All Forum Posts by: Frankie Woods

Outstanding accomplishment!  Keep it up!

@Chester Straley Conventional banks will generally only do an appraisal and title search. Hard money lenders focus a lot more on the property itself as far as current condition, rehab estimate, after repair value (ARV), etc. So yes, he was probably using hard money or private money (e.g., family or friends).

REIA stands for Real Estate Investment Association. It's basically real estate meetups in your local area.

Like others have stated, keep contributing up to the match.  It's free money and a guaranteed return.  Additionally, you can borrow up to 50% or $50k (whichever is the smaller amount) from your 401k without a penalty.  You will have to pay an interest rate (currently about 3%), but you are paying yourself.  I'm in the process of doing this myself for a downpayment with a conventional loan.  

For appraisals, the zoning doesn't matter significantly. If the properties arer less than 5 units, they will comp other properties that are similar in size, bed/baths, and condition. So in your case, the appraisal will be similar in scope to a primary residence. They will look at other SFRs in the area to come up with an ARV. If your proeprty is in good shape, and the appraisor can't find adequate comps, it's going to be hard for you to know ahead of time how it will come back. However, in my experience in STL, the appraisals have been very conservative. And no, unless you are getting a commercial building appraisal, the appraisors generally do not care how the property is being used.

I've used hard money once.  It was a simply process.  They focus more on the property than the borrower.  

My lender charged 14% interest only for one year with 5 points.  I paid approximately $7k in fees for a $65k loan.  Fairly expensive, but a realtively easy / quick way to nail down a great property.  

I would ask individuals at your local REIA or post in the "Ohio" forum. You can also call real estate professionals in your area (e.g., realtors, brokers, contractors, property managers" and ask for recommendations.

Happy Hunting!

You can think of a HELOC as a credit card with exceptional interest rates. I think the risk of using it comes down to your time horizon (due to the variable nature of the product), and the ROI using the interest you are paying as part of the calculation.

If you are using the HELOC to BRRRR or Flip, I think it is an excellent way to get started because your payback time horizon is relatively short. I wouldn't expect interest rates to raise more than 2% per year and there is probably some sort of max increase clause in your product. Banks' terms will vary.

Additionally, I would "season" the money needed from your HELOC in your checking account for at least 2 months if you want to get a conventional loan and look at it as part of your holding costs.

"Influence is power."  

I take that to mean: network your tail off and get involved in your city politics / planning to demonstrate your knowledge and help guide critical decisions in your community.

@John Warren stated, this is fairly easy as long as your credit and DTI are reasonable. Just remember that HELOCs are adjustable, and with the current fiscal environment, rates are likely to continue to raise in the future. With that being said, I am also going to utilize my HELOC to purchase some more properties.

Congrats on a job well done!

Just find a great deal thru hard work and grinding.  If you do this, the current market cycle makes no difference.  The money will chase you if you do it right.