What is Hard Money | 100 Percent Financed | Hard Money for Buy an Hold

Foreign.

Hello.

How y' all doing? I already have one heart and I ain't been on here yet.

TJ with Solutions by TJ thank you for joining us. We do appreciate it. I'm waiting on a few other people to get into the room just to make sure that everyone can see it and has access to the live and to the videos. Today we will be.

Hello, I have seven people on. If you are on Facebook and you have a question, it is always better to come to YouTube because something goes on with Facebook, I don't know, it won't let me see your questions. You and y' all got mad at me. Somebody gave me a thumbs down yesterday because I couldn't see the questions. So please come over to YouTube and ask any questions that you have. And thank y' all for joining us. Hey Saritha. Hey Sarah. So we have 13 people online. If you are on YouTube, come to YouTube.com Solutions by TJ because that's where we can see your questions. We can see that you're here. There is a link within the chat. Again, that's YouTube.com solutionsbytj so because Facebook, we have an issue with seeing people's comments and seeing who exactly is online and live. Hey Laura. Hey Facebook user. Come over to YouTube for me. Come over to Solutions by TJ on YouTube. We can't. For some reason Facebook is messing up but I just wanted to allow you guys to get on from there to get, you know, to get started.

So I am excited today. I wanted to start out by. I know that there were some questions on YouTube yesterday that I on Facebook yesterday that I was unable to see because I don't know, for some reason the link up between the streaming service that I use in Facebook does not allow certain Facebook comments. So that's why I'm asking everybody on Facebook to come to YouTube and the YouTube channel is YouTube.com Solutions by TJ. If you had questions yesterday, please, please, please don't hesitate to inbox me before we get started. And I have a very special guest today. Her name is Aisha Brown.

And she's going to be talking to us about hard money. The, the ins and out of hard, ins and outs of hard money. Why it's good. What are some of the disadvantages of hard money? What are, what can you expect basically with hard money? And she'll also discuss rentals and you know, she's owned rental properties and she'll go through that with us a bit as well.

So I wanted to talk to you before we get started about Momentum. I just spoke to one of my, my upcoming mentees about that on the phone just a second ago. And life has a momentum. And when I say momentum, I mean say you have a rock at the top of a hill and you let go of that rock. As the rock goes down, it gets faster and faster and faster. And anything that comes in contact with that rock builds and becomes a part of that rock. Well, your emotions are like that. Good things come to you or bad things come to you in the same way that that momentum builds. For instance, if you are sad every day, you're sad the first day, you're sad the second day, and you stay in the momentum of being sad, eventually that rock is going to grow and grow and grow. And the same thing happens with being happy and speaking positivity in your life. The more you do it, the. The faster that momentum grows. Same exact thing with real estate investing. Some people get discouraged before they make their first deal. However, the momentum is growing. So the more calls you make, the more you remain consistent. The momentum will carry you and get you to your destination. So I wanted to let all you guys know that, and I'm sure you know my slogan by now. Hey, you are one deal away from changing your life. So without further ado, I want to introduce to you Ms. Aisha Brown. And how you doing today, Aisha?

Good. How are you? All good.

Is a real estate agent. She is an accountant by education, correct?

Yep. Finance. Accounting.

Finance. Accounting. Okay. And so I wanted her to walk us through the a couple of hard money scenarios. Now, Aisha, why, what is hard money and why do people use hard money?

Okay, the main reason people use hard money is because you have a lot of good deals out here, like the foreclosures that you see, and they need a substantial amount of repairs. Nothing scary stuff that you can get done. But a traditional lender, whether it be, you know, bank of America or whatever mortgage company, they're not going to lend on that property because they're worried about all of the repairs. So a way around there for investors like yourself who may just be getting started, or investors who have tenure. Tenure is to actually use hard money. Hard money is very similar to cash. And the people who you're offering the offer to to buy the property, the sellers, they're going to see that as cash. So that's one good thing. Hard money closes quickly. It's very similar and seen as cash. And hard money. Lenders are not afraid of those repairs. So you might see a house that looks good, but it has A hole in the roof. Well, the bank's not going to lend on that. But a hard money lender, they will lend on that. So that is the main reason that people seek hard money.

Furthermore.

No, you can go on.

