All Forum Posts by: Mike Sattem

@Craig C.,

Income and Rental history are the biggest concerns. If people have decent jobs and haven't had issues in the past, they are more likely than not going to be just fine. The issues arise from when landlords either don't actively manage, or they settle for tenants with red flags. I have bought a fair number of properties from landlords that let the little things slip that turned into big issues (i.e. no smoking, turns into smoking on the porch, turns into smoking inside. No adults in the home that aren't on the lease, turns into an out of luck family member needing a place to stay short term, turns into 17 people in a 3 bedroom home)

@Josh Calcanis,

The Delayed Financing Exception is only available to 1-4 Unit SFR style properties, as it is a Fannie Mae/Freddie Mac product. Last bit of note, if you own up to 5 units and use this exception its a breeze to do. However, once you pass onto your 6th-10th financed property the reserve requirement (6 Months of all properties PITI) and sourcing of funds becomes much more restricted.

@John Calcanis,

The delayed financing exception is a route to Fannie Mae/Freddie Mac financing. These basic guidelines are thus: If you purchase a property for all cash, you can finance the property within 6 months of original purchase using a Fannie/Freddie loan for up to 70% of the new appraised value, not to exceed the purchase price. because you are buying for cash, and most likely doing some form of remodel, I always plan on just receiving my purchase price as the financed amount. Additionally, you can finance your closing costs onto the loan above and beyond the 70% LTV/Purchase price amount. Below are some examples of the way I have done this.

1602 Monroe Ave, La Grande, OR 97850

Purchased for $58,650 in August of 2015, all cash

Had rehab costs of $6500 (paint, carpet, and some minor electrical)

Financed the home using the delayed financing exception in January and received a mortgage of $61,000 (Purchase Price plus closing costs)

I then rolled this cash into another property, and repeated the process again, closing that loan in March.

I eat my rehab costs out of pocket, but it's a method that has worked well for me, and I have purchased four homes in the last calendar year doing it. As a side note, I actually purchased all of these with "cash" from a line of credit, so in reality I was able to get all the benefits of a cash purchase, (quick closing, solid offers) without using my own money. The delayed financing exception will require that the lender source your funds, and if you use borrowed money like me, they will require it to be paid back with the financing money, but I always pay off the LOC's when not in use anyway.

Hope that is helpful,

@Frank B.,

You are correct in that the delayed financing exception will only lend on original purchase plus closing costs, so you eat the rehab costs.

@Jeremy Dugal,

I've tried it multiple times and it didn't work. Every time the seller got offended that I was insulting their intelligence. I think it is fair to say that more often than not, they don't know what they don't know.

@Tom Howard,

@J Scott is 100% spot on. Even folks who have been through lots of rehab projects still find it tough to give an accurate rehab value without a thorough inspect. Don't be like me. The first flip I did, I walked right by the giant water stain in the ceiling, and said "oh that's probably just a few rivets on the metal roof that need tightened." After some very expensive repair, my roofer calls me his favorite client.

@Erick Garske,

if you are within 6 months of purchase and own less than 10 residential properties you can utilize the delayed financing exception under Fannie Mae/Freddie Mac. These will allow you to use a traditional Fannie/Freddie mortgage with a 30 year fixed at 4.5-4.875%

@Austin Walters,

I was still pretty young when I got my license (24), but I had bills to pay so I would focus on whatever I could sell. In reality, selling a house is the same as selling a house. There is a wide range of owner occupant and investor buyers, so I wouldn't focus too tightly on one niche when you get started. Try and get deals, and don't focus too much on what the property class or type of buyer is. Once you see all the sides, you can drill down more on a specific category if you want.

@Tami R.,

Howdy! I was much of the same mind regarding flipping and taxes as we were exclusively buy and hold investors, and then I did one. Walked away with $40K before tax, $29K after tax. $29K! That's more than I made my first YEAR in the Army! Also, following that, my lender loved that years tax return because it showed a huge increase in income, allowing me better access to money. I plan on doing one a year from here on out.

@Austin Walters,

That is a great Idea. You can very easily work in real estate as a broker with a funky schedule. Figuring that the majority of agents quit within the first 6 Months to a year because they don't earn enough income you are in the perfect spot of not needing alot of income since you are still in school. I earned my license in Oregon in about a month, but finding a quality office to work at took alot longer, so if you already have an in, go for it.