All Forum Posts by: Peter Eberhardt

Quote from @Katie Landis:

@Peter Eberhardt, Thank you for reading and responding. I might be more of a "get rich slowly" person than you. Getting cash back definitely fits my pretend-future-husband David Greene's velocity of money / BRRR strategy advice.

...but I kind of like to imagine owning the properties 30+ years, seeing modest/good cash flow year over year & appreciation, then letting my sons continue the business.

Gotcha. In that case, it would come down to your personal situation, goals, and priorities. No one would really be able to provide good opinions and feedback to your questions without knowing more about your situation is. Don't be scared of hard money just because it is unfamiliar, call up some lenders and ask directly the process and fees for it.
You mentioned the purchase price but then your loan amount is reflective of rehab included, but then said funding the rehab with credit cards and savings? I find it surprising that in your area a conventional product would offer a higher NOO LTV (aka lower cash to close) then a hard money lender fixer product. 

It all comes down to the numbers. IMO your only goal should be getting as much of your money back as possible (including holding costs).

I assume no matter which way you go, you are planning to cash out refi after the improvements? If so, then one route will clearly be better to take (least amount of money in (think:fees and holding costs), greatest amount out, highest ROI).

Quote from @Jordan Ray:

Hey everyone!

Looking for recommendations on a company to obtain a HELOC with to use for rental property investing. Since it sounds like not all HELOCs are created equal what would you recommend for a HELOC to use for investing?

Thanks!

-Jordan

I used Connexus credit union for a HELOC on my condo in El Cajon. Pretty straightforward, low margin, locked in for first 18 months was the promo they had when I signed on. $515 was the total fees to open the line, and used the money to get a investment property in Bakersfield.

Quote from @Nicholas Coulter:

@Peter Eberhardt Great deal! I would ask what is the plan with the 100k you would pull out. If your goal is to have a lot of cash coming in then it may not make sense to do the refi. If the goal is to scale it might be worth it! It also sounds like you have a proof of concept and I would suggest not getting private money but making partnerships that you are the sweat and hustle and you have another person be the money. Would allow you to scale with less burden on you!

 The plan would be to purchase another property. My only "goal" that I really had in mind was I wanted to acquire a property every year that would cashflow at least $1,000 once it was stabilized. With the amount of money I put into this one, I cannot buy another property this year but I also have the cash flow for 2.5 years worth of properties in reference to my "goal".
And with what you mentioned, that is what I was going for and it would be one in the same? I have this idea of using 100% private money to acquire and stabilize properties. They are the money and I am the sweat and hustle.  Obviously the cash flow wouldn't be as great but if it is a win win for the both of us if I can grow their money, I would hope that they would want to partner over and over again.

Quote from @Sergey A. Petrov:

Keep your primary/first in place and see if you can get a second mortgage or a HELOC. that keeps your original low rate and unlocks some of the additional equity you are trying to pull out. I suspect the personal loan you had to take out comes with a substantial monthly payment as they are usually short term. This will drive your DTI up limiting your future financing options. You should pay it off with that second loan.

I have yet to find a lender that will give a HELOC on any 4plex, owner occupied or not. If you have any recommendations I would love to hear them!

Quote from @Caleb Brown:

What would numbers look like if you refi'd? If you want to scale it might make sense. It would also give you a cushion just in case if repairs come up

 To be honest, I only looked at the current rates I got from my lenders and did a rough calculation of numbers.
I currently have a PI & TI payment of $2,493 at a 3.375% rate. If I wanted to pull out $100k, I would have a new PI & TI payment of $3,987 at a 6.875% rate. 

The intention for the funds would be to purchase another property. So, I would essentially loose $1,494 in cashflow a month to get instant $100k.   

Quote from @Amber Smith:

They look great, Peter! You guys did a great job!

 Thanks @Amber Smith and thanks for all your help and recommendations as well! 

Quote from @Janice Poncetta:

Nice work! Where is the property at in Bakersfield? Have you considered trying it as a short term rental?  I'm in Bakersfield and have a few rentals in the downtown area. I converted those into STRs which are mostly booked by people traveling for work during the weekend and people visiting family on the weekends.  It will be an added investment to furnish but could bring in additional cash flow for you. 

They are right off Ming and the 99 freeway. I did actually get approached by 2 STR companies that basically sublease out your unit to traveling workers. They would furnish it and manage the property as well. It is a great concept but between me wanting to know who is in my unit, having it not feel like an AirBnB to my neighbors, and wanting full pop on the rent (they have to make their money somewhere too) I optd out. If I didn't want to self manage, it would have been a good deal through and am saving the contacts if I ever want to go that way in the future.

Hey BP! 

I am done renovating my Bakersfield 4plex, 3 units completely gutted and remodeled and 1 decent unit had two turnovers over the last year to get the rent up to market. I went in way deeper then I thought down to the studs in some rooms, had countless adventures, so much fun and so many stories, learned a bunch, and spent a bunch, including a brand new roof I was hoping to hold off on for a year or two.  

In total I spent $70k for all the renovations including the roof. I did 70% of the labor myself over 7 months. Now I am positive cashflowing $2600/mo which will be bumped up to $2900/mo in 18 months once a personal loan is paid off that I had to take out when I started pinching pennies to finish the last unit. 

I never was planning on cashing out refi, but I wasn't planning on spending $70k in renovations either.  I got in at a 3.375% rate and a cash out rate would bump me up to 7% right now. Everyone is saying to not cash out refi which I understand. But I also have never been so broke and looking at another 2-3 years before I can buy my next one, and a instant $100k in exchange for cutting my cash flow by more then half doesn't sound too bad to me. For now, I am going to hold off on refinancing and look at other ways to get my next one quicker.  

During this journey, I have had many people come up to me. They have a lot of money they want to invest in and I am now teaching myself how to structure a private money proposal and use hard money. I want to practice a BRRRR next or something where you don't have to start from ground zero once you finish. I know it will be a lot harder to find the property, but I am up for the challenge. If you have tips on how to propose or structure a private money proposal I am all ears! On to the next one!

Before and after of one of the bathroomsBefore and after of one of the kitchens

Thanks as always BP community, I am glad to have you in my corner!

I have been using Innago management software for almost a year now. The flexibility it gives on signing leases and reporting is what I like most about it. This morning I got an email that they will now have an option to report on time (or late) rent payments to the credit bureaus. The most rewarding part of this whole hobby is being put into a position to help good people that, because life happened, may have a hard time finding a place. In the areas I invest in, credit scores are not good but that doesn't have to mean that they are not worthy of living in my units. Looking forward to implementing this in my vacancy ads and helping tenants build credit.