All Forum Posts by: Sathish Sekar

Hello Raj,

In addition to John's comments, I would add this. The FHA 203k loan is only for owner-occupied properties. Were you planning to live in this next property or only hold it as an investment?

@Steve Lawrence Sr.

Also please check on the past due HOA assessments. If this is a bank owned property, the HOA fees likely haven't been paid for many months.

In Illinois, typically the buyers of foreclosed condos need to pay the past 6 months of HOA fees.

@Jaki Gandara for private lenders, be sure have a due dilligence package for your deal. The private lender will vet the property to make sure you are likely to succeed (and thus pay back what they lent you)

Ask them about their past residences. What did they think of their old landlord? 

The way they respond can tell you how responsible they are. If they go into a list of complaints about their old landlord, they will likely complain to you when they are your tenants. But if they respond in an objective fashion, they are more likely to be reasonable tenants. Basically, you want to avoid people who are always blaming others for issues. Responsible adults know that a property landlord relationship is built upon mutual respect and obligation.

Hello Kien. I personally am not familiar with Philadelpha building permits. 

However I would ask, is this project worth it? How much extra rent could you get from the extra bedroom? This seems like a significant structural upgrade and you only benefit from 1 additional bedroom. The marginal benefit may not be worth the cost. You may want to invest the money into renovating the existing space. 

These are my initial thoughts. Perhaps you can enlighten me with more facts on the situation. 

 Yes. I am a long way from Houston. I am in Chicago. 

But I recommend visiting a local meetup group for real estate investors. There you may be able to connect with a lender. 

A BRRRR would be possible after rehab. After repairs are done, the property would be worth more. So a refinance could pay back the purchase mortgage and hopefully the down payment.

An FHA 203k loan can be complicated. Also this loan is only for owner-occupied properties. So it wouldn't be an option for an investment property. Unless you plan to live in the property.

For you situation, I'd recommend seeking hard money financing. Where the lender analyzes the deal rather than your personal finances. 

Reggie, where are you located? 

Trevor, I would suggest finding an experience partner who has done BRRRR before. You can leverage the partner's experience to minimize your risk as a beginner.

As far as savings, You typically would enough money for a down payment. Typically 20% of the acquisition price. Depending on values in your area, that could be from $20k to $50k. 

side note: i would consider partnering with you. But I am up in Chicago, IL. 

It would be a smart idea to partner on your first deal. That way you can use the experience of your partner to limit your risk. 

As far as a partner. You should set expectations with a "house flipper". Make sure the person knows you plan on keeping the property long term as a rental. Typically house flippers buy and sell properties within a few months.