Okay. Furthermore, hard money is a way for you, if you find the right deal, hard money is a way for you to get the deal done without having to invest as much of your own money. So I'm a big fan of hard money because, and I'll walk you through an example as to why. But a lot of those repairs can get costly. You may run into things that you estimated that end up being more. Or if you're under a hard money loan, you'll have that cushion, you'll have room in there. You'll not be as tight and have as many headaches trying to get through your first, second or fifth deal. So that's the next big advantage. And if you want me to start, I can walk them through kind of an example right now. I don't know if everybody has their pens and paper handy to kind of walk through some numbers. So it makes a little bit more sense for you.

Absolutely.

Okay, so let's say we're going to start really basic. Let's say we have a property, it's kind of run down, it's a foreclosure, it's only $80,000, but it's a good deal. You've seen other properties in this same area, in this same neighborhood sell for as high as 150. So you're like, hey, this is a sale. $80,000. I can get this deal and I can fix it up. It doesn't look like it's much. It looks bad, but it doesn't look like much going on with it other than cosmetic issues. And I can sell it for 150. Well, how are you going to get this done? So how the hard money, how the hard money lending works is that they look at that after repair value, which is the amount that you know that you've seen properties in that same neighborhood selling for, for around 150,000. That's called the after repair value. That's the value after you've done all your pain, after you check the plumbing, it's ready to go for a first time home buyer to buy it and move right on in. So if the property costs $80,000 and the ARV is 150,000, the go to for hard money lenders, they're looking at a 70% loan to value ratio. So if you take 70% of the 150,000, you get 105,000. So again, that was the ARV after repair value of $150,000, which is the market price that the house will sell for. 70% of that is $105,000. Well, that is what the hard money lender will give you. And that's the key. If they're willing to give you $105,000, but the property only costs 80,000, this is the way to get started with investing in properties with less cash out of pocket. That means you have room built in there. You have $25,000 of cushion between the price of the house and what the hard money lender will give you. That means you have money already for repairs. The repairs may not even cost that much. But let's just, for example, say that the repairs cost 30,000. This is a big hitter. I mean, there are $30,000 worth of repairs. You got to do plumbing, you got to replace the AC unit, you got to do a little roof patching. So if the property costs 80,000, the repairs are 30,000. That means your total.

Between those two is 110,000. That's how much you got to put into this property to get it going and listed. So what the hard money lender is going to require is the, the money for the repairs when you close. They want that money to sit in an escrow account. And the reason they wanted to sit there in that escrow account is say the deal goes bad, say you jump ship and catch ghosts. Well, at least they have that money sitting in reserves. And now they can make money off of the property. They can do the same thing what you were intending to do. So they put that money into reserves and you can slowly but surely get that out as you complete the repairs. So if the repairs, if the hard money lender, and you are estimating those repairs are about 30,000, and they've given you 110, that means you have to add about $5,000 to the deal in order to have enough in your repair reserves to make the deal work. That's a lot better than coming up with $30,000 for repairs. So if you go to, say the house didn't look as bad and you could go to a traditional lender, well, that traditional lender is only going to give you the amount that you're purchasing the house for, which is the 80,000. However, a hard money lender, they're going to give you 105,000. So like I said, you'll have $25,000 towards repairs. You add 5,000 to that and you got everything you need. Of course, now you have dumping a little bit for closing costs and all of those types of costs. But you're going to recoup those as well as realtor commissions when you do the sale. So you will get those back. Those are just money that you have to front initially to get through the deal. So hopefully that makes sense to you and you can use that 70% ratio no matter what the cost. We just did a ARV of 150,000. But let's say the property was ARV is 100,000. Well, you know that hard money lender generally is going to give you 70% of 100,000, which is 70,000. And if that house is only 50,000 and the repairs are 5,000, well, there you go again. You now have money already built into your loan to help you with those repairs versus coming out of pocket.

