All Forum Posts by: Matthew John

@Rick Trivedi A private money lender simply lends his money (similar to a bank) at a fixed interest rate (usually higher than a bank) and their money is secured by the asset itself. 

I think it's one of the safest strategies to earn consistently passive returns, but you should also be aware of the deal your money is going in. Usually lenders will lend out on purchase price + rehab. 

Feel free to reach out to me via DM, I'd be happy to go more in depth with you if interested!

@Damaine Senior It's a great way for investors to get involved or even get their foot in the door to Out of State Investing, especially in markets in the Midwest. 

@Carlos Soto If you have 200k cash, have you considered becoming a private money lender?

Sure, you won't actually own Real Estate yourself, but you'll get all the same benefits of monthly cash flow without dealing with finding a deal, rehabbing, finding tenants, dealing with tenants, or dealing with all ongoing issues of a property. 

200k @ 10% interest/yr = $1666/m for just lending your money. Might not be exactly what you had in mind, but could be a good idea for you until the market turns and presents some favorable opportunities again! 

@Andrew Combs I don't know a /ton/ about Hamtramck, but I did frequently play their HS in soccer back in the day. 

Their bleachers had homeless people living under them. Seeing beds setup with people sleeping during one of our games under the lights. That's probably the most vivid memory I have of Hamtramck. 

Definitely don't want to be walking around down there without protection. It's not somewhere I'd be putting my money if I was looking at investing in the suburbs around Detroit.  

Not to say there's not opportunity, but it's not the nicest place to live & your tenant pool probably won't be quality. 

@Jim Cummings Back when I was Renting my Apartment complex required this. It cost me $9/month. 

During my time there, my car was stolen 2 times. My renters insurance covered everything that was in my car at the time, no questions asked. 

If you're investing in area that have higher crime rate, I would highly recommend it or at least give the option to your tenants. If they don't use it & something happens, it's their loss! 

@Michael Schaper The Midwest is not Texas. As a general rule of thumb, the more expensive a market is, the more likely it won't cash flow. 

In the Midwest states, Michigan, Ohio, Indiana, Illinois, Wisconsin, Missouri, etc, there are houses you can find for under 100k and they will rent for ~$1000/month. These are the perfect opportunity for BRRRRs because you can acquire them for 30-50k, put 15-20k into them, and they're worth 85k-110k (at least in my market). 

If you're considering investing out of State and have money, I would find some experienced players in the market you're interested in and connect with them. Maybe become a Lender for them on a few deals and you will learn a TON about their market all while passively collecting interest checks. 

Texas is hot (literally), but it's not the Midwest. If you really like that State, then find a city where your ideal strategy works and connect with someone more experienced if you want to get your foot in the door.  

@John Warren Thanks for the detailed reply! Congrats on getting 100% LTV. Sounds like I should definitely shop around.

You don't have to go through the same lender for either Refinance or HELOC?

Are you only able to get a HELOC on the primary residence?

I'm just struggling on which one is best for my scenario of wanting to use it to buy more houses in my local market. My lender said HELOC I would have to wait 1 year (which is another 8-9 months for me) in order to go off the newly appraised value of the house.

Hey guys, 

In August 2018, I bought a primary residence that met my buying criteria for a BRRRR, but I bought it with a bank loan and they want me to live here for a year. After dealing with closing costs, now I know exactly why people get HML or Private Lenders to buy with cash & then refi into a bank loan.

Well, now I'm in a position where I am trying to pull out equity in my house. 

Here are some details...

• Purchase Price - 57k
• Down Payment - 5%, Conventional
• Rehab Costs - 15k
• PITI + PMI - $518/m
• ARV - 105k
• Rental Estimate - $1000/m

It took me just over 1 month to get this rehabbed and moved in, now I'm playing the seasoning game! 

I talked to my Lender and he said I would NOT be able to get a HELOC on the newly appraised value for 1 year.

He said I would be able to do a Cash out Refinance on the newly appraised value after 6 months. 

I'm not sure if this is industry standard or just the lender I originally used. If I did a Cash out Refinance and they give 80% LTV, I'd be getting just under 30k back. I understand there's closing costs associated with this so it'd be a little less, but it's enough money to get another property.

With the HELOC, I would be able to keep my monthly payment (I think), but how much equity would I be able to access AND is the interest associated with it worth it?

Context - I'm in the suburbs of Detroit looking to do some more BRRRR deals partnering with either a private money lender, hard money lender, or just creatively funding my own deal with the money. I'm going to continue living here until I can rent it out & I know another property's cash flow would cover the added monthly mortgage I'd get from a REFI.

I'm curious what you guys would do here knowing a bit about my backstory! 

@Frankie Betancourt Hey man! I'm in Macomb, MI as well and was in a similar problem. I haven't had a "job" in years. 

All my deals involve a credit partner. I have gotten a couple houses in the last few months through bank loans, but had to bring in a credit/income partner. My credit is 760+, but I show nearly no income. 

It's not easy, but if you're in a similar position you have to get creative. Maybe friends/family would do it for free, if not you might have to give up some equity in the deal OR offer money. 

If you have 3 houses rented, you *should* be showing that as (personal/business) income. Might not help now, but in 2 years it will! 

I would also look into HML or PML or LC/Seller Financing. There are ways around it, but if you're refinancing into bank loans I would def look to partner. Plenty of people at the local REIA's or on here who I'm sure you could partner with if you have good, cash flowing deals!

@Dorothy PangHey Dorothy, I focus on buy and holds in all areas mentioned except Harper Woods.

I grew up in Macomb County & have a team in place. Right now I'm focusing on direct mail campaigns to generate leads and also driving for dollars. 

I have multiple rentals in Macomb County and I'm looking to continue to buy! If you have any questions specifically or would like to work with someone to get your foot in the door in the Metro Detroit market, feel free to message me!

@James Wise Thanks for this! I posted in the original post they did updates 12 years ago. I think I underestimated how long the repairs last because originally I was factoring in a new roof soon, furnace, hot water tanks, and other Capex.

Good to know these could last MUCH longer than I anticipated. 5-7k sounds about right, as well. 

It will def need HWT, but doesn't sound like that's much. He also said electrical was redone & "90% of plumbing updated". Also good signs since it's a 100yr old property. 

Knowing all of this, the owner wants 150k for it OR 20% DP + 9% interest + 6 year note. I am considering offering 130k with the inspection contingency which I could get a bank loan for, or a Land Contract with 10-15% down payment + 10% -12% interest for 1 year. This would give me time to remove current tenants, do the rehab, get new tenants in there, and then go get a bank loan. 

Maybe this sounds too easy, but could I swap a Private Lender's role for Seller Financing/Land Contract??

This seems like the best way to go without a reliable Private Lender in the deal and being unable to offer all cash.