All Forum Posts by: Steven Goldman

Rehab lenders want to lend you 70-85 percent of the purchase price and 100 percent of the rehab costs, not to exceed 70 percent of the ARV. So a private HML is actually an impediment to making this deal work. You can have a private capital contributor so long as they are not taking a mortgage to secure their loan. Right now many of the rehab. lenders will not lend to someone without experience due to the unstable market. So as a recap. Depending on your credit score and experience, you need 15 to 20 percent of the purchase price as well as, lenders fees and, closing costs. You will be able to finance 100 percent of the rehab costs. This is a a bridge loan and you will either flip or refinance when the rehab. is complete.

Rather than try to find money that fits into your paradigm you should fit your resources into the rules of this lending space. Good luck.

@Stephanie P. Actually we find many veteran borrowers do a DSCR loan because of the speed of execution. They also prefer 30 year fixed terms if they are planning to hold for an extended period of time. Obviously, the banks shorter term and lower rate means less interest paid over the life of the loan. Those of us who remember super high rates, understand why older seasoned investors, with multiple doors, prefer fixed rate financing. In fact, we are approaching just such an an economic cycle.

In my experience as an investor and broker there are two ways to go about raising capital for real estate investing. The channel you use depends on what you are trying to accomplish. if you are looking to raise capital to acquire properties you can seek out private money which may involve taking in a capital partner or, using bridge funding from a private lender. The advantage to this choice is private lenders generally will not charge origination fees and points rather they will be interested in stable interest. The disadvantage is you may need to give up a piece of the ownership or refinance out of a bridge loan.

The second option is to find DSCR banks or hard money lenders. Believe it or not their are some banks that charge 1/2 or 1 percent and will lend up to 75 percent on cash outs or 80 percent on purchases. The issue with the banks or, credit unions, is speed of execution. As a broker I have written deals both ways. Appraisals are a necessary evil of the business and unless yo have a very trusting private lender you are going to need to get the property appraised. It is especially important if you are rehabbing and want to get a realistic estimate of the ARV.

I hope something I said had some value. What I have learned is that the costs should not impede you if you are operating effectively and to scale. Our best borrowers, who have numerous doors, are not concerned about paying points or fees beyond their reasonableness. They find deals which support the costs and fees and, keep moving forward.

@Gurjot Grewal 

Although I am not from Columbus I have spent a great deal of time in Columbus I think it is a good place to acquire properties. I would start by having your realtor send you listings of properties which you can review and select some properties that you find interesting. I would only go to Columbus if your  research indicated that you have targeted specific properties or areas in advance. Some of the best bargains are in the suburbs of Columbus where the gentrification has not caused too great an appreciation in prices.

Make sure you are familiar with school districts if your are buying single families that would have renters or buyer's with children. You should also schedule meetings with contractors so that you can assess the contractors who might have been recommended to you. Finally, schedule a meeting with the property management team. I have found than when working outside my own turf in Philly it pays to develop personal relationships with your team members. It pays off in the long run. If you can find a meetup during the time your visit is scheduled, I would attend a REI or other investor meeting and pick the brains of the attendees. Investors are always eager to share what they know with you. Good luck.

I agree with both of these comments. But with the amount of mold I see in this picture I would be very leery of buying this property. If that much is exposed what is underneath? It looks to me like a long neglected problem. Good luck.

Hi Joe, while Elliot Elias's answer was short and sweet it was also spot on. I have been in real estate since 1981. There have been good and bad markets. The savvy investor continues despite the challenges in a bad interest rate or value market. It is all in the buying. You must be very discriminating and only buy devalued properties. You must strictly control your rehab. costs. You need to factor in a bigger spread between total acquisition and, rehab. costs and the ARV. That is where the buying comes in. You need the spread to buffer against rising costs of materials and interest rates.

Here s the good news. In a challenging market contractors and subs are willing to work at smaller profit margins to keep their crews busy. Homeowners are willing to accept less for their properties. Material costs will recede when demand falls off. It's all how you look at it. Our strongest investors are ramping up for the down market in anticipation of buying properties at lower values. They are refinancing and creating a cash fund to work from.

Finally, you may want to  only work in markets that you have experience or a strong connection with eliminating the possibility that you operate on faulty or old outdated information. If you are going to buy further from home, you need to have a strong team including a great real estate agent, crafty, experienced mortgage specialist and a thrifty property manager. The same ingredients that apply to a good market apply to a bad market. Happy hunting!

Thanks Mike Kinsella are you related to Ray Kinsella?  *

*(Field of dreams reference for you youngsters)

Sorry for the confusion. No ones perfect. Certainly not I.

I agree. It is because even tougher the rent iscoming in they discount it in calculating DTI. Most conventional lenders also worry about the age of your debts. They prefer to see you service it for a period of time before extending additional credit.Good luck!🤞