That should make sense. And you should see the big benefit of that and hard money lending versus going out and just getting a traditional loan. And a lot of times with those loans, you're going to run into problems anyway. Once the appraiser comes out and takes his couple snapshots and he takes a picture of the hole in the roof, which might only be $1,000 repair, but when he takes that picture and the, the conventional loan or FHA lender sees it, they're gonna, they're gonna back out of the deal anyway. And if you have cash, well, why wouldn't you go through hard money? You go through hard money. There's one other thing we're gonna talk about right after this. One more expense. But if you have your own cash, we'll do five deals with hard money. Rather than take your $50,000 or your, let's say it's $100,000, buy the property for 80. You only have 20 left over for repairs. You have no wiggle room now. So hard money could allow you to do several deals because you can split that hundred thousand dollars into three sets of 30,000. Now you can do three deals, so that's a big thing. Now, there is one other thing, and you'll hear people talk about it all the time. Well, hard money lenders, the interest rates, interest rates are higher with hard money lenders. But again, you build this into your costs, build six months of payments just in case things go haywire, into your own calculations. So you need to calculate, and I'm sure you all know how to use spreadsheets or even if you're just using pen and paper, write it down like you would Write down your home expenses, go through it and make sure that there's enough value in that property left over to where you can afford to pay maybe 10% in interest instead of the typical 4. And even these days I'm hearing, you know, the high twos, mid 2 interest rate. And now remember, that is just while you are holding the property. So if you sell it in a month or two, you don't, you've only paid that extra interest for a month or two and you're on to making your profit and you're on to the next deal and you're on to using the hard money lenders money versus your own. Again, I'd also like to add, if all goes bad or if it all goes bad with the deal and you have to hold it, maybe your exit strategy is if it doesn't sell, you're going to rent it out. Excellent exit strategy. You can refinance at that point. The house will now pass conventional or fha. It'll pass all of those types of lending practices because you've done all the repairs. So it'll just be what, a couple weeks. Refinance it, get it down to 2,3% interest rate and you're back where you originally would have wanted to be in the first place. So it's definitely worth the extra expense that you'll incur. And it used to be about 10 to 12% for hard money lenders. I'm sure these days you can strike a little bit of a better deal, especially if you have some good credit. They'll work with people who don't even have good credit as long as that 70% loan to value ratio is there.

Okay. You know, you talk fast.

I was trying to slow down for you. I know I do.

Look, I'm writing fast, so I'm looking crazy. Okay. So I just went to YouTube and got a few of. You know, hard money varies by geographic location, but according to information from 19. I'm sorry, 2019, the range varies from 7.5% all the way to 15. And you said something about.

Factor that into your costs, meaning factor the payment for the hard money loan into your cost of doing business. Correct?

Is that correct?

Hello? You were frozen a second there.

Oh, okay. Can you hear me now?

To factor that into your cost. Yes.

You hear.

Rocks method. And I want to.

Okay, okay, There we go.

Yeah. So you were talking about factoring those costs for the hard money into your. Into your cost. And in the scenario of the $150,000 after repair value where you have $25,000 left over. So would you use that 25,000 that's left over to pay the, to pay the repairs and the cost for the hard money during that time?

Well, quote, unquote, that money is supposed to be designated for repairs. However, a lot of time you're going to, you're going to make sure you always overestimate because you want to make sure you cover yourself. And likewise, those hard money lenders are sometimes overestimating because they want to make sure you don't get yourself in a bad situation. So once you complete all the repairs, they release, they release the money to you in segments, like usually three segments or four segments. And so as they release that money back to you if you fit, a lot of times after they've released 50% of the money, I finish all the repairs. I still have another 12,500 leftover. Once they see the final repair is complete, they rescind the rest of the money to me. At that point, I could use that money towards payments. If the house doesn't sell immediately or now I can use a little bit of my money that I had put to the side that I was going to do one deal with. Now that I'm splitting between three deals, I can use a little bit of that money to help make those payments. But again, I would build this into my cost and break everything out so that I know my true profit potential.

Gotcha.

Gotcha. Okay, so let me ask you this. So for that $150,000, $150,000 after repair value, for the $105,000 that they'll loan you for the box of rocks, people like me, calculate that for me. How much am I going to pay per month? What, how do, how do I do that calculation? Would I say 105, 105,000 times, what.

12%, what that monthly mortgage rate is going to be? The best way to do that is to use a mortgage calculator. So we can pull one up. Or if you go online and just Google mortgage calculator, put in that interest rate and you can play around with it. Put in 10%, put in the highest 15%. Like you said, some geographical areas are a lot different. It will calculate that for you. Now I can tell you, generally speaking.

Let me calculate here, generally speaking, and I'll pull one up just to make sure, because I don't want to guide anybody.

Okay, I'm going to share my screen, guys, so we can look at it together.

Okay?

Okay, so the mortgage amount. Hello.

Yes, I can see it. I can see Your screen.

Okay, the mortgage amount, you said 150. And we're going to say at the highest interest rate that they said.

