A web video blog about lifestyle design, passive income, real estate, vending machines, used cars, and eustress challenges. This episode is all about our team.
Runtime: 31:15
A quick rundown of the episode:
- Welcome to Episode 25.
- We watch, live, our 3 cars at auction.
- We introduce and have a conversation with Kelley Shouse, one of our contractors.
- We take a tour of a renovated home that was first seen in Episode 20.
- Introduction of the ‘Ren-lympics.’
- Chalk Talk – We need to be on The Fantasy Factory with Rob Dyrdek.
- Wrap-Up – A team of All-stars is essential! Really!
{ 11 comments… read them below or add one }
In phoenix I recommend Farnsworth Construction.
Question for Kelly: The Red Sox? Really?
Kudos to you guys for systemitizing an investment (buying/renting homes) that can be a huge headache. I don’t want to own rental properties again (the pain is still too fresh), but if I did, I would follow your advice. Seriously good stuff.
So far, this used car business doesn’t look too hard. One thing I didn’t understand though is how you make money selling cars at auction for less than you paid for them. Do you make it up in volume? HA! Just kidding, of course. Still lots to learn.
Well see, what had happened was…
Decided to comment via video today….check it out
http://www.youtube.com/watch?v=FwyOrYs85QM
Is that a whiteboard behind you? I think it is…Congrats on the free flight…let us know, where you want to go…
You should try to get rid of those cars on Craigslist. It’ll cost you nothing, and CL buyers are very motivated.
Oh where oh where are the Ren Men in the comments? You must be crushing it.
I want to throw out another question for your attention when you have time to answer it.
What is the lending arrangement you have established with your lender?
My assumption is that they have agreed to lend you some temporary money (line of credit or temp loan at a higher rate) to purchase and rehab properites.
Once the property is rehab is complete, they then have an appraisal done and lend you money (a permanent loan) on 80% of the appraised value. At that time you would incur the closing costs, etc. Therefore you have no money tied up and also take a little back for your overhead, etc. from the loan.
Is that accurate? Sweet arrangement if so and if you can get it but I have had trouble finding a local lender that will do that even with cash in the bank and a great credit history. Any advice?
@ Todd – I don’t know all the specifics of your situation, but some common ways to scale up when buying your first 10 properties include the following:
1) FHA 203K loan
2) Construction Loan (rare these days, but still possible.)
3) Hard money lenders (expensive, but hopefully short-term.)
4) Partner with private investors who have cash and will share profits with you.
5) Conventional financing combined with a HELOC or a Home Equity Loan on your primary residence to fund the down payment and renovation.
Have you pursued all of these options?
@JKC
Thank you for the reply. I have explored some of those options. As far as I can tell the 203k program is not available to investors. This is from HUD:http://www.hud.gov/offices/hsg/sfh/203k/faqs203k.cfm
“In October, 1996, the Department placed a moratorium on investor participation in the 203(k) Rehabilitation Mortgage Program.”
Construction loans as you indicated are pretty hard to find.
Hard money will work but the high rate makes its undesirable.
Private money is great if one can turn it into a permanent loan after the repairs are done. I have not tried to raise private money or use a heloc but those would be options. The ren men indicated there were locating with a local bank to provide all of their lending so I was seeking a similiar arrangement. Thank you.
… as you described in your earlier comment, usually you will be refinancing after the renovations are complete. So, hopefully your ARV (After Renovation Value) is at least 20% higher than your costs. Then when you pull out the equity at an 80% LTV Conventional Loan you can “pay yourself back” for the temporary (Construction Loan / Hard Money Loan / HELOC / Home Equity Loan) financing.
Once the refi is complete, you should be set up to do it again.
The recent changes in the mortgage market have made financing more difficult. Even the “local banks” have decreased the number of real estate loans in their portfolio – but this will vary from one location to the next.
Don’t get discouraged, the first 10 loans are easy. What city are you in? If you have not done so already, I would call a local Realtor who specializes in investment properties in your preferred neighborhood. Tell him/her about your interest and challenges. A good Realtor will have a network of lenders that can help.
Good luck and have fun!
There are finally coming…we have been treating our community poorly…
That is the exact relationship we have with our lender…except we only ask for 70-75% loan to value…instead of 80%…
Seek other lending institutions, see what their parameters for lending are…we are outliers and really fortunate to have this relationship with our bank…it’s tough to find lenders and we know it…we are very fortunate to have the relationship that we have…