All Forum Posts by: Nghi Le

Be careful taking advice from investors outside of our market. The Seattle market is very different than most other states. For example, we have HMLs who can fund at the auction (or within 24 hours) and full-service auction bidding companies (although I don't recommend buying at the auction right now). There are a lot of different strategies being implemented here that you don't typically see elsewhere. I talked to Scott Trench last month (when he was here for the real estate Expo) about a real estate financing strategy for BRRRRs that was pretty commonplace here (ie most HMLs here will do it), but he had never heard of it before.

I know exactly who you're talking about, mainly because I've purchased deals from them in the past. I don't think this deal is the right one for a newer investor. It's hard enough finding contractors who can do quality work for houses in this price point. It's another to actually sell a million dollar house, as right now anything over $600k is at risk of sitting on the market for a while. Whereas Tacoma was just recently recognized as the hottest market in the country... 

BTW, did you meet them at a BP event (although technically I don't think there's such a thing), or at one of their classes? These deals are usually blasted out on their email list. I'm pretty sure I saw the email; it's a Ballard house, right? I think the deal is probably gone by now. I don't usually recommend buying deals at 83%, but I can tell you there's no shortage of people willing to do that in this highly competitive market. But with those thin margins, I'd probably leave it to the volume flippers who have lower costs than most.

The Seattle real estate community is also very different from the rest of the country. We're very open to sharing and collaborative, despite the immense competition. There are a lot of meetups, usually 1-2 a night, ranging from 15 to 150 people per event.

Finding a deal at a meetup isn't necessarily a bad thing, but it depends on what kind of meetup you go to. I think most people commenting on this thread are used to real estate clubs where they have time for "Haves and Wants" and people come up to sell their deals. But the good meetups are where deals get made, not salesy, and you're not surrounded by a vast majority of people who haven't done a deal.

In terms of hard money, you have a lot of options here. If you're constrained on cash, there are a few that offer hard money loans at 10% down to brand new investors. Although you may or may not want to take that loan. Competition has really driven hard money rates down. I see a few loans at 7% rates every month, although that's typically for very experienced investors.

Feel free to send me a message or email if you want to chat about your situation. We'll probably see each other at a meetup sooner or later. The next one I'm going to is a mastermind that happens every Tuesday during lunchtime in Burien.

Great turnout today! See you guys at the next one!

Sounds like a BRRRR. Hard money loans are good for the upfront financing of the purchase and rehab, but it sounds like you might have a problem with the back-end refinance if you have DTI issues. I definitely don't recommend putting yourself into a hard money loan unless you know for sure that you can get out of it.

An investor-savvy conventional lender without much overlays might be able to get the loan done.  Albert Bui and Adrian Chu are a couple of active BP folks here who may be able to help.

If not, you can try to seeing if a commercial/portfolio loan will work. It's not based on DTI, but on the property's cashflow/DSCR, which may or may not be a good thing. Properties in King County don't cashflow too well, which may lower the loan amount and LTV. You'd need at least the 1% rule in order to get a good LTV (70-80%), otherwise you're stuck at 50-60% LTV. Rates are comparable to conventional loans on a commercial loan, but it's a 5-yr or 10-yr term instead of 30-yrs.

This is actually not true. If the underlying ownership still remains the same, there is no transfer tax here in our state.  This doesn't apply to all states, so please confirm if you are investing elsewhere; a lot of states don't have transfer taxes either (but might have other transactional costs).  You can confirm this with an escrow officer.

Here in WA, you get charged according to ownership % changes. For example, I had an LLC with 3 partners (each owning 33%). We changed title to 2 partners' names individually (in order to get a conventional loan) and was charged 33% of the excise/transfer tax because 2 put of 3 owners still remained on title.

This is the first time I've heard of a HELOC for 90% on investment properties; I've only seen that high of an LTV in primary residences. Max I've seen is 80% LTV for investment properties.

Also, keep in mind that commercial loans (which you can often get on SFRs and 2-4 units too) are primarily dependent on the property's cashflow. The problem with our area is that nothing really cashflows here. That translates to lower loan amounts and LTVs (ie 60%).

Looks like you're in my neck of the woods :-)

I'm primarily an OOS investor, currently active in 5 other states outside of WA. I use the same commercial lender wherever I go, and they have a lot of flexibility and can lend on just about any asset (or portfolio of assets) with no minimum loan amounts. I just bought a 5-plex in PA for $60k... So I do mean it when I say no minimums. Up to 80% LTV, rates are mid 4's right now.

LTV can be constrained by cashflow, but over 95% of the US cashflows better than Seattle, so you shouldn't have too much problems there. My last couple of commercial loans in King and Pierce counties have been about 60% LTV too due to DSCR restraints.