Now remember, your mortgage amount is going to be less than it's only going to be the 105 ARP is 150. Yep.

Okay. And so do they amortize it over a 30 year time period for hard money?

It depends, but usually they do. They use the same thing as a regular lender would use. But of course your term is going to be a lot shorter. They're not going to allow you to hold that for 30 years because they know it's going to sell. Yeah, but that's the way they calculate it usually.

Okay, so then if I hold that for let's say six months. So let me go to calculator.

Just say, you know, worst case scenario, something goes crazy and my payment is 1300amonth, 1328 times.

Six months, you'll be out of.

$7900. $7968 with hard money. But when you look at deals, one thing that you look at when you're doing comparables, when you find the deal, one of the major things that you look at is average days on market. It's called the dollar days on market. Write that down and make sure that you see. Okay, houses in this market normally sell between 30 days to 90 days. So that's three months and it should be sold. You also have to factor in your repairs. From the standpoint of will I.

You know, how long does it take my contractors to finish my repairs? If you have super slow contractors, they will eat all of your money up. So that's why you have to have guys that are on it, on it, on it. Some people are just real meticulous or you know, say for instance the storm has hit and then you start hiring contractors and they get greedy. And versus just having your house now they have 10 other houses and only have one man on your house. It'll take them 12 months to finish it. You want full quarters on your house, a good thing. There's this guy called Lawrence Builders. Look him up. I think he's on Facebook and Instagram. But he goes over sort of how to hire contractors and what to look at from a home standpoint of when you get ready to do the repairs and how long each thing should take. For instance, if somebody guts a house and has to put Sheetrock over an entire house, will that take one day or two days? How, how long does the build out take? He can get a whole house done in 30 days, over and over and over because he has a system and the guys in order to do it. So when you're hiring your contractors, you need to make sure you know, y' all have a written timeline and what can happen that will defer you from this timeline. And if it defers you from this timeline, how is that coming off of my price?

Real quick to add to that while she's right there, just to add to that, one of my biggest recommendations. And you'll get more experience with this, like she's saying as you go along. But don't put everything under one contractor. I think when you're first starting out, until you know you have that go to person, split the plumbing up. Don't let the same contractor do your plumbing your havoc. Because if something goes wrong with him or is delayed on one thing, it's going to delay everything else. If you have three guys, a person doing your cosmetic, a person doing employment in a different electrical and havoc, then you, if you run into a problem with one, you're not slowed down on the other stuff and you could wipe him out of the deal and move on to the next contractor. For that part.

I'm writing in the comments, havoc is H.

Is AC and heating. Okay, so we have a couple of questions real quick.

One question. Can you do a hard money loan on property under your LLC using business credit? Credit? Yes.

Yes, you can. They will do that.

Okay.

And often times they'll ask you, they like for you to use your LLC versus your own name. They, they actually like that.

Okay. With hard money and you have to hold the property and have to refinance. How does the hard money get paid?

They become the seller, they pay it off. Just like when you refinance a regular loan, it's refinanced and the refinance company will pay them off because they're who the debtor is at that.

So to be more specific on that, you have the house is actually worth 150,000. Right. Let's walk through the numbers on that. The house is worth 150,000. How much can you generally refinance a property for?

Whatever amount that you want. So if you want to refinance it for the amount that the loan is so you can refinance it for. Well, in this case, you're refinancing for the 105,000. Oh, because that's what you owe the lender. Yep.

Gotcha. Okay. And, and that's a good number because when you refinance.

They don't give you A hundred percent of your after repair value. They normally do the same 70% LTV that that the hard money lender did, which is the 105. Correct.

They're going to just get, they're going to refinance the amount that you owe the lender. So if you still owe them that full 70%, that's the amount they're going to refinance. Now there are some particulars. There's a 203k FHA loan where if you still had some repairs that needed to be done, say you hadn't finished the repairs and you wanted to still try to get a little more things done, you could go that route. But that's a very meticulous route to take. Generally you would just do a standard refinance at the 105 and get that hard money lender paid off or much lower interest rate.

