All Forum Posts by: Scott Hollister

@Elizabeth Susan Ademi my advice is to get one to two really good referrals. Make sure that people have closed loans with the broker in and around your market. The 5 IMO is overkill, and you might rub the lender the wrong way as well. But I am all for verifying lenders before making the largest purchase of your life, so I understand the due diligence. So here is how you can back into what you want, start with the type of property you want to acquire.

First time homebuyer and owner occupant loans: 

Your best product will be the FHA, 3.5% down loan 1-4 unit loan.

Another great option for forcing equity is the FHA 203k loan where you can "bundle" in the rehab costs for the project.

Another great loan, USDA rural loan, 0% down. 

My advice: Pick the loan you want then find the lender that specializes in that product.

What bank do you belong to currently? 

@Nick Gray I found being an Agent a surprisingly helpful transition into full time real estate investor. 

But be careful, you wake up every day "unemployed". So if you really need that W2 income for now, stay with the current job until your passive income goals surpass your current income. 

I've found the transition super stressful at times, rewarding at others, and one hell of an adventure. I'm not financial free yet, but the real estate "agent" has helped me a ton. It has put food on the table, allowed me to work for myself, and brought me education and connections I would not have otherwise. 

The hardest part has been the health insurance, it is super expensive as a 1099 employee. Under 30 it was $250-300. As soon as I turned 30, it skyrocketed to $500. And that is almost the cheapest plan I could get. 

Overall my advice is to work your way backwards, figure out what you really want and plot it out with 1, 3, 5 and 10 year goals. You will be surprised how much you can accomplish in 10 years. 

Also being an agent is a job, I just switched to eXp for the passive income side of things, as well as representing my own brand. (Passive income streams are the ultimate goal)

P.S. Don't forget to marry up, I love my future wife very much, and its just an added bonus she brings great health insurance:) haha

@Blaine Alger here is my best advice that I wish I knew earlier in my career. 

Follow the population and job growth, which is vague so lets specify. You are looking at the economy and the impact of the multiplier affect. Let's say a local employer creates 1 job, and then that job creates an additional spin of or 1.5 to 2.5 jobs. All of this adds to the local taxes collected, retail sales, etc. But not just any job will do...

"The type of primary industry jobs located in the economy determines the quality of the economy."

You are looking for primary jobs coming to the area with an higher average pay than the average area wage. 

You are also looking for emerging real estate markets, tracking the data year over year to compare it. (Job and population growth huge factor in this)

You want a diversified area with multiple primary industries. (Be careful of oil towns in Texas) 

To summarize, Texas had the largest % job gains among large areas since 08. My advice is stick to sound investing principles, which you can learn by networking, reading, forums, and education. And look where no one else is looking right now...

You have a great market, all you have to do is become an expert in it now:)

Book/Free PDF to read: 

Emerging Markets

The Flow of Money

@Blaine Alger Yes correct, a lot of our houses were built in 1800's-1900's. I consider anything 1950 and up "new" around here... And people can't believe it...haha. 

But my question is, you live in Waco TX? Why not invest in Texas where all the positive basic job growth is? The only positive for CT is Fairfield County, proximity to NY City/Boston, colleges, and the 4 seasons. Otherwise the job and population demographics are showing a bleak future for residents. 

Just asking:)

@Monica De Lozadapadin I second what @Stephen R. said. 

There have been 4-5 of us in CT that have take taken that same course in MA, he is fun and educational. Like Steve, said keep an eye out for the groupon. 

Take a look at my thread on being an agent for a year: https://www.biggerpockets.com/forums/21/topics/584...

Best of luck! 

Hello BP,

We are looking forward to our next Investor meetup!

We always have great conversations and new connections.

This meeting we will talk about the state of the Economy, Interest rates, and more. Then we will break up into open networking. 

Meetings are low key, informational, and fun! 

Brand new or experienced, all are welcome! 

Hope to see you there, feel free to reach out with any questions! 

@Regina Jones work your way back into the deal. Have your agent run comps for the last 90 days, see what type of finishes the houses had, and look at DOM to see how long it will take you to sell. Once you have all those important numbers, a SPOT on rehab budget with 10-15% contingency, then you choose your profit, then you get your offer number. 

