All Forum Posts by: Nathaniel Hovsepian

I have one question for you:

What would your cash flow be if you were to pull money out of the equity that you have in the properties?

Personally, I wouldn't take anything out until I had something solid that I was going to do with that money. I know that everyone is saying that we are at the top of the market and that it is going to crash at any second now, but why would you want to just have cash sitting in the bank for no reason?

You can always cash out refi later. Who cares if you lost a percent on interest rates down the road? You don't know that interest rates aren't going to keep dropping from where they are today.

You have to ask yourself what return on your money you are getting currently, and what return you get if you take that money out and either have it sit and wait for a maybe opportunity down the road, or reinvest into something else.

@Mohammad Haidarasl I would echo what @Adam Parker said here. 

Let's say that you were paying 5% interest on your student loan debt.

Well, if you had the capital, and you could put it into an investment that was going to get you 8% do you think that would be a good idea?

It isn't quite as simple as this, but you would essentially be netting that 3% difference. 

Yes, it is great to get debt off of your books and out of your head, but if you can put your capital to work for you instead and get a better return then that's the better option. 

@Stephen Solano that is exactly what you should do! Take the worst case scenario and base your numbers off of that. Then you cross those little fingers of yours and hope for the best case scenario and a big payday!

Maybe that's not popular opinion of how to go about it, and maybe you won't get as many deals that way, but it will protect your downside a lot more than expecting the best every time. 

There you go @Sunday Tsai! I will keep my fingers crossed that you can find one that works. You can always post here and tag me in it and I will get notified and try to help you out if I can. 

Happy Hunting!

@Stephen Solano Oh ok I see the picture a little bit better now. 

Have you looked to see if there are any meetups near you? I would guess that some REI groups are having a Christmas party around, which is a great place to shmooze and meet people who could help you locally. Just get out there and tell people what it is you are trying to do and what you are looking at. I have not met an investor in person yet that wasn't willing to help.

Real estate investors are really a great community who enjoy sharing what they have learned during their careers.

If you are really eager to get started and can't wait to meet some people then hard money is the way to go. A couple that I have dealt with are Anchor Loans, and Lima One Capital, but there are so many out there that you can find through a quick google search. 

Keep posting here and I will help you out as much as I can.

@Stephen Solano I am a little skeptical of your rehab estimates based off of what you say needs to be done, but you said you understand project costs so I will just assume that you are correct. 

There are a few ways that you can go about finding money for this sort of project. 

First, you can start with any local banks that are in your area and show them your numbers and see what they would be willing to do. (Although they probably won't be interested, but is worth your time to build relationships)

Second, you can find a hard money lender. If you don't know what that is, they are lenders that give loans for exactly this type of situation. They will cost you around 12% annualized interest every month, or about 1% of your loan every month with a balloon payment at the end of your term. Generally you be charged anywhere from $1500- $3000 to close on the loan at time of purchase. If you factor this into your numbers and can still make a profit then this is a great way to go.

Lastly you could get private money. This would be family, friends or another investor that you have met. I assume that family and friends are not an option because you probably wouldn't have asked otherwise. This leaves another investor that you have yet to meet. Find some local meetups and start rubbing elbows with other people who are doing what you are trying to do. I have found quite a few people willing to lend money this way.

In my opinion, the numbers on this property wouldn't really work if you were to pay the $70,000 that you say is the purchase price. After you factor in closing costs for purchasing, rehab costs, holding costs during the rehab, and then closing costs to sell, you don't have very much wiggle room if something were to go awry during the rehab period.

That is just my opinion of course.

So I just got the yard all cleaned up and it looks so much more presentable already! I unfortunately didn't get the best before pictures (I pulled them from a video walkthrough), but you can get the idea.

Yikes! Look at all that bamboo and overgrown foliage!

Yup, it was just as bad in the back, if not worse.

But here is what it looks like now!

My fugly face isn't in this one (sorry all), but look at the difference.

I can't wait to see what this place will look like come springtime!

I plan on getting rid of that poorly built back porch thing and just put a step down into the backyard.

Hey @Andrew R. Lucas I hear what you are saying about people trying to take advantage of me needing their "expertise". I know for sure that all of the studs need to be replaced as I can visually see all of the damage to them from termites from hell! The joists I am not so sure about, but the roof is sagging in a couple of spots, not bad, but noticeable. 

The house is concrete slab, so there is no issues with the floor and the exterior walls (cinder blocks) look pretty good for the most part.

Since we are going to be replacing all of the studs anyway I am looking at how I can rearrange the house to better suit a modern families needs without having to redo too much plumbing or electrical work. It is currently a 3/1 with very large bedrooms and very little closet space. 

It also didn't have a laundry hookup, so I am trying to figure out where the best place to add that will be. I am thinking just off of the bathroom to make for the easiest plumbing route.

I am not sure how this is all going to turn out profit wise in the end, but I am enjoying the process so far and learning a lot. I think that I am going to come out on the other end of this a better investor and level up my real estate expertise.

@Sunday Tsai So you could possibly get about $60k out of the house to put towards something else. That would be the highest you could most likely get. You can shop this around at banks, both big and small, and see what they would be willing to do for you. Do you think that would be enough for a down payment for another place? 

It may just end up being in your best interest to sell the place, take the 31% (-minus closing costs) and put some of that into a multiplex that you can house hack. 

Thoughts?

@Sunday Tsai 

Those numbers look a little tight for my tastes. After you pay off your mortgage, insurance and set aside what you need to for tax purposes, you don't really have anything left over. If it was me, I would pass on renting this out.

To answer your question that you asked Joe, yes!

You have a couple of options, depending on what percentage of equity you have in the house. I know you said that it has appreciated ~$150k (that's great!) but you would need to know what the percentage is.

Typically, banks will only give loans out to about 80% max of a homes value. So if you have 30% equity in the home, you will only be able to get a loan for 10%. This would apply to a HELOC (Home Equity Line of Credit) as well.

Let's hear what your numbers are from here and see what we can come up with.