Okay, my family on Facebook. Please go to YouTube if you have questions. I cannot see Facebook questions on here. For whatever reason. I can see YouTube a lot better. So I don't want questions to. I don't want you to think that I'm missing your question. I just can't see it. So hopefully I'll be able to see it on YouTube if I, if I can't see it. Everybody who's on here, let me know if the questions have piled up and I just can't see it. So somebody put that in into the comments. And the users that I see on here, I don't really see. There are 27 people on the call. I see probably just a portion of those. I don't see a full 27 in the comments at least. Okay, Sean has a question. What factors would you use when deciding on which hard money lender to use? Excluding price more so to vet them out.

So I would use a lot of things that we typically look for, how long they've been around. I would ask them for three references and I would talk to those three references personally to see how their deal went. How much did the hard money lender support them if they ran into problems? These hard money lenders are supposed to be offering you more than just money. They want your deal to close. So you want to make sure that you're dealing with a credible company for those reasons, but just your typical things. Do your research. That's my best advice. And then after that would be interest rate. Whoever's offering me the best deal and has been around and has a good proven track record, I'm going to go with the best interest rate.

Absolutely.

So just to add a little bit to that when you are looking for them, do a spam. I do a spam report on a scam. I'm sorry, scam report on everybody. If I have a lender or anybody that I'm about to do business with, I Google them. I want to see what comes up. I'm just nosy. I kind of want to know and I've been through some stuff in life, so I want to know who you are and whether or not there's some type of scam or something associated with your name. So Google it. And most people, you know, if they're honest people, they will let you know what's going on.

A lot of companies that are reputable, I know you know, Aisha has been using a company that has been around for a very, very long time in Texas called or in Houston called Jet Lending. I'm giving them some free pub and some free shout out today, but it's called Jet Lending in Houston. I don't know if they operate other places, but hey, it may not be a bad scenario to let them know. And let them know that you were referred by Aisha Berry.

Do they know you by Barry or Brown?

Probably they know me by both. I've been doing it. Yeah, I've been doing it for. Working with them for a while. So they might know Barry or Brown. They know both.

Okay, so regarding rentals, now, when you do rentals, you do you use hard money when buying your rentals and then you refinance that rental out and then rent the property out.

So if it's a rentals for me and how I got people is that if it's a rental, you're gonna try to be out of, you know you're holding this property, you know you're not selling, so you're not gonna get your money back soon. So in that case, you want to eliminate as many expenses, whether it's interest, whether it's closing costs, you want to get all of those costs down, down, down. So I do not typically use hard money on a rental. The only time I would use hard money on a rental is if you, as an exit strategy, you buy a property you thought it was going to sell the arv, it just doesn't sell and you have to turn into a rental, then that's what you have to do. But if, you know you're targeting to get a rental, I would go conventional. I would go conventional or, you know, fha, whatever. The best deal you can do is just a standard loan.

Okay.

Do hard money Lenders consider your DCI ratio or is the loan based solely on the property potential?

They do look at those things, but what they care about is solely on the property potential. I mean, if you can show that you have cash reserves and you can show that that Property has that 70% loan to value ratio, that's really what it's going to take to get that deal closed. And that's another reason hard money is advantageous. A lot of us out here, you know, investors, we might have a high dti. Well, traditional bank isn't going to take you that hard money lender, they're not worried about that. They get the big picture.

How does credit play a factor in qualifying?

So credit, they don't want to see horrible credit. Of course they will want to see decent credit, but it's not like traditional lending. Again, they don't need a 650 or 700. If you have a 600 because your DTI is high, you don't have anything recently derogatory. Maybe it's old stuff still sitting on your credit. They're not as worried about those things. They just want to make sure that you, that the property and that again is solid and that you have the cash reserves and you don't have anything recently going on that's bad on your credit or if your DTI is high again, that's, that's not a big deal to them. They understand.

Okay.

Okay. Only simplistic is getting an FHA loan. A simple process.

You want to speak on that or.

I mean, to be honest with you, it doesn't take, as you know my opinion, they can take however long they take. To be honest, it kind of depends on your broker. It doesn't take any longer than a conventional loan.

I would say the same thing. The only, the main difference is they're just going to look at the property a little bit harder. The appraisers are going to look at a few more checklist items than conventional. That's about it. They have better rates.

Yeah, yeah.

But you can get it closed within 30 days, sometime sooner. Hard money, you can get it closed within a week.

Definitely no more than two weeks. Okay.

Do you know of any hard money lenders in Atlanta? I personally don't, so I would Google it. I do have some friends that I can ask. Let me write that down.

