All Forum Posts by: Nathan K.

Not to be rude, Matthew, but how is this product/service any different than BP's own internal calculators or other apps like DealCheck? Or did I misunderstand something? Personally, as an investor, I thoroughly enjoy running the numbers for myself and teaching others how to do so as well. I don't know of any who would pay that out to a service.

How'd this work out for ya?

That's a really good question. I recommend checking out an app called DealCheck. Their premium membership has a feature where you can add multiple loans. For your BP-specific topic, I recommend you just do cash price and then put the refinance part as the actual refinance loan details. The hard money loan is really easy to calculate on its own - there's probably a set amount at a set interest rate over a set amount of time. That's basic math you can calculate outside of the calculator. Does this make sense?

Consider DealCheck's premium membership. They let you put multiple loans on their calculator that is just as solid as BP's. I think it's $30/month but I'm sure you can do a free trial just to see what I'm referencing. Hopefully this helps.

Admittedly, I'm not real educated on the ins and outs of your question, but I'm also asking myself those same questions and calling off-market properties to pitch seller-financing or subject-to. Couple things I've learned so far:

1) They can't seller finance if they don't own the home 100% 

2) Subject-to can work, but often requires lender approval

3) Wrap-around mortgage may be an option if you haven't considered it

I still have not successfully secured a property with SF or ST, but what I look for is their motive. Do they want to retire/downsize portfolio but want to retain cashflow? Do they want to reduce taxes via monthly payments vs one huge lump sum if they were to outright sell? Do they just want to help a young investor get started so they're fine with taking the time? 

Also food for thought, I'd recommend suggesting seller financing with a balloon payment at 24-36 months. That's reasonable for the seller to get their money sooner than 20-30 years from now, but also gives you time to build equity and refinance into a conventional loan and buy the owner out. Hopefully this helps stimulate more questions as I'm pretty confident it didn't answer many haha.

You need me to connect you with a couple good NC agents who can assist? I don't specifically know those cities like they do.

Sorry we missed you! How'd the conversation go on Monday?

While I absolutely agree with the two Gentlemen who said buy a fourplex and put 5% down as your primary, it's going to be extremely difficult to find anything on market that's affordable and even harder to find anything off market. Obviously, those homes are most ideal. When I started a few years ago I did the same thing as you. Duplex, duplex, duplex, ANYTHING multi-family!! After a year of realizing that's literally every investor's dream property, I went for single family, detached and totally concur with  your plan - 1/year for 5-7 years. I've gotten 3 in the last 2 years and they rent just fine as single and dual-tenant living.

In a more realistic world I would recommend a 4 bedroom and 2-3 bath house near good industries and hospitals. Live in your own private area and rent the rest to cover the mortgage - this will help you leave the apartment and still save money. I'm skewed towards mid-term rentals with travelling professionals on Furnished Finder. The first home was the hardest, no doubt, but this second home is just as fundamentally important. 

Great work going for #2 and feel free to reach out if you need anything.

Siding with @Nathan Grabau here on what he said, but adding some additional insights. I actually didn't know you can refinance in as little as 121 days. I figured it was closer to 180, so thanks for that, @Nathan Grabau! Sounds like it depends on your lender.

1) How soon can you pull equity out of you home and how? - depends on  how much you have in the house. If you buy it in cash, you can immediately refinance into a loan and pull 80% of your cash back out (so 80% of your $300k home value is $240,000). So that's a long way of saying you can pull 80% of your equity back (based on bank's appraisal of the value of your home). So, specifically with your numbers provided - you have it for $265k and it can sell for $300k. So you "own" 12% of the house (i.e. you have 12% equity - so 88% of the house is still financed). Say you pay off the loan to $250k and home value remains $300k - now you own 17% and are borrowing 83% - you with me so far? So now you have a $250k loan but the home value is $310k. That means you now own 20% of the house and owe 80% of the loan. THAT is the 20% equity thing people keep talking about. You can borrow anything beyond that, does that make sense? 

How soon can you refinance? - see above

Did I make a smart play or jump the gun? I think you made an extremely smart play, but need to be more realistic on your timeline. Going back to the 20% equity and pulling money out in a refinance for your basement remodel - when do you think it's realistic you'll have that much equity to enable a complete basement remodel? Food for thought.

How often can you refinance throughout the life of your loan? - like the other dude with an awesome name said, as many times as you want, but depending on your lender it usually runs 2-3% of your loan price to refinance. So on a $265k loan, it'll run $6-8k to refinance each time. Make sure you ask your lender about "break even" when considering new rates/buying down rates. A break even is effectively the time it will take your new rate to be worthwhile compared to the amount you paid it down. So if your new rate takes 20 years to break even, probably not wise. But if it breaks even in 2 years, then it's saving you money in the long run.

Questions for you, if you don't mind me asking:

1) what financing are you using? and what rate did you lock?

2) Do you know your city's rules on basement remodels? Specifically permitting and laws for basement egress doors/windows

3) how much is the basement remodel you're considering? Recommend 2-3 quotes

Thoughts - if you make friends with the other half-duplex owner, then you can eventually get yourself a full duplex :) feel free to DM me if you need any further clarification. Great work, Israel! Your first house is always the hardest.

Great question, Jacob. I've been investing in northern Virginia for the last few years and seeing 3% of every $600k home I buy go to someone else bothered me a lot - so I got my real estate license. Here's some food for thought from an agent who invests - I use my own license but if I were to hire a buyer's agent, I'd look for the below:

1) owning your own investment properties usually indicates you know what it means to be an investor. It helps you be more credible. David Greene always talks about it in the podcast, find an agent who also owns rental properties because they understand the numbers. So you become more valid if you own your own rental properties.

2) be able to mentally calculate CoC, know the market rates for rentals, know the market value of the property, and know any building projects in the area. If tech is moving to your location, if a hospital is being built, if the city is planning a new park nearby? Information like that.

3) understand different financing methods. This is pivotal. Most home buyers just go 20% conventional and that's that. They don't care about other options. I don't know too many investors that are happy with that because it ties up a lot of capital. Seller financing is especially huge for an investor. You can also consider DSCR (debt-service coverage ratio) loans if cash flow is high enough.

4) understand different renting strategies. These include house hacking, short term rentals, mid-term and long term rentals. Helping your client get the investment property is great, but do they know how they'll make money off it? Is it a strong mid-term rental property but they come in hot thinking it's a long term area? You've got to be the one with that insight.

5) understand human psychology and negotiating methods. There are extensive resources out there so I won't talk your ear off with recommendations, but at the end of the day, business is a person-oriented endeavor. If you don't understand people, it doesn't matter how good you are with numbers. 

6) time in the market/running deals. I always hate when people say this, but it's true. The best thing you can do in preparation for serving your investor clients is running deals over and over. In doing so, you will become astonishingly efficient at running numbers, interest rates, PITI, taxes, etc, off the top of your head. The longer you're in the business, the more weight you'll carry - but ONLY if you know what you're doing. Unfortunately for new dudes like us, we can be as smart as we want, but it's our time in business that may be slowing down (which you can't control... you can control your level of intelligence though).

Hopefully all this makes sense and I'm excited you asked this question because it shows you care about those you serve!