All Forum Posts by: Stephen Herbert

Our house is in Cincinnati, and might be a bit too much for that market... - anyone from Cincinnati have input on that? I understand it's also a bit more complicated to install, which might run up costs.

My contractor and I are getting into a discussion about the pros and cons of quartz v granite - what are buyers in your area leaning towards? Surveys show that younger buyers tend to prefer quartz since it's no maintenance and comes in more unique colors and patterns than granite - do you agree or disagree?

Good morning @Neems Y. - My partners and I were lucky enough to be LOs at a large hard money lender, and I had a particularly high volume client that was doing a lot of business in OH. As a lender, we also had specific metrics that deals needed to hit in order to meet our underwriting guidelines (i.e. LTVs, minimum ROI, etc), therefore I knew that if the deal was comped out within our guidelines it would be a workable deal. A few things that I did before signing the contract on the property:

• Home Disclosure report for the neighborhood allows you to get some insights into the area
• Sent the property to an OH-licensed appraiser I had worked with many times and asked for their ARV opinion based on our estimated repairs.
• Sent the preliminary property out to several lenders to find what terms could be offered (we were unable to borrow from our own company) 
• Sent a local inspector to the house for a walk-around to see if there was any major exterior work or foundation damage that would indicate larger costs (the homeowner was still in the house, and we based the interior work needed of a video provided by our agent)
• Reviewed the inspection report to ensure the budget would still fall within our max allowable budget to achieve the returns we wanted. One thing that is difficult about investing from abroad thus far is the lack of pressure you can keep on the team to keep things moving, and the lack of ability to do the work yourself. Given this, we ran numbers on worst case scenario (15% contingency on rehab budget, 2 months longer than anticipated hold time) to make sure we were still within our goal ROI

We bought the property from a local wholesaler that my client had worked with to source their properties, and used one of the local GCs that my client had also used. The biggest confidence booster in being able to invest abroad for me was tapping into a network that was established and I had seen work already via my seat as an LO. It's not a benefit that all investors will have, but assuredly through BP you would be able to find someone who invests local to the market you're looking into to either partner with or ask for referrals. 

It's exciting, and there's an inherent lack of control over the process compared to investing locally, so be prepared for that. I like to have a hand on everything, and it's been a challenge letting go, but in the end it's a lower cost way of getting into the real estate game, and beats saving up for CA prices... Best of luck! 

I'm currently investing abroad and am excited to read this book and see what I did right and what I need to be more aware of for my next investments. Living in San Francisco, there's no way my first house would be within my immediate area - or even within driving distance since I do not have a car - so I had to either A) postpone my investments for an untold period of time, or B) look into markets abroad. It's been a learning experience to take on a property 2,000 miles away.

Don't be afraid, just do your homework!

Hi Kevin - 

Since funds need to go into this property for the renovation, I would recommend a 2-phase approach to getting this done with less than 20% down. There are several hard money lenders out there that would finance both the purchase and the renovations costs at about 85-90% of purchase price and 90-100% of the renovation budget. You're in a judicial foreclosure state, so the rates will be higher there than say CA, but you could get financing at 85% of purchase, 90% of rehab for around 11% interest and a couple points. Once the renovation is complete (most lenders have a 6 month seasoning period), you're able to refinance into a long term program based on the fair market value, as opposed to the cost.

Wow - what a year! You mentioned maxing out your lending limit - which makes sense if you're borrowing based on your credit profile, income and DTI, but what about exploring options with lenders that purely underwrite the asset and it's cash flow? If limited access to capital is hindering your ability to grow, it's time to take the outside-the-box approach and explore asset-driven lending.

The roads you could take from here are endless, and it's hard to determine which one is best suited for you. My advice is to think of what your long term goals are, and what you want your financial picture and how you spend your days to look in 5 and 10 years. Investing in real estate is not (typically) an in-and-out, get rich quick kind of investment. It takes time, so no matter what you select, C is going to be integral.

Hi Joy - there are many ways to get started in real estate that will vary depending on your personal circumstances. I recommend picking up the book Set for Life as an introductory book that will give you insights into how to get started with a purchase of a living space/investment property. This will give you options down the road when you're ready to move somewhere else and can keep your house hack as a cash flowing asset while contributing little of your own funds. What's important to keep in mind is that the path to financial freedom is often long and winding - do not get discouraged when results are not immediate, and build a 5-year plan for yourself. Whether you're flipping houses with partners, house hacking or investing your IRA into a rental property, there are options out there for everyone.

Hi Vincent - 

If you're eager to get started with multiple projects right off the bat, it would be wise to look into borrowing in order to minimize your capital contributions. There are several lenders that would be able to finance both the purchase of the property as well as the renovation costs with interest only payments and 12 month terms. That would be a wise route, and would allow you to grow your bottom line quickly through the power of leverage.

One week ago I made the decision to leave my W2 job and pursue a position as an independent contractor, full-time investment mortgage broker. It wasn't an easy decision to make, but at this point in my career I have the risk tolerance to be able to make this kind of a decision, and I thank all of you on BP for being an inspiration in my career thus far. I owe specific thanks to @Scott Trench for his book, Set For Life, which played a big part in my decision making process, as well as @Brandon Turner and @Joshua Dorkin.

I've spent the last 3 years behind a desk as an MLO for one the country's biggest hard money lender, working specifically with brokers across the country to facilitate loans on behalf of their clients, and the learnings from that position and the time I've spent on BP, reading the BP publications and forums has given me the confidence to undertake this life changing pursuit.

If you or someone you know/partner with is looking for financing on any upcoming real estate investment, let me know - I strive to be of value and have an extensive lender network to ensure quick terms and reliable financing. Thank you all for being a continued inspiration!