds as the down payment.

3. Gifting funds, as you previously mentioned can work, but the lenders will want to see documentation showing it is not a loan.

@Tony Matthews,

@Account Closed are both correct on this. Don't get too hung up on having tons of cash ready before you purchase your first property. However, once you do get started lenders will require reserves in the bank to lend on new properties (most lenders require 3 months PITI if you have less than 6 properties, and 6 months PITI over that), and things will break in your properties. The fastest way to becoming a slumlord is to spend all your CAPEX money on personal bills.

Also, I keep all my reserves in one savings account for ease of management. I have a tracker for what expenses are being paid on each property, but found that having 6 savings accounts was a major pain in the butt, so I downsized.

@Brian Braunhuber,

Did the property go through probate? If so, the probate order should list heirs. Also, you can check the county tax assessor website to see if the mailing address for tax statements has been updated to somewhere that is not the property.

@Sean Griffin,

If it were me, I would terminate this deal. Having run into title issues in the past that became show stoppers, I no longer deal with properties that aren't clear. Worst case scenario would be getting into this property and being unable to sell due to a pending lawsuit from someone claiming interest. You may win the lawsuit, or your title policy may pay them off, but these things take time and hassle that could make the difference between profitability and losing your backside. Unless this deal is a homerun, it may not be worth the risk.

@Mike Ojo,

Like @Nick C. mentioned, purchase price is very important. In my experience, the major downfall I have encountered is ensuring a solid ARV as compared to rehab costs. If you buy a good deal, but increase your rehab costs and lower your ARV even slightly, you can be in a world of hurt by not being able to refi out all of your costs. If you can swing putting your own cash into every deal, it's not as big of a deal, but it can severely limit your ability to continue the BRRR model in perpetuity. Also verify exactly how you will refi out. Some lenders will require 6 months seasoning, others a year. Also verify whether you can "cash out" or not at each of these time frames. If you can't cash out, your rehab costs will be stuck in the deal regardless of the LTV.

@Aaron Nelson,

I have coin op washer and dryer in my 4 Plex in common area. I pull approximately $12.50 per month per bedroom ($1.25 a load, $1.25 per dry, 5 loads a month). I had both machines paid off within the first year, only to have the dryer get ripped off by some meth-head and be forced to buy a new machine. My clients love it, and it makes me a little extra cash.

@Jonathan Ghrist,

You can use the line of credit however you like. I have used the LOCs to both flip and BRRR homes. Be advised that most LOC's have payments that are about 2% of outstanding balance per month, so they aren't cheap.

@Jonathan Ghrist,

An Idea that I have used. With good credit you can qualify for a personal line of credit(LOC) from most banks. I have three personal, unsecured, LOC's, from three different banks that I use to purchase a house for cash, typically a non-financeable REO, pay for the rehab, and then immediately re-fi using the "Delayed Financing Exception". This will only refund your purchase costs, but you can then refinance the property at the 1 year mark and get back your repair money. The delayed financing exception uses similar financing criteria to a refinance because you already own the home.

Just a thought,

@Jonathan Ghrist,

Something else to keep in mind, portfolio lenders are going to charge you a higher rate than a standard mortgage broker, due to the fact that they will be keeping the note, as opposed to selling it. Fannie Mae/Freddie Mac will provide up to 10 loans in your name, so if the property can qualify through the Fannie Mae, Freddie Mac Lending Criteria, you would typically be better to utilize that type of loan product. Portfolio lenders typically deal with folks who can't gain traditional mortgage financing (non-traditional income/odd ball properties/investors) thus the reason that they can get away with charging more.

@Jason Barr,

As @Anthony Giannette mentioned, they will run forever if maintained, although the maintenance can be spendy due to the lack of qualified boiler technician (Most are plumbers with the additional certification). Most older boilers had a pump that ran at one speed, either on or off, which led to the motor burning out faster. New boilers, i.e. high efficient models, have a pump that never stops, but will actually speed up or slow down relative to the amount of heat you want put out.

I have stayed away from boilers like the plague, however I just finished rehabbing my first property with a boiler installed in 2007 and have been pleasantly surprised by it.