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    Wednesday, January 13, 2021

    Real Estate Investing: Hard money refi exit strategy

    Real Estate Investing: Hard money refi exit strategy


    Hard money refi exit strategy

    Posted: 12 Jan 2021 05:58 PM PST

    Hello everyone! I posted this to a facebook RE group but didn't get any responses and couldn't find any answers here from previous posts

    I am a rookie real estate investor looking to get started this year. I've been exploring my options and have come to the conclusion fix and flips or BRRRR will be my main focus. However because I was "self-employed" since the beginning of January 2020 I cannot get a traditional mortgage. This is relevant because I am wondering if I was to BRRRR a property; currently looking at a 4plex... What sorts of options would I have in order to refi out of a hard money loan?

    I was thinking a local credit union may do a portfolio loan 70-80LTV or a commercial loan then refi later when I can qualify but I'm not sure if there's any other options

    TIA!!

    submitted by /u/Ino_suke
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    Equity vs Cashflow

    Posted: 12 Jan 2021 08:52 AM PST

    Which is would be more beneficial in trying to acquire several properties sooner rather than later? (Not over night of course, but not a decade later)

    submitted by /u/Junior_S1
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    Should my first property purchase such as a condo be a rental property or a home?

    Posted: 12 Jan 2021 08:43 PM PST

    Hi, I am 25 years old and managed to save up $80,000 in 2020. I live in the Bay Area, California and make about $60k/yr after taxes. I wanted to move out of my parents house, because I feel like I've lived here for so long and need something new in my life and want to take on more responsibilities.

    I see that interest rates are really low right now on loans, and I can also use a VA loan for my down payment for a condo somewhere.

    I also have seen a video about how my first property should be a rental investment property and not my own home if I want to be financially successful. How true is this? Should I just keep saving money, make a down payment on a condominium, then rent it out before I save more money and buy another one as my own home?

    I am single so I am financially independent, and a lot of income that I make is from the stock market. I know I am young, but I really want to leave my parents house, I can at most wait another year but I really want to start my own independent life, but at the same time I don't want to be living paycheck to paycheck-- I want some type of investment plan that will help me be financially successful.

    Also is now a good time to purchase property ? Or will prices of housing drop soon?

    submitted by /u/ivegottheshits
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    What is the best way to use a Doctor’s loan/financing ability to scale in property ownership?

    Posted: 12 Jan 2021 02:43 PM PST

    Doctors/ dentists are very busy people LOL and most of them don't realize how much potential wealth can be built using their loan/financing ability.

    What do you think is the optimal strategy in scaling property ownership/rentals/profits as a doctor or by partnering with a doctor?

    submitted by /u/ninja1295
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    Open permits in Philadelphia

    Posted: 12 Jan 2021 08:26 PM PST

    Not sure if this is the right sub, so please direct me elsewhere if necessary.

    My BIL bought a typical philly row house that was gutted by the developer. The developer (who has done several projects in the area) skimped hardcore on my BILs house. They are having to redo the roof cause it was shoddy, there is no gas line to the hvac unit on the roof, dishwasher was not properly installed, etc etc. I was looking at the Philly licensing and inspections department website and somehow the mechanical permit is listed as completed (even without the gas line installed), yet there's a plumbing and "residential building permit" that are still listed as "issued" but not "completed" like the other permits.

    In New Jersey where I live, having permits closed out or "completed" is a must. In NJ, lawyers are required for real estate transactions to cross all these t's and dot all these i's, yet lawyers are not required in PA and my BIL bought the place as is, developer did not offer any concessions for anything.

    The question is, should he try and close out these permits, with risk of having to take out walls and such to get them approved, or ride it out and hope for the best? I think he could request an inspection and have both open permits finalized and close them out without issue...or on the other side, he may draw attention to his property and the open issues and thus end up paying wayyyy more to get everything resolved. Thoughts? I know this is very Philly specific!

    submitted by /u/jessendjames
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    Leverage or no leverage on first property?