And if you are not a member of the Facebook groups in your city, ask that question. Because a lot of investors have Facebook groups from Atlanta, from Dallas, from all over the world. Really ask that question within your group and you'll get a lot of recommendations. And when you get a lot of. When you get those recommendations, follow up with those people. Ask them how long they've used them and what their experiences have been. And let me tell you something that I figured out about references. We're gonna just be 100 transparent here. When you go on a job interview and you give references, what type of references do you give?

Give the best. You are not gonna give a reference that's gonna talk bad about you. So what's the value of a reference? Unless it's like from an independent source like Trust Builder that's online where, you know, you're just seeing the reviews that people have written outside of the lender. But when you ask somebody for a reference, they're always going to give you the absolute best. So just keep that in mind.

And.

Jenny Smith with the B Mogul group for Atlanta, Someone in the chat just posted that regarding Atlanta. So that is awesome. Hard money lenders. But do join those groups.

And please DM me too. Please direct message me, Audrey, and remind me of that. I'm gonna look and then I will either put it in our Facebook group or.

Or.

I'll give it to you directly.

Okay. Any other questions?

Sarah, what do you. What do you want to know about professional references?

Type it in. And while you're doing that, we'll just get on.

So one more thing, one thing I can say to add to that is most of these hard money lenders, they have a lot of mixers. If you get on their email list, they have a lot of mixers. So you can go to these different happy hours and events. And I know Covid may have changed it some, but I think they still have started back up a lot of that stuff. And you can mix and mingle and learn and you know, there may be people there you can talk to. And that's where I found out stuff, you know, even about other hard money lenders at one hard money lenders event, you know, just about the competition and so forth so that you can have more eggs in your basket to research.

Perfect. Okay. And I know that we aren't talking about this on this call, but I do want to mention it because it just came up in my head. So the difference between a private lender and a hard money lender, very important. A private lender is an individual or entity that does not regularly or generally operate as a business in lending money. A hard money lender does it as a business. I bring up private money because people. There is a company called Quest.

I can't remember the rest of the name, but it's company called Quest in Houston. At least you can look for it in your organization. But it's where a group of people come to Quest and through Quest they purchase or they buy into certain deals and act as the lender. And their interest rates are generally a lot lower than hard money and they are phenomenal. They use their 401ks, their Roth IRAs, self directed Roth IRAs to invest in people's deals in real estate. So if you aren't shy, they have groups where they just allow individual investors to come and pitch deals to them. Most of the deals that they get are multi family but a lot of them feel really comfortable with single family deals. Because look, if I loan you money for a single family deal, I'm good with you defaulting because now I just own that mortgage and I'm going to take it and finish it.

Not that big of a deal to me. So, you know, I doubt if I, you know, you will start on the process of repairing it and hopefully you don't burn my house down. But I will make sure even if it burns down, I just build a brand new house. And that's something else. You know that me and my cousin Aisha is my cousin, by the way. That's something else that we have in common. Say the floods that are going on right now based on the weather or your house catches on fire, those are times for investors to be happy. And even as a homeowner, I'm happy.

Why?

Because I get a brand new house if my house is insured. That is what insurance is for. Is it a hassle? I mean, you know, your job can be a hassle. It's a bunch, your husband can be a hassle. There's a bunch of stuff in life that can be a hassle. However, it's all based on how you look at it. So hard money, there's a give and a take. Private lenders, there's a give and a take. Everything in life, there's a give and a take. You just have to figure out exactly what you want to do and take massive action and move forward in doing it. Quest Trust, okay. Sea Hunter said it's called Quest Trust. Thank you, Sea Hunter, I appreciate that. Quest Trust, okay, I saw.

I'm trying.

To make sure I'm getting all the questions answered. If I have not gotten your question, please enter it again for me or if anybody else sees a question that I can't see and I'm answering your questions, please Write those questions in for those people so that I can see them. Do you establish the relationship first or would you present a deal to them?

I just present my deal. I'm just gonna be honest because I don't, I don't go to them all the time. But when I go and they're presenting deals, I would not be shy about getting up and presenting my deal to them. I'd have all the numbers ready and available. I'd have proof that those numbers are right and real. You know what I'm saying? So for instance, if I bring a deal to people who use the self, people who use Quest, I would approach them like, you know, here's the house. I already have it under contract, so I'm not scared to give anybody the address. This is the house, this is the address. Here are the comparables. And, and I would show them the.

