All Forum Posts by: Paul Tschetter

Thank you for the question.  So the rehab was more like $40k but with closing costs, refinance, lender fees, ect. the net number between what I paid for the property and the long term debt I put on the property was about $50k. Yes, I was able to get a conventional 30 year loan n the property.

I hear you.  It does not cash flow like crazy so I get why many investors would have old.  It works for me as I have no cash in to it and it does cash flow; some argue this is an infinite cash-on-cash return.  Of course my $100k of equity is now tied up in the deal but I am ok with that for now.

 I have pulled cash out of deals in similar scenarios this year.  I believe you have to wait 6 months.

Since hearing on a recent podcast and after a friend encouraged me to share, I thought I would share 1 of my success stories from earlier this year.

I purchased a single family house with a guest house on about 1 acre of land in my area (Island County Washington). It was a (reverse mortgage) foreclosure I found on the MLS but I had been tracking the house for 24 months so I knew it would be available at some point. I purchased the property for $160,000 (there was a higher offer from another buyer but my track record help me convince the seller to go with my all cash offer). I knew that with some cosmetic fixes the property should appraise for $300,000 so the idea was to buy (with hard money), rehab, refinance and then hold as a rental.

My hard money lender trusts me and saw the value in the deal so he not only put up the money to buy the house but he put up the rehab money as well.  I did have to give him a lien against a separate lot that I own outright that is worth about $50,000 just so I had some skin in the game but I was able to do this without using any cash.  Pretty cool. 

So we closed on the property, I rehabbed the place and rented it out in about 3 months (gross rent is $2,350).  I also knew that if the appraisal came back low, I could sell the property for $300,000 for a quick sale.  I like having more than 1 exit strategy.

So about 4 months after closing, we went to refinance and the appraisal came back at $325,000.  I owed the hard money lender $210,000 so we put about a $210,000 loan on the property and paid off the hard money lender.  The loan to value ratio needed to be 80% so we were well below that number (about 65%).  I cold have even pulled some cash out of this property but I wanted to be a little more conservative making sure my rental rate supported the loan amount.

Now I have a 2 unit rental with just over $100,000 in equity that cash flows a few hundred bucks and again I did not have to come up with any cash to do this deal.

Welcome to BP @Jay

I spoke to 21st Century a couple years ago and I believe they only finance manufactured homes (even attached to land) for owner occupied units (so nothing for investors).  Did anyone else find out something different?

Welcome to BP!

You could offer to buy all 36 at a discount an in exchange you close all the properties at the same time. He can take the necessary funds for his daughter's college then the rest he can do a 1031 in to a more passive real estate investment like a NNN deal.

He could also sell them off individually over 4 years so he can use the proceeds to pay for his daughter's college assuming she is a freshman.  It really depends on when he needs the money for the college fund.  If he basically needs 100% of the funds for college, I do not see any need or place for a 1031 but maybe someone else has some ideas.

Here is a lender I have done a bunch of SFR rentals with the past 24 months:

Jeff Larson

Prospect Mortgage

(425) 951-9502

[email protected]

I am assuming since you mentioned HomePath that you are trying to buy a single family home; is this correct?