    Posted: 12 Jan 2021 04:13 PM PST

    Thinking of investing in real estate and I'm having a hard time deciding wether or not to take out a mortgage to do it or not. If I have the funds to buy a property with cash, and my goal for investing is diversification/capital maintenance am I missing out on anything if I don't lever up?

    submitted by /u/busboy2018
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    BRRRR method question

    Posted: 12 Jan 2021 08:47 PM PST

    New investor here trying to understand the BRRRR method (also not very familiar with how cash out refinance works) since I've never gone through the process of buying a home. Here's an example I found:

    Buy: Purchased for $113,500 (20% down payment of $22,700), hard money loan: $90,800

    Renovate: Full House Rehab of $25,000 (closing fees, holding costs, repairs)

    All In: $138,500 ($47,700 personal funds- most of which were recycled from a prior BRRRR)

    -

    Rent: Initially Rented at $1180/mo. Currently Rented at $1300/mo.

    -

    Refinance: Appraised at $175,000, New Loan at $131,250 (75%)

    Received back $40,450 during cash out refinance

    Total cash in home: $7,250 (4% of appraised home value)

    Compared to putting down $35,000 (20%) to purchase a fully renovated home at $175k

    -

    Repeat!

    My understanding

    If the buyer had chosen to flip instead of BRRR, then they would have taken home $175,000 (appraisal) - $138,500 (all in) = $36,500. But... they have a $90,800 loan they need to pay back, so in this case flipping makes no sense (unless they paid everything with their own cash)?

    So they've decided to BRRR - their all in is $138,500. At this point, they're down that much ($47,700 from their bank, $90,800 in debt).

    Questions

    3 months later the house is appraised for $175,000. What does that change? They're still out of the ~$40k from their bank and ~$90k in debt (give and take rent payments/mortgage payments). How does a cash-out refinance improve their situation?

    What happens to the original loan of $90,800 when they take out this new loan? Where'd it go? Also, where did the $40,450 received back come from? Why would they receive anything back if they're just borrowing more money?

    submitted by /u/whtintheworld
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    Is it a good time to put a down payment on a house?

    Posted: 12 Jan 2021 10:07 PM PST

    I'm 26 and thought about putting a down payment on a house for about a year now. The plan is to rent it out and have it cover the mortgage plus a little. Goes without saying I'll need to do my due diligence when picking but is it a good time in the housing market?

    submitted by /u/Braumson
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    CoC return calculator?

    Posted: 12 Jan 2021 11:00 AM PST

    I really like the BiggerPockets one but you can only use it a few times without purchasing a membership.

    Anyone know where I can get a free one or an excel sheet?

    submitted by /u/_ezpzlemonsqueezy
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    Beginner Investor, want to increase the equity in my current home to pull out cash for next propery

    Posted: 12 Jan 2021 10:47 PM PST

    Recently bought home built in 1993 from parents for $300k on a 30 year fixed conventional loan at a 2.875%. The house appraised at $350k during the sell (a gift of equity was used as down payment). Recent comps sold in the area are around $380k-$410k. The comps have been somewhat updated (not enough in my opinion)

    My thought is to update my house that has not been touched since 1993 to increase my equity. I would like to put about $15k into this house (paint, flooring, redo bathrooms, mostly diy projects).Then take out the equity to get another property. Any thoughts?

    submitted by /u/MasterCALI
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    Looking for alternative investing ideas from standard duplex

    Posted: 12 Jan 2021 11:08 AM PST

    I have been keeping my eye out for duplexes in my area and they are few and far between. The ones that do come up are over priced and in very bad shape (not too much of a surprise in this market). I am not the favorite loan candidate as I am newly employed and have never had a mortgage before. I do however have a very large down payment and near perfect credit score, so that helps. I want to get my foot into investment properties but am sort of discouraged by the duplex option. What other options are there to put my money to work when rates are low?

    submitted by /u/Relevant-Asparagus-2
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    Seeking Advice on Potential Real Estate Moves

