All Forum Posts by: Rafael Norat

Hey Franz,

I would run the numbers and see if it cash flows with the scenario you mentioned. If so, and the amount of cash flow meets your criteria, then yes consider. I'd also make sure my management/maintenance plan was covered well, as you'll be out of state.

Hope that helps.

Rafael

Hey John,

I also wouldn't worry too much on interest rates creeping up. We will probably be very low historically speaking for years to come. The fed is struggling to even move 25 basis points after 7 years!

Seems like you have to find a good balance between capital growth and cash flow to meet your retirement goals. So, I would just focus on tweaking that balancing to fit your timeline and not worry on interest rates.

Hope that helps a bit..

Alex,

I think in the short-term that's OK, as long as you plan on refinancing out. Otherwise, you can get over-leveraged quite quickly.

I have a 3-unit project right now. I'm using a business line of credit to finance the purchase. The total cost of the project is ~65k including repairs . I had a realtor run a CMA for me which confirms a potential ARV of ~ 85k. I also have established relationships with local banks and know their terms and requirements well. One of them should give me the $85k ARV at 75% LTV, which would get me close to 100% back out when I refinance. Total turnaround for the project is about 8 months. The on to the next one!

So, I would say short term leverage as such (similar to your equity line) is fine as long as your exit strategy is in place. That means knowing your ARV and having the bank relationships to execute.

Hope that helps.

I would say always best to err on the side of caution. Third party inspections may give you more leverage to negotiate. Always good to have a fresh set of eyes on things as well. Might save a couple of upfront bucks without one, but get beat up in the long run.

Hey Pete. Your question will be answered and debated many many ways, as there are multiple approaches to your path there.

I would suggest finding a seasoned wholesaler in your area and trying to help them with their deals to learn quickly and sink your teeth in on some real-life action.

Me personally, I would start on by finding SERIOUS PROVEN BUYERS, which you can find at your local REAs. Once you know them and their criteria, you can build campaign fully knowing you have the buyers end covered. You'd also learn tons from them during the process. I believe in having a handful of serious buyers than a database of unknowns..

Hope that helps.

Hey Eduardo! Congrats on getting started. There are plenty of CA folks here who invest out of state. I suggest finding them, taking them out to lunch, and building your network and experience..

Best wishes!

no problem!

Yes, water/sewer can account for $50/month or so for a 2unit. Also lawn maintenance can vary account for another $50/month or so depending upon the storms. 

Does the house have a French drain system in it? That's pretty common in flood zones to help elevate issues a bit.

Not sure on how to estimate for flooding emergencies. I would definitely suggest at least going to some of the local real estate meetups and getting a seasoned opinion there. Flippers and funders is a good one on meetup.com. I'm sure you could find union county investors there to pick their brains a bit.

CMA is a comparable market analysis. It's what realtors give you to judge your property of interest based on comparables sold and on the market. This will give you a good idea of the value of the house as-is and after you rehab it. It also give you insight into what it can possibly appraise for when you go to refi with a bank.

Reach out to me if you have any questions. 

Another thing to consider is whether or not you are looking to refinance and pull out your cash soon..

If so, I would have a CMA done prior to purchase to have a good idea of what my 80% ARV is and then try to keep all my costs below that number. I would also talk to banks and see if there are any extra factors they take into consideration with flood zones props. Do they refi less?

Hope that helps!

Very cool!

What price are you getting the house at?

Are you including insurance, water, sewer, regular maintenance, lawn/snow removal into your costs?

How often does it flood there? How are you estimating your flood emergency?

hey tristian,

I would seek out a local seasoned investor and get their opinion as well. Unless you can find someone with a portfolio of flood homes in that area to mitigate your risk, it might not be the best way to start. Plenty of non flood zone opportunities in your area I'm sure. NJs foreclosure market should be plentiful for the next couple of years so don't jump at anything just to get the ball rolling. Check out the local meetups in your area for more local advise.

Rafael