All Forum Posts by: Nick M.

Figure out what area of real estate interests you. Flipping? Rental properties? Multi-family? Take this time while building up your savings to educate yourself on the pros and cons of all the different areas. 

Understand what you like to do or might enjoy doing. Some people hate being a landord. Others could care less about taking an old beat up house and making it new again. If you find out what will be rewarding for YOU, you will love it and continue to do it. Otherwise, it will become just another job.

Learn as much as you can about the geographic area you want to invest. If it's local, drive the streets. Where we invest, a house can be an incredible deal or a potential loser depending on the street/block it's on. One or two blocks in either direction make a very big difference. Know those differences. If the area isn't local, get to know as many people as you can from that area. Use BP, talk to real estate agents, ask them to refer you to some of their investor clients, etc. I've found that people want to help. Ask them lots of questions about them. Make them be the expert. People love to feel smart/important. 

Gavin, I went to Lehigh and my first rental property purchase was in Bethlehem (828 Montclair Ave). Glad to see someone posting from my old neck of the woods. 

Agree with Russel's comment above. Banks won't care about earnest money. In my experience, their priority is: 1) Offer price 2) how quickly you can close and 3) where the funds are coming from (cash/mortgage).

You're probably competing with investors on a foreclosure...who will more than likely be buying with cash. Anything that makes your offer less attractive (even though it may be slightly more $) could potentially make them go with a different buyer. So, seller financing (probably a non-starter for them), inspections, etc. will put you lower on the list. 

Is this a HomePath foreclosure? With HomePath, they are required to allow homeowners to bid first before investors. That could help you. 

Good luck! Let us know how things turn out!

I'm getting into Multi-Family as well. I travel a fair amount for my "real job" but I'd like to start a local meetup specifically for MF topics. I don't believe the REIA covers MF specifically. I could get some speakers to call in and share their expertise.

Well done! We're working on our first right now. Just closed on the purchase last week. Your story (and pics) are inspiring. Thanks for posting!

Thanks everyone. I appreciate the quick responses! 

I'm under contract on one flip and am making an offer on a second. 

In the second home I'd like to open up the living room but it would require taking out a load bearing wall. It's a competitive market (multiple offers on the 2nd home so we are being asked for "highest and best" offers) so I don't have time for a GC to come in and provide a quote.

I've used quotes from other properties to get a rough estimate of per sf costs to apply to the second house (roof, siding)...however, I don't have any sort of number to open up that room. Does anyone have a rule of thumb to apply here?

Under contract on a REO. Pipes were removed from crawl space. Unfortunately one of them was to the above ground oil tank. Can anyone recommend a soil testing and remediation (hopefully don’t need those services) company in southern NJ? Preferably one that’s EPA compliant. Thanks!!!

Thanks everyone for your feedback. The bank accepted our offer yesterday. I'm going the HELOC route for now. Will see what the banks come back with for appraisal value of my existing properties...hopefully it's enough to pull enough equity out to pay for everything, if not, at least the purchase. Then I can weigh cash or hard money on the rehab costs.

Definitely appreciate all of the opinions. Made me think about different options and see things from different perspectives. Wish me luck!

Originally posted by @Matthew Paul:

@Nick M. You say you have the cash in hand , and you can take out a Heloc .  Why borrow then ?   keep your cash in the bank , use the heloc from another property to buy and rehab the new property .  You still have your emergency fund . The rehab will be free and clear . Sell the rehab , pay off the heloc . If things take longer than expected you still have your cash reserves . 

I use my heloc all the time , I buy rentals , I pay with the heloc  , fix them up . When they are done I get them financed , then I pay off the Heloc . Fees and interest are minimal .  My back up is if things go south I sell a rental , or make my wife get a second job 

Good point. Don't think I have enough equity in one property to fund the purchase price and rehab costs, given the HELOC LTV requirements. I guess I was thinking of convenience getting all the money from one place. To your point, I'm paying for that convenience.

Originally posted by @Aaron Pfeffer:

It never ceases to amaze how many investors disparage the use of HMLs. There's this never ending stigma that all are predatory scumbags who can't wait to steal your property after you slip up. Uh, no. Nor should you ever use ALL of your own cash if you don't have to. Especially for a flip. I promise you there are a number of HMLs who will fund you 70-80% of your purchase price on a one year note with no prepayment penalty for a reasonable interest rate and fees, and you can have them include 100% of the rehab money or not depending on how you operate with your flips. That part is up to you...but leverage is everything. And you know what else? You can just as easily get a non-recourse hard money loan for maybe another 1-2 percentage points on the rate if you're really concerned about a personal guaranty of the note. When it comes to flippers, there are a number, a ton, a plethora! of national and local HMLs in every state in this beautiful country of ours who want to fund your project with the intent of seeing you succeed, making you a repeat customer, and doing it again for your on your next project. These loans are business purpose bridge loans on non-owner occupied property and everyone involved in the loan process (lender and borrower and escrow/attorney and title company) should be speaking the same language. The language of profit. The borrower makes a profit, and so does the lender. Rinse, repeat. So yes, use an HML @Nick M. What really stands out about your post is that you are from North Carolina and purchasing a flip in New Jersey, and I hope you are comfortable and qualified to do an out of state flip, because that can be daunting. And honestly, the numbers you are throwing out are meh. You're saying the rehab cost is half the cost to buy the house. That's a bad ratio right there already. Then purchase costs, holding costs, and sales costs to make $10-20K in taxable profit, and that's if your rehab doesn't balloon to $50,000 like they often do. If you have the cash to do this yourself, you'd be better off lending out your $100K as a private lender yourself at a max of 60% LTV for 10% interest. That's $10K annualized right there and you'd sleep at night and have all that other free time on your ends not doing a flip in South Jersey. But that's just one person's opinion...

I don't recall equating HMLs to predatory scumbags but maybe your comments are meant for others. Since that's your profession I can understand the sensitivity. My real job is medical device sales and it's frustrating to hear negative comments on sales people. I appreciate what HMLs do and they need to make money like everyone else...especially given the risk of loaning money to people they don't know to work on a property they'll never see. 

Thanks for the direct feedback on the deal. My numbers are overly conservative both on the ARV (lower than it should be) and the rehab costs (higher than they probably will be) but I do that to help overcome any emotion/overconfidence that seem to challenge new investors. I modeled best case, worst case and base case scenarios with ARVs and rehab costs so I have a range of potential income. The numbers you're seeing are on the lower end. So anything above is gravy. And I'm learning from mistakes along the way.

I have homes in both NC and NJ and split time between them so it really isn't a long distance flip...but am aware it will be challenging. I have built in extra rehab time into my carrying costs to account for this.

Never considered being a private lender before. I enjoy working with my hands and have done significant rehab work on 3 of the 5 houses I've  owned....so that's an additional benefit of taking on a flip for me. I'd be interested in learning more about private lending if you're open to discussing.