All Forum Posts by: Steven Goldman

@Ashley Glinka  

Hi Ashley, refinancing in a LLC is no more difficult than refinancing in your own name and in some cases has advantages. First, if you are going to a hard money lender for a 30 year fixed mortgage than only one member of the LLC need guarantee the loan. Right now the best 30 year fixed rates are in the high 7s low 8s and that could change tomorrow. Funding companies or HML's do not lock a rate until application. Currently none will grant a rate lock extension. So it is important to move quickly and lock the rate at your first possible opportunity. In a rising rate environment it is important you work with an experienced broker who has a strong relationship with the lender. Otherwise, the lenders may delay a clear to close when rates are significantly higher than when you locked the rate.

Their is a hearty ongoing debate about LLC vs. individual name. I will not delve into that contentious subject. Suffice it to say if the property is in Pennsylvania you will pay transfer taxes to convey the title either way. So it often does not pay to switch ownership after the original settlement. That is a state by state proposition which you should investigate before making that decision.

Currently, most banks and credit unions will lend either way and rates are between 5.99 and 7 at the moment for a 10-20. 

It is hard to say whether a 10-20 is better than a 30 year fixed. the difference in payment is marginal. The million dollar question is what will rates look like in 6 or 10 years when your loan converts to an ARM. if you have that answer please call me immediately. Our most seasoned investors prefer 30 year fixed products. They believe they can always refinance down but do not want to accept upside risk. Good luck.

I feel like people are mixing apples and oranges. If you buy a property significantly under value you are unlikely to find a lender willing to immediately refinance you at appraised value. You will need to have at least 6 months seasoning for most financial institutions. Obviously, if you buy a property significantly under value it is a good investment. It is not however a BRRRR. It would be a buy and refinance. By its definition you need to rehab to do a BRRRR. Buy, rehab, rent refinance repeat. Although a buy and refinance is a wonderful thing!

Hi @Joshua Nicewaner   

In order to evaluate the efficacy of refinancing your rental you will need to provide a broker the following information:

1. Your credit score

2. Rent

3. Taxes and insurance

Because this is a small loan you will need to find a local bank or credit union. Hard money lenders will not lend under 100k. The property has to have a 1.25 debt service coverage for a bank or credit union. Most banks will shorten the term on a small loan so you may be looking at a 5-15. Or even a 10 year fixed. I would reach out to a broker or lender and see what loan amount and term your rent and credit support. Good luck, 

@Jordan Reisman

Buffalo is one of those undervalued markets I write about in my comments.  I would make sure you perform careful due diligence in Western NY and even Erie, Pa. The prices are more reasonable but the economic situation in these areas is still imperfect. If you have solid tenants and the price you are paying conforms to the market, I would not hesitate to purchase in Buffalo or Erie. 

@Marcos De la Cruz   Hi Marcos, BRRRRing is one of the strategies that allows you to get a good deal. Their are others. If you have enough cash you can buy at tax and sheriff sales. In some markets you can buy turn key properties that will likely increase in value because the market the yare in has been historically low. We see deals in Central Ohio, Western Pa and throughout the South which are substantially below value due to recent economic hardships which are likely to dissipate in the future. BRRRRing is a great way to increase value but nothing is guaranteed. 

Many investors swear buy turn key rentals. Good luck!

Hi Oliver, No!  I would never use a contractor who will not give you a detailed scope pf work. That is what is required by every rehab lender. If you do not have detailed itemizes proposed scope of work than a unscrupulous contractor can inflate the pricing and claim that it was not within the scope of original agreement. One of the major reasons rehabs fail is disputes about the scope of work and extras with the owner. It always help to have a sketch plan created if you are moving walls. It makes the scope of work clearer. Good luck.

@Carlos Jackson 

I strongly urge you to attend some real estate meetups and find a mentor who can help you recognize a good property. This is a bulldozer property. Meaning it needs to be knocked down. It would probably be cheaper to build new, than rehab this property. That is why you need to find a mentor and get educated on all phases of BRRRR or flip. Good luck.

Hi Mike, if you are going to do rehabs I suggest dividing your cash into several down payments and then stage up sequential rehabs. That way the 6 month seasoning requirement, will only slow down your first project. You will incur bridge loan costs, but they will be offset by being able to work to scale. It will also allow you to buy construction materials in bulk giving you some negotiating power with suppliers. Rehab lenders will lend you 85 percent of the purchase price and 100 percent of the construction costs not to exceed 70-75 percent of ARV. If you are buying Tax sales or sheriff sales you should be aware that tax sales create issues with title insurance for up to one year after the sale to allow the redemption periods to expire. Sheriff sales likewise will require 6-12 months seasoning before using a higher value. Good luck

The seasoning period applies to private banks, Hard money lenders and government insured. So their is little or no way around it. When you take on bigger projects it will be less burdensome because the rehab. phase will be 3-6 months anyhow 

@Cameron Biggs The success of the BRRRR strategy is entirely dependent on the purchase price of the property and control of construction costs. Bigger pockets members are always asking where is the best place to BRRRR? The best place to BRRRR is the place where you have assembled a strong team and are familiar with the market pricing, contractors and costs of materials. It depends more on your fund o knowledge and people than it does the geographic location. Obviously, in areas where pricing has been recently depressed due to economic or other conditions, there is usually more opportunity. but without a strong team and enough knowledge you can end up with mediocre result anyhow. Good luck!

@Jeffrey Loftus

The road ahead depends on where you want to arrive. if you want to build a rental empire than cash out refi. and wait until the market corrects and buy at the new values. Refinance in a few years if rates moderate. If you want to own jus ta few properties sell and utilize IRS 1031 exchange and buy a nicer property that has a higher or faster rate of return. Good luck.