I know, not the most creative of blog post titles, but it will have to do…
Lots of “fun” stuff happened the past couple days:
1. Met with a couple more banks. While they aren’t going to be able to get me the financing I’d like, I may not be in a position to be too choosy; it looks like my best option so far (and I still have some more to speak with) will be high LTV (65-70%) on the purchase price of the property, not including rehab costs. So, if I buy a property for $80K and put $20K of work into it, I’d only be able to get a loan for 70% of the $80K, meaning I’d still be putting up about 45% of the total investment myself. Not great, but at this point, better than 100%.
2. I met a bank rep the other night at the local real estate investors association (REIA) meeting who does rehab loans. Basically, for a small down payment and a couple points, they’ll provide interest-only financing for 12 months at 10-13%. He offered me better terms if I was willing to keep a bunch of cash in a CD in his bank (currently paying 4.25%); specifically, he offered interest-only loans for 12 months with no prepayment penalty, no down payment, 9% interest and 1 point. Not bad compared to some other options, but the part that scares me is the 12 month balloon payment (have to pay off the loan after a year); there’s no guarantee that I’ll be able to refi in a year if the credit markets haven’t improved and my income situation hasn’t changed.
3. I had a great lunch meeting with an REO agent today. She lists a good percentage of the REO (foreclosed, bank owned) properties in the Atlanta area, and thought I had a great plan for acquiring and managing SFH properties. We discussed my goals, my buying criteria, and the areas I was interested in, and I think she’ll be able to bring me some great properties before they hit the MLS, or within 24 hours of hitting the MLS. Without exaggerating, this could be the difference between success and failure in my real estate endeavors. Additionally, she was tremendously pleasant to talk to, had some great insight into the Atlanta REO market, and I think we’d work really well together. I’m looking forward to working with her, and seeing some of the deals she can find.
4. I’m having lunch today with the agent/wholesaler I’ve been working with on a couple offers. He’s done a lot of rehabbing, and has experience as an agent, and I had suggested previously that maybe we should partner on a deal or two (I’d happily do much more of the work if he was willing to “be the brains” and teach me some of what he knows). He and his current business partner want to discuss this idea over lunch. While having partners isn’t a necessary part of my plan, I’m always happy to partner with smart and motivated people, and I think this guy is both.
5. An “Internet friend” of mine (someone who posts on one of the same forums that I often frequent) has been investing large-scale in SFHs for several years now, and has probably learned all the lessons I would likely be learning the hard way. She lives and invests in Florida, and was kind enough to invite my fiancee and me down to Florida to chat, see how she runs her business, ask a lot of questions, and likely learn enough to avoid many of the mistakes I would otherwise make. We’re hoping to arrange something either in the next week or after the wedding, and I’m really looking forward to it.
6. My fiancee and I came to the decision that it would be in our best interest for at least one of us to get our real estate license. This would allow us to access the MLS (the service where all the for-sale properties are listed) and to earn a percentage of the commissions that move around when we purchase/sell properties. For various reasons that I’ll touch on in a later post, we’re thinking she’ll probably be the one to get her license.