I see a lot of people asking, "How much down payment does a hard money lender require?" My quick answer is 10-25%, primarily dependent on the lender, but can also depend on experience, credit, etc.  But I honestly think that answer isn't good enough.

Most people asking about down payment are usually constrained on liquidity (available cash). Please realize that flipping (or even BRRRR) is a cash-intensive business. If you have just enough money to do a flip, you don't have enough money. Most flippers, whether you've done 0 flips or 50 flips, often go over budget and over time; it's just the nature of the game. There are too many things out of your control (I can give you plenty of stories, such as a $175k rehab turning into $550k), and sometimes only way to survive and get through it is to have enough cash in your pocket.

I know that when I say down payment ranges from 10-25%, most people will gravitate towards the lower end of that.  Even with a 10% down payment, you need more money than just that 10% to qualify for the loan. This is because:

1. Down payment is not the same as cash to close. Cash to close includes down payment, all the lender's fees/points up front, prepaid interest until the end of the month, prepaid insurance (a vacant policy is at least 3x the cost of a homeowner's policy) depending on the lender's policy (i.e. prepaid for a few months, 6 months, 1 yr, etc), closing costs, and maybe some other miscellaneous costs on the HUD (e.g. if you're buying from a wholesaler and they wrote up the contract so that buyer pays all closing costs).
2. Reserves for monthly payments.  Lenders want to make sure you have enough money to service the debt during the loan. So they usually want to see enough money for at least 4-6 months of interest, sometimes for the entire duration of the loan (e.g. 1-yr).
3. Initial rehab funds + contingencies. If you are borrowing rehab funds, 95% of the time it's in the form of reimbursement draws. Which means you need to spend money first on the project, and then the lender will reimburse you as the project gets going. If the contractor asks you for a 50% deposit (which you should argue against), that's entirely on you; your lender will not front that money.

These days, the Greater Seattle Area has an average of 3 real estate meetups per night, but what about those who can't attend evening meetups due to work schedule, family obligations, etc? Then this is the perfect meetup for you!

There are no speakers or pitching, just pure networking. Whether you're working a day job in the area or are lucky enough to work in RE full-time on your own schedule, come join us for lunch and networking.

We're averaging about 60-80 people per meetup in this location and raise money for a charity called A Hero's Home each time through the meetup fee. This charity is dedicated to providing homes (acquired and fixed up by proven real estate investors) to those who have served their communities and country; it was brought together by a few BP stars, such as Jay Hinrichs, Brian Burke, Chris Clothier, Brandon Hall, etc. For more details, please visit: http://aheroshome.org/

We'll be on the 2nd floor of Two Lincoln Tower (although we may decide to move it to the covered rooftop in the same building if the weather is nice). Please carefully read the directions to get there in the meetup link below. Parking is free in Lincoln South parking lot for up to 3 hours if you validate with any store in Lincoln Square. You can also park at Bellevue Square and walk over.

The fee is $15/person, and all proceeds will go directly to the charity. We have a generous sponsor taking care of the location and food for the event.

Please RSVP so we can get an accurate headcount for food:

https://www.meetup.com/RealEstateAtWork/

Pictures from the previous events:

Keywords: Redmond, Kirkland, Woodinville, Renton, Factoria, Newcastle, Mercer Island, Issaquah, Sammamish, Factoria, Tacoma, Everett

These days, the Greater Seattle Area has an average of 3 real estate meetups per night, but what about those who can't attend evening meetups due to work schedule, family obligations, etc? Then this is the perfect meetup for you!

We're back at one of our favorites for our south end lunch & networking! Kathy Tang, Jimmy Tang's sister, has opened her doors for us once again.

There are no speakers or pitching, just pure networking. Whether you're working a day job in the area or are lucky enough to work in RE full-time on your own schedule, come join us for lunch and networking.

I have to give the restaurant an accurate headcount ahead of time, so please RSVP to the meetup here:

https://www.meetup.com/RealEstateAtWork

Here are a couple of pictures of our past meetups at this location:

Keywords: Burien, Normandy Park, Renton, Kent, Des Moines, Seatac, Federal Way, West Seattle, Auburn, Tacoma, Lakewood, Fife

QBO used to not have the classes functionality, but I believe that has changed.  So in terms of functionality, both should be about the same now.

Main reason I choose the desktop version is the same reason that @Cathie Kovacs mentioned:  you don't have to pay more if you have multiple companies.  QBD is already cheaper than QBO, even if you just look at it from a single year's perspective.  Obviously QBD is a one-time payment (usually on sale for $150, but I just bought the 2019 version when Amazon had a crazy sale price on it for $79), and it supposedly will last for a lifetime, except that if you do any kind of bank reconciliations, they turn that feature off after 3 years.

At the same time, when you invest with partners, QBO is a lot more convenient than QBD.  Unless you're tech-savvy and can set up a server for everyone to remote into...