All Forum Posts by: Pete Storseth

How the heck will I do this with 24k a year?

1. Pay off half my loans

2. Get a new job as a mortgage loan officer or property manager, either should increase salary to 35-50k minimum. (DTI from a single cash flowing property at 200/mo and cutting 200 off my monthly debt should do the trick)

3. Save every penny of profit, cashouts, down payments to invest in next property.

My current issue, 24k annual income, no real landlord experience.

My strengths, low debt-low enough to payoff half in next several months, resiliency-I did door to door for almost 10 years, good credit-700+, time, energy, passion.

My goals...

BRRRR with a twist. Ideally screening tenants who aren't just ideal for renting, but responsible enough to buy someday. After refinancing, offer tenants owner finance and wrap my own mortgage, collecting a 10% down payment on the new ARV. This with the refinance could get me enough to scale into a bigger deal for the next one, if not multiple properties.

House Hack, when I do move, I will definitely house hack to reduce or eliminate the housing expense.

My Dream Deal. Multi-family with half long term rental, half short term. The short term unit will double as a AirBnB/VRBO and a personal vacation home. I want to do this locally in Houston and also in Austin. Eventually, other desirable locations as well.

@Bryan Martinez

Thanks I'll keep reaching out to both small banks and hard lenders. I wan at least 5 of each in my pocket for the deals I'll pursue in the near future.

@Whitney Hutten

Your example didn't have a cash out refinance. Isnt it possible to increase the LTV with a modest rehab budget, and get both cash out and a lower monthly payment if I'm willing to take the longer term?

@Alex Bekeza

I will keep calling credit unions and small banks. Thank you

@Alex Bekeza

Thanks

On #1, I have yet to find a lender to verify this. They always have the DTI issues that any conventional loan product does.

On #4, then HOW is BRRRR supposed to work?

Hello BP

I'm planning my first deal based on the BRRRR strategy and I'm stuck. The refinance is key to get cash out in order to repay lenders and be able to repeat.

My question is, when you refinance aren't there a number of obstacles?

1. You have to qualify for the conventional loan to refinance into it.

2. Using local banks that keep loans in house, aka portfolios, still require 80%LTV which means you need to raise the value significantly in order to cash out refi.

3. Its confusing to research, because many investors are refinancing into "portfolio loans " that include multiple properties instead of just one refinanced property at a portfolio lender.

4. Doesn't this put too many properties on your credit to eventually lead to maxing out what banks will do for you? Forcing you to stay with hard money or private money?

@Tommy Daggett

Just remember guys, 1% is just a guideline. Work the numbers, when it makes sense, relentlessly pursue the deal.

I have yet to find 1% deals. I haven't even seen a significant profit margin on a potential rental yet. But I'm still learning.

Getting my money ready is my focus. Along with lining up cash buyers, private investors.

Ask everyone you meet that buys real estate what they're looking for, then seek it out for THEM. Then, you know when. You find a deal, you have a buyer or lender. Simple.

@Tommy Daggett

Its different for every lender. Whether private or hard money, or smaller banks, they all have different standards.

It makes sense reallly. My issue is DTI, so I'm saving and paying off smaller debts to decrease the amount I owe (student loan, rooms to go, etc.) and consolidating the rest into lower interest accounts. The idea is to manage your credit accounts at a zero balance. Best to use one for your autopay expenses, and auto pay that account from your bank. It's easy once you're there, literally all you have to do is know what you can cover.

The better the deal, the more likely the lender will loan, yes. Of course, right? It makes sense too. If it was you, what securities would you want on your money? Would you want a junker that either will get turned into something nice and creat a profit, or would you rather have a decent property that was simply bought at a discount? Always think of the worst case scenario. If you fail or bail, what would the lender have left? If they have something they can sell that will give their money back, fine. If they could sell and make a profit even if you failed, they'll definitely do the deal.

@James Wise

I guess slimy is your opinion. I do see how some may take advantage, much like lease option sandwiches. However, bad apples exist in all business. Those who have full disclosure in both transactions, sub to and wrapping mortgage, are doing a service to both seller and end buyer.

Its cleaner to buy seller finance from a retiring landlord, then seller finance to a buyer who cant get traditional financing. If you think its slimy to be the broker in this situation, how should one do it otherwise? I taught a friend of mine to wrap his own mortgage instead of buying his property. His tenant was a good tenant. Why not sell to them?