All Forum Posts by: Patsy Waldron

Do you mean wholesaling, where you do a simultaneous close with the seller and with a buyer? 

Disclaimer: I've never wholesaled. This is based on what I have read about it.

So essentially with a wholesale you get under contract for a property that you don't plan to hold. You then find a buyer who does want to buy the property to fix and flip or fix and rent. You obviously ask more money from your buyer than you have agreed in your contract with the seller.

In a simultaneous close, buyer and seller are at the attorney's or five or at the title company at the same time as you. You close with the seller and turn around and close with your buyer. In essence, you were owner of record for about 15 minutes!

Some use the end buyer's money to settle with the seller. Some use transactional funding from another source to "clear the waters" between the two transactions. Some use their own money. The point is you as the middleman don't own the property for any significant period of time.

It sounds like a master lease would work well in this case.  You lease it from the owner for a set monthly amount (which covers his mortgage, interest, taxes and insurance plus some extra) and transfer ownership when he is out of his pre-payment penalty period, I.e. in a year you go apply for a conventional loan and buy the building outright. 

An app that would aggregate loan information and allow you to compare and shop around for different products. 

Think Priceline/Kayak/Expedia for lenders. :-)

As Natalie mentioned, if you are self-employed, banks will want to see income from the self-employment for the past 2 years (self-employment is considered less stable than W-2, which is funny to me considering that employers can and do fire employees at will- but that is a rant for another day). You don't actually need a W-2 from your company to qualify for a loan. If it was a sole proprietorship (which it sounds like it was), that counts too *AS LONG AS YOU DECLARED THE INCOME*. They will just average your earnings for the previous two years at the time you buy. 

If you buy in 2018, you should be fine- just make sure your 2016 taxes do reflect self-employment income accurately, and do the same for your 2017 taxes too. As Darryl suggested, find a real estate-savvy CPA who can help optimize your taxes (balance write-offs and deductions with the need to show income). You should be good to go if you can show enough income.

Maybe Chris Mason can chime in- he usually has great advice about everything that has to do with loans.

Funnily enough, they contacted me today and asked if I would talk to them again for my loan needs. Several months ago I decided to walk away, after several rounds of providing information that they kept asking for- I figured out that this was going nowhere and got my deal financed elsewhere in a few days. They seemed very "red-tapey" for a private lending company. 

Oh no, you are not! 

My very first house had plumbing issues show up within a few days of moving in. Kitchen faucet dripped, master bath sink faucet had very low water flow (turned out it was rusted inside and debris were blocking water, I got it replaced) and smell of sewage wafting from the guest bath. Turns out toilet seal was broken. Paid a plumber just a little shy of $1,000 to get those issues fixed. 

Then a couple of weeks later, master shower stopped draining completely. I was not about to call that plumber back.... A kind lady at Lowe's (where I had gone to buy Drain-O) suggested I use vinegar and baking soda to loosen up any gunk, then use the cheap plastic "snake" to get the blockage out. It was a huge, gross ball of hair and other stuff. Yuck, but at least I had paid less than $10 to fix the issue.

We moved in a few days after Christmas. This was Virginia, so not very cold, but right around New Year's we had some pretty cold weather. There was a lovely wood fireplace in the family room, so we decided to make a fire. Well, we didn't know this, but the flue was broken, and the fire filled the house with black, smelly smoke. So much for a warm fire on a cold night!

There were a couple of other issues over the next few months and years. But you know what? I loved that house because it was my very first, and I poured everything I had into it- dollars, time, effort. A neighbor joked that my paycheck should be direct deposited to Lowe's because I was forever coming home with bags and bags of stuff from there.

Just think of the stuff that's breaking as good stories to be told later. :)

Kevin beat me to it, but I will repeat it because it is important: find a REIA or meet-ups nearby and connect with investors in your area. They will give you some much-needed support as well as invaluable education, and possibly some good deals! Once you find success, the naysayers will have to shut up. Good luck!

For the kind of partnership you are talking about, you need to be thinking about creating an entity and getting commercial loans. Yes, the terms will be slightly less favorable than residential mortgages (higher interest rates, shorter amortization) but it will avoid the kind of financial acrobatics you are describing. It also allows you to circumvent the maximum number of loans problem. (By the way, a person CAN in fact have more than 6 mortgages in their personal name- Fannie Mae allows up to 10 loans, assuming your debt-to-income ratio is within guidelines (the 43% you mention).)

As far as having each property in its own, separate LLC- that's a matter of preference. There is no doubt that it's a more complex arrangement than not having an LLC, or having everything in one LLC, or having a few LLCs and having a few properties in each LLC. If you plan to have lots of properties, you may want to break them into small groups and put each group in one LLC (and you could actually get one "blanket loan" for all of them if you want to be more efficient). The more entities you have, the more layers of complexity you introduce in the legal and accounting side of things, but the more protection you potentially grant yourselves. You and your partners need to decide how to balance complexity and asset protection.

It's a great idea!! Most students have roommates while in college, if you can get into ownership and have your roommates help pay the mortgage and utilities, it's ideal! Just make sure the people you rent to do pay their bills (i.e. don't take advantage of the fact that you're a friend).

If I could go back in time, that's exactly what I would do. Especially since when I was in college it was the time when anything living and breathing could get a mortgage, lol. 

@Nick K.- Gotcha. Sounds like what you wanted to do won't work... I think a personal loan from your 401K may still be worth considering, as you should have cash flow above and beyond the mortgage payment to use to reduce debt (if you buy right). But I absolutely understand the hesitation to add more debt to the mix. Best of luck!