All Forum Posts by: Todd Pultz

@Anthony Jones so your looking for funding on another property and not the one your living in correct? In that case there are a lot of HML's that will fund based on the deal. Your number of successful exits affect your interest rate and loan amount. They all have their own formula as to what works, but it's not hard to get a HML at 80 LTP and 100 rehab. They usually have a LTV total amount and typically want to find deals 60k and above and sometimes more.

Groundfloor advertises to new investors depending on the state your in, but you can throw a rock and hit a HML, just research. Check out LIMA Capital as they have a single close product for flip to refinance rental.

@James Bridges I might be a little confused on what your wanting you do? You have 3 partners and you want to do a side deal with just 1 of them?

@John Warren we have the same thing here with applicants and we will get 20-30 inquiries with a few days of posting. 1 bedrooms are no brainers, we have a waiting list for them. However none of them will have a 600 credit score lol!

@Dominique Mitchell good luck to you on this one if you do it! I would get 3-4 bids from contractors if your going to go through with this deal.

Besides zoning you want to check to see if your going to be required to bring anything up to code. A big ticket item might be a fire suppression system due to the commercial nature of the building. That could easily be 100k. Just really check zoning and code on this one so you do not get burned.

Let us know what you do

@Amber Schreck I agree with @John Morgan, if the property will cash flow after Refinance and you have 0 money in the deal at that point, do it! Use the cash out to repeat the cycle although I would think about using leverage to begin with so you don’t have all cash in next time.

@Dominique Mitchell I don’t like “my contractor thinks it will be 300-400k”!!!!!!! That’s too big of a spread. I would make him get exact and have contingency, but I would also set deadlines on completion and penalties if he fails to meet deadlines. You can not play around with this large rehab.

If this is already a full rehab, would it work to turn it into Condos? Would that increase your value? Not sure as I don’t know what condos sell for there, but a condo conversion is always an option

@Dominique Mitchell I have a completely different opinion on the hard money lender. We use them often and frequently and on full rehabs, but only if we can have rent ready in under 6 months. If that’s the case we can get fully rented in less than 2 months and be able to refi out at 9-10 months.

Our hard money guys will do 90% LTP and 100% rehab cost. They put rehab in escrow until we take out.

In your scenario I do not know how many of what unit you have and what market rent is, but I think your numbers are low no matter what. So check your Fair Market Rents. However, for sake of debate I took the average of 800 and 500 which is 650. I used that as the rent across 16 units to get your annual gross. Then we account for 10% vacancy and considering the property is fully rehabbed, 35% expenses should be more than enough leaving you with roughly $73,000 NOI. Using a 10cap we would value your property at around $730,000. Now if you refi at 75% you would be able to pull out $547,000 or somewhere around there and take out your $465,000 all in number. Thus having 0 cash in the deal and pocketing 70-80k for reserves or to use on another property.

Remember, your 465k all in, and net operating income is 73k, so your operating around 15-16cap, which is pretty darn good.

I would do this deal all day long, but you better be sure on the numbers and have the crews ready to roll. If it needs full gut, I would ensure it still meets zoning. A lot of buildings sit vacant for awhile in a zone that was changed at some point to residential zone not allowing high density multi-family. Due to the long vacancy the lose their non-conforming condition and you have to file appeals in attempts to get it, so double check this before you jump down the hole.

@Adrian Fajardo you have to hustle and drive for dollars or have someone doing it. You won't find too many on MLS.

@Matt Jennissen congrats man on being this far along! A lot of people do not have the courage to jump in like you have! #1 keep the hustle and be consistent and intentional with everything you do in real estate. I wrote a quad strategy on another thread that quite a few seemed to like, so I’ll sum it up, but reach out if you want details. I built my portfolio starting like this. Keep in mind, I have no idea how much capital you have to work with, but we can be creative with that!! Find the deal, then find the funds!

Simple strategy if you had 100k to invest that takes Hustle and finding off market deals usually. I did and still do drive for dollars! Every single day........several areas in Midwest you can get into quads in C class neighborhoods 80-90 k and sometimes cheaper. You can get these to appraise at 120k easy as long as rents are where they need to be. As long as you get all in at 90k or below you can refi after 6 months at 75-80% which means you pull 90k out. That 90k pays off your loan of roughly 72k and down payment of 18k. These are rounded numbers, but every dollar below 90k is now money you put in your account on the cash out refi. Now you have 0 money in the deal on a fully amortized property cash flowing around 1k-1400 per month. If you had 100k you could easily do 4 of these with that cash. Once all are refinanced, you have your original 100k and you rinse and repeat! 8-9 of these quads easily cash flows 10k or close to it. You could also partner with capital partners to fund your gap money on down payments and have 0 cash of yours in, which is what we do.

We use this brrr strategy with forced appreciation on larger units now, but I started and built my initial portfolio on quads and tris.

Now if you don’t have capital, hustle to find the mom and pop owners and work owner finance deals!

Lots of ways to skin a cat and this is just 1

Good luck man

@John Nachtigall good post!

On point 1 though, I’m not sure that is a negative for these type of properties. I have a dm great friend that drove a Honda Civic from 2005 until just last month, it had about 150k mikes on it. He upgraded to brand new Chevrolet Tahoe. He did not upgrade because he didn’t like the Civic, it was just time. He will tell you that Honda Civic was the best car he ever had and he loved it!

I think that’s more of the story with successful C owners. My friend will never go back to the 2005 Honda, but he will never have a negative word to say about it because it did exactly what it was supposed to do for him!

It takes a special type of landlord to be successful in this space being discussed, but I buy properties all the time from mom and pop owners ready to retire who have had their C properties or D properties for 20, 30 or even 40 years! I know many that have stayed in this space for a long time. I’ve never thought about selling any of ours because they are cash cows! Only exception was my first quad I sold 2 years ago to fund my wife’s inground pool, lol!

To be successful, I do think you need to be local or have a phenomenal PM that you trust.

We also have B properties and a couple A’s, but we will continue to buy C all day long at the right price!