    Posted: 12 Jan 2021 04:14 PM PST

    I bought my first duplex in 2016 for $310K on an FHA loan @ 3.5% down. I lived in the building for two and a half years until December 2018 when I bought my second property and subsequently moved into it. Today, it is worth ~$440-$450K, and it would yield net proceeds of ~$130k after agent fees if I choose to sell. This does not include a HELOC, which I would pay down to ~$15k at the time of sale so let's say $115K net proceeds. I am tempted to sell this property for three reasons:

    1. To take advantage of the Section 121 exclusion since I've lived in it for two of the last five years

    2. To access the equity and restructure or expand my real estate portfolio via 1031 exchange

    But mostly

    1. The house is very old (~120 years). It is in decent condition but I foresee many large capital expenditures in the next few years, and there are some things about the building that really irritate me like very unprofessional plumbing & wiring, and ice dams in the winter. In terms of CapEx it will probably need new siding, new roof, new kitchen, and new windows within the next 5, maybe 10, years.

    Here's the catch, the duplex currently cashflows ~$1250/month after all expenses. However, I expect the CapEx to cost in the realm of $80-100k total which would kill my gains during the next 5-10 years.

    I'm seeking advice on what to do. My agent is very confident that I could sell the property quickly because there will be very little inventory this year, but this decision is proving more difficult than I had thought it would be. Would you sell now while the market is hot and take advantage of Section 121 exclusion? Or would you hold the property for the cashflow and anticipated appreciation, knowing that large expenses are on the horizon?

    Furthermore, whether I sell or not, I am looking to purchase at least one more property this year. I could take out equity in both properties via HELOC totaling ~$100k. Is it wise to finance an entire down payment with a HELOC?

    submitted by /u/YellowB00ts
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    Advice on Getting Tenant to Move for Close

    Posted: 12 Jan 2021 09:45 PM PST

    I am looking to buy a 3 unit house that has a really good return potential and am pretty motivated to getting it. The seller and I have come to an agreement on price and are both eager to move forward. However, there is a Section 8 tenant in one of the units that is holding this up. The seller has been trying to get rid of them but has been waiting for the state to relocate them for months now. Their lease was up in November. I will not agree to purchase it unless they are out due to the issues I would be taking on with them. (Issues not because they are section 8 necessarily but because they are destroying the apartment) Any advice on ways to get this tenant out so we can move forward with the deal?

    submitted by /u/just_kidding_idgaf
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    Attorney mailed EMD refund check to wrong address

    Posted: 12 Jan 2021 12:55 PM PST

    My wife and I recently backed out of a deal after the seller refused play ball regarding repairs and an outrageously low appraisal. We're now waiting for our earnest money deposit to be refunded back to us. Our attorney informed us on 12/29/20 that the seller would be mailing the check that day.

    Yesterday, we hadn't received it yet so we contacted our attorney, who informed us that she'd received the check and had sent it to us via mail to be delivered on 1/4/21 and provided a USPS tracking number. I checked the tracking and it had just been delivered to the wrong address earlier in the day (got sent to a whole different state).

    Obviously we're rather upset about this now. We contacted our attorney and asked if she can have the seller's attorney cancel the check and just wire us the money. She seemed resistant to the idea and wanted to contact the post office first. That might have worked if the check was still in transit but it had already been delivered. We called her back shortly thereafter and basically told her that she should contact the seller's attorney and get this sorted out.

    What are our options here? We called her today for an update but she did not pick up. We're getting extremely frustrated here. What would you do?

    submitted by /u/AmbrosiusAurelianus
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    Refinancing home assistance

    Posted: 12 Jan 2021 08:07 PM PST

    Hello, I currently am on a 30 year fixed mortgage with a fha loan. My apr is 3.25% and I have about 82% of initial loan left to pay.

    What I'm looking to do is get rid of MPI (mortgage insurance) while also taking advantage of the interest rates and also trying to pay little to nothing to refinance.

    Given my current fha loan agreement, I am unable to get rid of MPI (wells fargo, sent me a letter stating so)

    What should I do to get a loan/refinance to get best rates. Any and all tips are welcome. Thank you in advance.

    submitted by /u/HKS247
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    Realty groups

    Posted: 12 Jan 2021 08:00 PM PST

    Hey all,

    I'm a newbie with investing (learning via podcasts and videos). I've seen local realty groups that mention "investing" and they offer consultations, strategies, etc. but has anyone utilized them before? I don't know how beneficial they are and if it's worth it. I personally prefer following strategies from bigger pockets and learning from others but if someone can share experience with realty groups, please comment. Thank you

    submitted by /u/dhamesdudystain
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    3.5% refi rate on a rental-good or bad??