Comps in the area. I would get some type of repair estimate from a general contractor or somebody. Or if I'm really good at it and trust my numbers, I'd do it myself. If the AC and roof or something needs to be repaired, I'd get an estimate from reputable companies to provide in that estimate so that I can show them the entire, every single number that is associated with that deal. And Quest walks you through the entire process of how that lending goes. I have not done that personally, but I do have friends that work with Quest all the time.

Okay, any other questions?

Okay, so.

I had another. Oh, I talked to Aisha about the rentals.

Talked about the hard money.

Does anyone give them a little more insight? I don't know if people are really that much more interested in the rentals, but I can give them a little bit, please, if you want. So I actually one thing I recommend if you're just starting out, because when you buy investment property, as you all probably are starting to find out, outside of hard money, I'm talking rental property. So you're going to try to get a conventional fha, a low interest standard loan. Well, bit of advice I like to give is if you already don't have a house or if you're renting an apartment, go ahead and buy the property as your primary move in it while you're getting it ready to go. And that way you avoid the 20% down payment that's required for investors. That means you have to put down typical, what these days, 3 to 5%. With COVID they may even take less than that. And then the house, get it repaired, do the little things you need to do to get it ready for the market listed immediate. Don't be scared of having to move move in and be ready to move right back out. But the avoiding that 20% interest and in case the house doesn't lease right off, which in this market you're not going to probably have that problem, I will bet you on that. But if you do, at least you're in that property and the expense, you're just paying your own rent that you will be paying for somewhere else to live somewhere else. So that's one bit of advice I would give. Of course, after you buy your first one, you're gonna at some point have to start buying them as investment properties because they will know that they are investment properties and you'll have to pay the 20%. The next thing I would advise, a big bit of advice that I like to give people is to carry. We love to write everything off in our taxes. And I finally started doing it. It took me a while. But I will say on rental properties, don't write off everything on your rental properties. Show that income, carry that income. At the very least, just let them break even. Because you don't want your investment properties to start counting against you when you go to buy more. So a property generally, if it wasn't your primary, another advantage for it being your primary residence is that you're allowed to buy a property, another property.

If you're in your primary property and it hasn't been rented for two years, you're allowed to buy the next property and just show a lease that is just now starting. However, if you've been in that, if you are holding these properties and you are not living in it initially, you have to show that you've rented that property for two years for it not to count against your dti. Otherwise they're going to take that mortgage and they're going to factor that in like it's a credit card or another expense on your credit report. Even though you're clearly collecting rent on it it every month, if you don't show that rental property on your tax returns for two years, that is gonna most likely happen. So that's why I recommend people. I mean, we're like, oh, we get to write off all of these repairs. Definitely write off the repairs if you really do them. But just be sure to count that income and show that income on those rental properties.

I'm a big budgeter, so I'm gonna say with rental properties, you know, let's just walk through a small example. Say a property costs 175,000 and that's how much you're going to pay for. Let's say that in the area their properties are renting for 2,500. So you already know you got about a 750amonth cushion. Just make sure that you are accounting for any and all expenses. Remember, you have HOA annual dues. Some people forget about those. They're not that expensive. But just be very nitty gritty down to every detail on these expenses to make sure that you aren't how. Some people have rental properties and they act like they're headaches. They're not a headache. They're retired. That's what they are. They should take care of themselves. It shouldn't be a big deal carrying them on their, on your taxes because they are paying for themselves. Just make sure that you expense out and you put reserves aside for repairs. You put reserve aside for the hoas, you put reserves aside for those realtor commissions in case you're going to list your, your houses for lease through a realtor. Just make sure you put that money aside. There's room in there to do it. You're collecting extra income. So don't just take all that income and run and sell. Spend it and use it on the next deal. Just pull part of that out so that you can make sure that that property is not costing you anything and that you're actually fully benefiting from it.

Good information. Thank you. Thank you.

Please like this video. If you are gaining good information, please, please, please. It helps other people to be able to see the video on YouTube. I'm not just asking you that just for vain purposes. I want other people to know that, hey, there's a lot of valuable information here that we're sharing absolutely for free. And trust me in me doing this all this week, boy, it has been hard. So because I'm doing a million and one things at once and then six o', clock, I mean baby, six o' clock has never come this quickly before because I have to start getting ready at 6 and then I'm on exactly at 6:30. So please, please, please share these videos with anybody that you know who is interested in realist investing in real estate. And also like this video.

