All Forum Posts by: Taft Love

@Brent Coombs

I've modeled out the cash flow on each of these (using mostly conservative numbers) and it looks pretty good. Aiming for $200 per door per month. I think I've done a poor job of explaining myself on the 5%.

I can do a cash-out refinance for 75% LTV. I am willing to spend up to 80% of LTV on purchase, rehab, and other costs. That's what I mean by "leave 5% in the deal". I hope I explained it better that time.

@Jim Goebel Thanks for the input!

1) You're right that managing six in a year is an unrealistic goal. I hope to be there in a year or two. Always thinking ahead :-).

2) What I meant by leaving $5k in a project was that I am willing to cash out $5k less than what I put in. So on a $100k ARV project, if the bank's max LTV is 75%, I'm willing to spend up to 80% of the ARV when I analyze the deal (though that's not ideal). The market is super competitive now and it's hard currently to find deals that pencil as a BRRRR without leaving a little cash in at the end.

3) Most of the deals I'm looking at are foreclosures. I've yet to find a house with the right price that is also eligible for any rehab loan other than FHA 203k. I've already used FHA and will also lose deals to other investors because every one is in multiple offers.

4) I could go this route, but it's not ideal for two reasons. It ties up all of my cash, which limits my ability to pick up more deals (even with conventional financing) and it means that the next project could take a lot longer.

5) Not sure I understand the question. Does product mean the house or the loan instrument?

Oh wow, that's a really good plan. I didn't realize that was an option. I'll definitely ask around and find out if similar options exist in my market!

Hi all,

Happy New Years!

I have a plan for financing properties and want to run it by all of you. Since I'm still learning my way around funding deals, I'd love to hear if I've missed anything. Are there any details that would make this impossible?

While I welcome opinions on whether or not I'm going about this the "right" way, what I'm hoping to learn is whether it's possible and if there are any rules of which I'm not aware that might sneak up on me and ruin my ability to fund deals.

- I'm buying SFR that will cost around $100k all-in. Planning to BRRRR, taking my cash back out. However, my market is tight and I'm willing to leave $5k in each deal.

- I've saved up around $60k in cash. This is enough to start a couple of deals, but I'll run out of cash pretty quickly.

- In order to make sure that doesn't happen, I've worked out a deal to get access to a low-interested $100k (~7%) line of credit from a former business partner who wants to put his money to work.

- My plan is to start by using my own cash to get into deals. I'll put 20% down on each deal, leveraging hard money. A deal "pencils" if I can spend less than 80% of ARV while factoring in hard money rates.

- Every bank I've talked to has 6-month seasoning requirements for cash-out refinances—even for in-house loans. This means I can do 3 at a time using my own money. By the time the first 3 are done, I should be able to save up an amount equal to what I left in each deal. So I should be able to do 3 at a time forever. That means ~6 per year.

- If I decide to do more than 3 at a time, I'll need more cash. If that happens, I'll tap into the LOC. I'm planning to use the LOC for down payments and pay interest out of pocket.

So, what have I not thought of? Please let me know why this won't work.

Awesome. Thanks for the info!

@Andrew Postell This is immensely helpful. It's good to know that seasoning refers to the deed and not a specific loan.

This info has helped me put together a list of questions to start asking banks. Here's what I've got so far. I'd love to hear anything you think I should add.

- Do you work with investors? If so, what strategies do you usually work with?

- What is your maximum LTV for mortgages and refinances?

- What is your minimum loan for mortgages and refinances?

- Do you have any overlays that apply to LTV or seasoning?

- Are there any other overlays that might be important for me to know as an investor?

- What seasoning requirements do you have for non-conforming loans?

- How do you decide whether to write non-conforming loans to investors?

I'm sure there are plenty of important things I'm not thinking about. If you (or anyone) has ideas for what to ask lenders, I'd appreciate. I'm sure others would get a lot out of that, too.

I think I did a poor job of asking the question. It is my understanding that one of the primary drivers of increased appraisal value for multi-family properties is rent increases. Comps are weighted differently for commercial than for sfr.

If I buy a duplex or triplex and increase the rent (without making any other changes), will that have a positive effect on the appraised value? In other words, is is possible to force appreciation by increasing the revenue of a small mfr (2-4 units)?

I hear about financing out of mortgages and loans often. However, what I don't know is when seasoning requirements generally apply. While I realize that non-conforming loans can choose their own restrictions here, let's talk about what's most common.

Under what circumstances do the seasoning rules apply? It seems clear that we have to carry conventional and FHA loans for six months prior to refinancing. What about cash deals, private lenders, or hard money?

I guess the fundamental question here is: do the seasoning requirements apply based on the deed, regardless of how the deal was funded, or is it based on the instrument?

@Nghi Le Thanks for the info. I'll DM for more details!