    Posted: 12 Jan 2021 04:11 PM PST

    Is 3.5% refi rate on a rental property a good rate? This is for another 30 years loan. The closing cost is between $2k to $3k.

    submitted by /u/DeliciousUni
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    Asset-based lender in Alabama or lends in Alabama

    Posted: 12 Jan 2021 04:06 PM PST

    Hi, all, as the title says, I'm looking for a lender in AL that lends based on a performing asset.

    Background: we've got an offer out for a property and it looks like current owner is leaning towards yes. Our financing strategy was assumed to be a hard money then refi and we'd start working on the refi lender as soon as we locked a property down but this property will likely not need many repairs so we're now looking for a traditional loan 30yr amort but asset-based.

    submitted by /u/TGFid
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    Anybody able to explain the process of buying land on hill and building on it to completion?

    Posted: 12 Jan 2021 10:56 AM PST

    I live in Los Angeles and see hills for sale. I've heard the cost is a million before even starting the build itself.

    submitted by /u/VenturaBoulevard
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    Flipper turned Renter

    Posted: 12 Jan 2021 03:21 PM PST

    I think that im over thinking this but im a flipper moving to the rental side of the house. Im in a dual partnership LLC currently. When we flip our houses we typically get a construction loan in the LLCs name. Moving to rentals we will need to get a 30 year loan with im assuming 20% down (i know the lender will set this). Can we still use our LLC as pass through for the most part? Anything different about this loan from a construction to a normal 30 year residential?

    We plan on using a PM to handle the property, do we just split our cut (cash flow/ profit) from there?

    Any other words of wisdom about this process? Most of the houses we're looking at arent really BRRR type properties, but I understand that process.

    submitted by /u/crispybrojangle
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    How to structure a deal with partners when I am bringing the capital but can not qualify for financing?

    Posted: 12 Jan 2021 02:37 PM PST

    How would you structure a deal if you have private lenders with several hundred thousand dollars but you can't qualify for a mortgage/financing due to lack of income history? Can you find another partner with the sole purpose of using their ability to qualify for financing?

    Does the BRRRR strategy still work in this case? How would the profit most likely be split in the partnership? Would it be possible to transfer the mortgage into your name (if agreed upon by partner) once you qualify?

    submitted by /u/ninja1295
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    Who thinks interest rates are going up?

    Posted: 12 Jan 2021 06:27 AM PST

    Trying to decide whether to do a CEMA loan or not (NY). It can take up to 4 months longer to close on a CEMA loan. I would save 11k in refi closing costs (paying 7k closing costs vs 18k closing costs). However, I can't lock the rate until CEMA loan is about to close and if it takes up to 4 months, who knows what the rate will be in May. Currently I can get 2.75%. My breakeven on 18k closing costs at 2.75% is 4 years which i can do.

    Just wanted some advice. Thanks!

    submitted by /u/lightning4417
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    Looking for best advice on getting into RE

    Posted: 12 Jan 2021 02:18 PM PST

    Just moved to El Paso, TX. Have been wanting to quit my online job for a dream career in real estate investing. Have about $40k to invest.

    I've been going to local real estate meetings, watching videos, learning as much as I can. I want to get my feet wet and purchase my first property, However, I feel like I can't offer much for a partner. I've heard that partnering with someone seasoned is a good way to start.

    What is the best way to approach one of the few people I've met here with a partnership deal? Is it as simple as "hey I would like to put up $10K and partner with you on your next deal"?

    Please let me know if there's a better way to phrase this or if I'd need a different amount to show I'm committed.

    submitted by /u/lysanderspooner_
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    What are the best ways to improve your properties value in the eyes of the banks?

    Posted: 12 Jan 2021 10:01 AM PST

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