One more thing that I want you to talk about, Aisha, is I have a bunch of people who have been on my lives who. Oh, okay. I had another question real quick. Okay, I'm sorry, let's answer this question first. If you already own a primary residence, will you still be able to get away from paying the investor down payment.

Well, it depends if you're going to move into the second property because you know, it needs some work. And so you're going to live there because it's closer to your job and you're going to live there for a couple months and you know, eventually you're going to rent it out. Well, then you wouldn't have to pay the 20%. But if you are going to definitely invest it, you're going to list it for lease two days after you buy it, then you would have to pay the 20%. So that's my advice. And that's actually what I did. I bought my first property. I lived in it for a year or two. I put it up for lease and then I bought my next property. I moved into the property. I actually only lived there probably. I don't know if it was even 40 days at least. I got those repairs done in two weeks. I was in there hustling, painting myself. I had contractors in there and I just put it up. I was willing to stay there for a year or two at least really quickly. And so I was out of the door.

Perfect. And I believe that there is a len something in lending where you are considered a new homeowner if you haven't purchased a property within the last. Is it three years, Aisha, do you remember that?

I don't know. I know there is a time frame, but I don't know what it is exactly. Right.

So after you've lived in your house for so long, you're considered a new home buyer again. So there are all kind of new home buying incentives. And.

Yeah, you may want to as long. And I was told just recently, as long as the house is your primary residence that you live in now and the property that you are about to buy, even if it's a month later, you can give an excuse like, you know, my mother came in town and now I need a bigger house. You'd have to show that that other house is bigger or that other house is on the other side of town, you know, to justify why you're getting another primary residence. So you can be on four, four or five different sides of town and keep having to move.

I have a lot of agents, Aisha, who are joining these calls and I want to know from your perspective, since you are a real estate agent, what is the. What are the advantages and disadvantages and disadvantages of being a real estate agent and a real estate investor?

I would say the advantages are. And the reason I got my license originally was not for, you know, to do Sales and residential sales and so forth was so that I could keep my commission. The commission is pretty sweet for real estate agents. I mean, it's 3%. So if you got a property that's $100,000, that's $3,000, 200,000, that's $6,000. So that adds up when you're getting into closing costs, when you're getting into those repairs, that's just one more thing that's not an expense for you. When you get ready to sell it, you no longer have to pay. Usually when you sell a property, you're going to put up 5 to 6%. Well, half of that now you don't have to put up because it's you. So you can give up your portion and you can just pay your broker fee and then pay the buyer if they have an agent. If they don't have an agent. At that point, you don't give up anything but your broker fee. So it's. That's the biggest advantage to me. The second advantage is that you have easy access to comparables. I mean, you can go log into the MLS online and you can pull up those comps in two seconds and you can get your offer submitted yourself. You don't have to wait on a Realtor. And I mean, not that some realtors aren't quick, but they have several clients. So it doesn't take much to get your real estate license. So for me, I did it. I don't remember. It was back in 2005, 2006, but I think I did in a month or two, probably less than that. And I got my license, and when I did my first deal, I collected my own commission. I've collected my own commission on every deal since then. And then the money you're collecting on those deals pays all of those dues and fees that realtors have to pay. So you're getting that for free pretty much, because your deals take care of it.

Awesome. Any disadvantages?

Disadvantages? I can't really think of any disadvantages. I mean, sometimes they ask you, are you owner, agent? And I reveal it. But I don't feel like it stopped or hindered anything. I feel like it's helped me because they're like, okay, she knows. So I can't really think of any disadvantage.

Yeah. And they trust you more. In my personal opinion, if you are an investor and an agent, they trust you a lot more when you're knocking on their door because they understand that you have a fiduciary responsibility to deal with them fairly.

Exactly.

Okay. Okay. Guys. So if that is all of your questions, I don't see any more questions. I'm looking, looking, looking. If I'm missing a question, please, please, please don't hesitate to direct message me or put it in our Facebook group, the Millennial Masterclass. I enjoy y'. All. I appreciate you coming. I think that it is wonderful that you are here and getting this information. And like, I'm. I keep saying and keep saying, and what motivates me when I feel like just, oh, I'm sick of this. You're one deal away.

You're one deal away every day. Yeah. You are one deal away. So God bless, y'. All. I'm rooting for you. Thank you so much for joining us. And God bless.