All Forum Posts by: Timothy Howdeshell

If I understand your issue correctly, you have equity in your home which, after selling and converting to cash in the bank, you would use to purchase another property in cash. However, you will not be able to sell your home in time to get the cash to use for the property. 

You actually have a lot of options here, and this is a relatively good position to be in! Most importantly, you need to find out from the off-market seller what their needs are. That will define and guide your approach.

If they need all of the money immediately (moving out of the country and buying a yacht or something), then you can simply get a short term loan (bridge loan). Many lenders will be able to help you close that deal, and you're looking at paying 1-3% in points and potentially a month or two of payments. Then you pay off the loan with proceeds from your home sale. 

If they don't need a huge chunk of cash right up front, then simply put the home under contract with a contingency based on the sale of your home. Set the close to a reasonable date wherein you could sell your home. 

If the date to sell is too far out, ask the seller if they would carry the loan for a few months. Then buy the house, and pay the seller on the loan for a few months. Once your house sells, pay off the loan all at once. This is great for the seller as they get a little more interest. You can negotiate the down payment. Ensure that you don't have a prepayment penalty on the contract. 

At the end of the day, it all comes down to the seller's needs, and what they are willing to accept. 

Best of luck!

I think real estate investors, who by their nature seem to prefer control and self-reliance/education (hence the aversion to stock investing commonly seen), are not likely to recommend financial advisers. 

I'll also say that my girlfriend works in that industry. She is not an adviser, but rather helps sell products to advisers, to sell to you! They make stupid money (300k is the minimum for these guys). So the advice to look for a fee only adviser is well placed! Many of these advisers do not have fiduciary responsibility to their clients and take a lot off the top. 

It seems like you've already met with an adviser, so I would say now you know where your knowledge gaps lie. Spend an afternoon, learn simple investing (low cost indexing is popular), money management, budgeting system, credit scoring and banking options. Unless you have lots of money, it is hard to justify the cost in my opinion.

1) Got a STEM college degree, and a good 9-5 job directly afterwards

2) Saved aggressively while keeping expenses low and paying minimums on loans (only had student debt)

3) Purchased a house with value add potential

4) House hacked and rehabbed the property while living there for 2 years

5) Pulled HELOC on the equity

6) Found equity and money partners for a flipping business

7) Networked for deals and support

You could simply gift it to me :-D (surprised no one else made that HILARIOUS joke!). 

Seriously though, congrats! 100k is a great first deal, and should give you a lot of room to operate. If you're wanting acquire more cash flowing real estate, I agree with @Seth Ferguson. It seems that BRRRR investing, with delayed financing so that you don't need to wait 6 months to refinance, may really be a great strategy.

Depending on how much time you have/want to spend on this, you may want to do your own marketing for deals. Take 20k and spread it out over the course of the next year in marketing. If you get too many deals, you can wholesale them to other investors and recoup some of your marketing costs. Then, you can simply keep the best deals for yourself to do BRRRR investing, or fix-n-flips. If you run out of money, find some private money to take them down.

This is the strategy that I'm working currently; the difference being that I don't have 100k sitting around, and so am fixing and flipping to generate the startup capital.

Best of luck!

@Tim Emery great Tim! I'll see you there tomorrow. Thanks.

By the way, wanted to also say thanks for putting out the podcast. I've really been enjoying the market updates, and local stories. 

To add onto @Caleb Coats, if you choose to go this route, use an online savings route. It will put another barrier to removal (takes a few days up to a week for ACH transfers between institutions). It will also have higher interest rates. My US Bank savings is 0.01% I think?! While my Synchrony online savings account has a variable interest rate that started at 1.85% 6 months ago, and is now up to 2.25% annually I believe. As the feds raise interest rates, this will become even more attractive. 

Hi Tim,

Great name! I'm in the Denver area and am looking for a flip. You mentioned that you get access to a lot of properties. I'm also looking for a more focused investor group to join, and would love to talk to you about ICOR. Please let me know if and when you're available for a quick call.

Congrats on your success with this one!

I'm not sure what this method refers to. Can you please expand on the stack method?

Also, whatever it is, I'm sure it works. But not everywhere, all the time, and for everyone. There are countless methods/strategies. It is all about identifying which one(s) you can get to a satisfactory level of success with initially, and then expand from there. That success is also something you have to define for yourself. 

My first thought is that I'm not sure why you need 10% down. For an FHA loan, 3.5% is the minimum. That is one of the main benefits. If you are going to put more down, then I would look to get something more conventional in order to avoid MIP, and the MIP premium when closing the loan.

My next thought is that you wont need to wait a year to get 3.5% down for the loan as that is only 5-7k + 2k in closing costs. So for the 150k property, you only need about 7k. Be wary of overleveraging and over-extending on your personal financial position. 

Also consider, that even if you put 10% down, if the markets turn and the home decreases in value only slightly, you may be underwater quickly. It costs a lot to sell a home, so you cannot recoup all of your equity usually. Therefore, I'd look for a "value-add" property so that you can force some equity via improvements. It could be as simple as paint the outside, landscape, paint inside, and new carpets (aka. a cosmetic/lipstick rehab), but that would provide some cushion as you get started. 

Finally, I'm not clear. Do you just have part time jobs? Keep in mind that lenders will want to see a suitable debt-to-income (<40%) in order to qualify for the loans. They also want to know that the income is "stable"/not likely to decrease significantly. 

Overall, it sounds like the start of a good plan. I would just be conservative at the top of the market, and really make sure that your personal financial situation is nicely buttoned up before leveraging highly. 

I am still very early in my investing career (1 rental property), but I am looking at making a strategy change in 2019. My plan was to simply save money from the 9-5 (non-real estate), use as down-payment for house hacks. I live in the Denver market, and finding a good deal here has been tough. I've also set up a partnership to do some fix-n-flip projects, but again, finding a good deal has prevented moving forward. We have the financing set up, but no deals coming in.

Therefore, I've spent Dec. getting my license to increase margins on potential fix/flip deals in Denver (wrap commissions on sales into the projects to increase margins). I'm looking to house-hack/BRRRR my next primary in Colorado Springs this year (secondary market to Denver).

The most major shift is going to be looking for deals by marketing directly to sellers. Aka., cut out the middleman wholesaler. I only need one deal for the fix/flip at this point. Due to the toppy-ness of the market, trying to find ways to increase margins on deals here in the expensive Denver market!