So lets say 253k ARV

253x.75= $189,750 ($63,250 buffer, minus closing, holding, fees, etc.)

189,750-rehab (50k) = your offer ($139,750)

This is just to show you the process. 

My thoughts: 

• 50k rehab seems cheap for a 253k house in CT. I can get a 1300sq ft house done for 50-60k hired out, only cosmetics with new kitchen and baths. 
• Know your prices on your capital, are you paying private or hard money? Understand the true costs when you put it through the BP calculator. Those work great for this. 
• I did 75% of the ARV. Adjust this for your comfort level. Some use the 70% rule.
• Understand your comps, a agent will get you the data but it is your job as an investor to really know what you can sell it for. Especially as we go into a winter session where sales start to slow down and purchase prices decrease. The holding costs alone on that big of the deal can eat your profit through winter. 
• THIS is the best advice ever I can give you, have your number, and STICK to it. Don't negotiate with yourself, "oh I will take a 20k profit over my rule of 30k per deal." This will be very hard to resist in the early stages of your career. (I learned that one from J Scott:)

Best of luck! 

Welcome to BP @Scott Kimberly,

That is how I started as well, but then you get hooked! 

The motivation and eagerness to learn will be worth more than the no experience and not a lot of money. For example, utilizing partnerships, creative financing, etc. 

Your primary will help, especially if you can utilize a HELOC. That was my first real investment after my primary, I pulled equity out and obtained a hard money loan to buy an REO. Then you snowball the cash from that purchase forward into the next.

As far as the analysis paralysis, we all have it. Just pick a niche that your really want to know, avoid the shiny objects, educate yourself, partner with a good investor friendly agent that handles distressed property, and become an expert in your market (By looking and underwriting everything that comes on market). 

And you have a great goal, congrats! 

Hello @Michael Fasano and congrats on the 1st post! 

Best place to look for investors are your local meetups, ask around, usually the more experienced players don't show up too often. But if you keep networking, asking the right questions, you will find someone who you can learn from. 

Also follow recent sales of properties are are flipped, or rental properties you like. Look up the owners information, and write a letter or call. I like calling and offering to take them out to coffee. (Lunch is tough I've found, hard to have a conversation while eating and coffee is more informal for a 1st meeting). 

You can partner, but you must bring value. Capital, time, project management, find the deal, etc. Typically for this, shoot for a 50/50 split. You must look at it as what your getting in return (Knowledge + Education) as opposed to "giving" something up (50% of the profit). 

When It comes to HML, there are a bunch out there now. Go with a good brand, that someone can recommend to you. The biggest barrier you will face is experience. Typically they like to see 3 deals in the last two year on your tax return. You can bypass this by 1) Bringing someone on your team that has it or 2) knowing a good lender or broker that can "endorse" you.

But here are the current rates and my favorite product so you can underwrite your deals: 

HML is growing in market share, which has compressed the rates over the last year or two. The lowest I've seen from a good lender is 8.99% for a 1 year IO term. But that is for someone who does volume and has a good track record. (At times only putting 5% down in each deal, under a certain ARV)

But for a new investor I would use these numbers, and if you get something cheaper, then great. 12% and 2-3 points is pretty standard for someone that hasn't built a track record, yet. They will loan 80-85% of the purchase price, 100% of the rehab, up to 65-75% of the ARV. Draws for the rehab are taken out as the project continues to be finished with the first one dispersed at closing so you can start the project.

If you do it right (BRRRR) then you can pull all your capital back out, have your renter cover the HML costs, and possibly pull some tax free cash out.

HML are great but also on the top range of costs. Private lenders are better (IMO) because they offer more flexibility. For instance, last deal I paid one of my private lenders 10% on the project, no points. (Just so you can compare costs). @Matt Faircloth just wrote an amazing book on Raising Private Capital. I definitely recommend it! 

Again, congrats on the 1st post and welcome to the best place for investors! 

@Andrew S. just spoke with my commercial lender in CT, he said they do offer lines of credits on commercial properties in 2nd position. However, they have to be behind their 1st loan. He doesn't know of any other banks that do this currently around here. 

What is your interest rate and terms? 

What town?