All Forum Posts by: Tamara Deering

Generate leads. Once you have leads in hand you can approach someone with a potential deal.  See if they will pay you a finders fee or if you can work the deal with them to get experience.  For most of us, time is the one thing we don't have, if you can't do something that will save time or be of value to the person you are approaching they will have very little interest in spending much time with you.  

If your goal is to earn your living selling real estate I would strongly recommend spending at least your first year with a conventional brokerage.  You will get educational opportunities, leads and experience that are difficult to replicate any other way.  I would look for a brokerage that has a track record working with investors since you seem to have an interest in Real Estate Investment.  

I have worked with buyers who have used a 203K loan. There are several good lenders in Texas who can underwrite a 203K. You need to meet minimum requirements to use them, you must be an owner occupant, you need about 3.5% down payment. You must use a licensed contractor and the contractor must only charge for the work on the application, you can not change your mind about the repairs without submitting a change request. Any change orders must be paid for out of pocket, the contingency can only apply to line items in the budget. There are some items that are not allowed in a 203k, swimming pools come to mind. There are two types of 203k, the streamline and the standard. If you apply for the standard 203k you will need to have a HUD inspector inspect the repairs.

If you meet the requirements this is a great way to finance a live-in flip or a house hack.  

After the fires in my area I worked with a smoke remediation contractor to clean a clients house.  We replaced all of the fiberglass insulation then let the remediation company do their work.  The clients still live in their house and are happy with the results but a fire is a different animal than long term nicotine exposure.  If it were drywall I would recommend a really good primer like Kilz or Zinsser oil based primer and two coats of paint.  I would also prime the subfloor when I removed the carpets.  I think you should base your offer on this being a gut because if none of the options you are considering works that is what you will have to do.

I have a spreadsheet that I borrowed (maybe stole) from someone about 10 years ago.  It lists the price per square foot of the common repairs/upgrades.  All I do is put in the square footage of the house in each of the appropriate lines and the spreadsheet adds it up.  Over the years I've added some lines like foundation repair to the spreadsheet and I track actual bids/costs with the estimates and tweak anything that is off.  If you want to verify your numbers with an independent opinion when you are starting out or something more detailed than some of the options offered here you can look into house hacker which has a free trial and then will let you either buy a subscription or pay by the month or by the estimate.

I have a HELOC on my home, it works for me but knowing what I know now, I probably would have done something different. That is because the laws in Texas are different on HELOC's than they are in WA where I was from originally. Research your options for refinancing a HELOC before you go that route. What I like about the HELOC is that it functions as a line of credit that you can use as needed and payback but I own my home outright and the HELOC is the only debt on the house. I would hate to be in a situation where I had two notes that both had liens on my property if something horrible happened like I got hurt and couldn't work or I lost my job.

Based on the scenario you presented I'd do a cash out refi but since I know absolutely nothing about you or your situation I wouldn't give my advice much credence.  Run the numbers, read the fine print and decide what will work best for you in your situation based on your risk tolerance.

If your numbers are accurate I don't see why you would buy this property. You are looking at longer than 10 year ROI and your bleeding cash each month.

@Jason Fitzwater

 We use a standard deed of trust and real estate lien to secure the asset, there are several other forms that we also have you sign.  Our attorney prepares the closing document package and a title company handles the closing. We typically have you fill out a loan application with information on both you and the property, if everything looks good after the soft credit pull, initial property research and background check we issue what we call a term sheet.  The term sheet lists the property address, amount of the loan, interest rate, origination fee and monthly payments, it also spells out the terms of the contract.  Once you sign that we go forward with the loan.  We generally require an appraisal, a survey and builder's risk or vacant dwelling insurance before we fund the loan.

All you can do is find another lender.  See if there are any in the bigger pockets community that work the area and go from there. You are going to have to move quickly though, the other option is see if they have cash.  Maybe you can forego some of your fee or use it to partner in the deal with your buyers.

@Jamie Hailey

That's great so that means you have two things going for you.  1. You may be able to tap into the equity of your current property to help with some of the costs of purchasing your next property. 2. You have experience with rehabs and contractors you can use to help with your first project.  

The best way that I have found to help with my nerves, and I'm nervous every time by the way, is research.  I have a spreadsheet that I use that gives me all of the costs, it includes soft costs, construction costs, the cost of the loan, holding costs, everything involved in the purchase, rehab and sale of the property. This gives me confidence that I'm not paying too much.  Then I go over what has sold in the area, finally I tour my competition.  What is on the market right now that I would be competing against if I put my house on the market today.  If all of those boxes look good, you've done everything you can and you just need to act.

I know it is scary but it's worth it in the end.