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Small Flip Deal to Build Relationship - $30k- $75k

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Glenn Espinosa

Rehabber from

Feb 20 '13, 06:13 AM


We have a small deal under contract and figured it would be a great opportunity to start a long term relationship with another private or hard money lender.

Purchase Price: $30,100

ARV: $119,000 (150 sq ft addition)
Recent comps available upon request
*All comps sold within 6 months, under 0.4 miles away (most on same street)
*High development area

Rehab: $45,000 max (6 month total loan max, rehab under 4 months)
*Green rehab features will be included, benefits are faster selling time, alignment with your personal values

Quiet costs: Approx. $14k - $17k

Rates: Looking for flat simple interest of 12-14%, no prepayment penalty, 6 month terms. Higher rates reserved for larger loan sums. All negotiable BUT one thing I ask is that you MUST be looking for a long term lending relationship. Our goal is to immediately roll your funds into a new deal right upon completion of this one.

Detailed investment summary available upon request as well as investment history of previous deals.

Message me here, reply to thread, or email me at my personal email below.

Thanks,

Glenn
Fresh Start Homes, LLC



Eric Michaels

Real Estate Lender from Chicago, Illinois

Feb 20 '13, 10:40 AM


One comment and one question.

If any borrower ever tries promising me a "max" cost or "max" time frame, I know they don't really know what they are doing. I can't remember the last time one of these promises was kept.

How much of this $90K total cost are you investing or are you looking for 100% financing plus rehab costs?



Glenn Espinosa

Rehabber from

Feb 20 '13, 11:19 AM
1 vote


I suggest you look for better borrowers, Eric.

My inclusion of max cost and max time is to protect my lenders. Anything above and beyond those figures has and always will be covered by myself and my company. We have enough contingency funds and reserves built in for every deal so that we are never running back to the lender requesting more money. Would you rather a borrower requests money with an open time frame and an open rehab budget?

As for how much we are requesting, the title stated $30k - $75k with higher rates reserved for investors looking to fund more of the deal. The more money I can borrow the more I am willing to pay as it keeps my own funds liquid and allows me to look for more deals.

Thank you for the comment,

Glenn



Jon Holdman Moderator

SFR Investor from Wheat Ridge, Colorado

Feb 20 '13, 11:35 AM


Where are you and the property located?

You're generally not going to be able to keep the money between deals. That is, you get a loan on the deal. The lender funds the loan at closing and you give them a deed of trust (or whatever it is in your area). When you sell, that loan gets paid off and the payoff goes to the lender. Then you repeat the cycle on the next deal.



Jon Holdman, Flying Phoenix LLC


Glenn Espinosa

Rehabber from

Feb 20 '13, 11:45 AM


@Jon Holdman, I am located in Norfolk, Virginia, as is the property.

I am familiar with the deed of trust process and I may have misstated in my original post regarding recycling of funds as I did not mean to imply keeping funds in between deals. My goal would be to identify a deal as the first property comes under contract so that there is as little gap between deals as possible. The first transaction will be completed prior to any re loaning of funds.

Of course, lenders are not tied to this process and can opt out of the next deal for any reason.

Thanks for the clarification, Jon.

Glenn



Jon Holdman Moderator

SFR Investor from Wheat Ridge, Colorado

Feb 20 '13, 11:58 AM


Sorry, I'm no help for that location.



Jon Holdman, Flying Phoenix LLC


Will Barnard Video Moderator Donor

Real Estate Investor from Santa Clarita, California

Feb 20 '13, 12:09 PM


What about points, are you willing to pay points in addition to the interest?
When is your closing date?
Are you prepared to provide bank statements proving reserves and capital for rehab along with corporate docs?
Who besides yourself is part of the company guaranteeing the loan?
Are you all willing to sign a personal guarantee and prove assets?



Medium_be_logoWill Barnard, Barnard Enterprises, Inc.
E-Mail: [email protected]
Website: http://www.barnardenterprises.com
http://www.InvestorExperts.com


Glenn Espinosa

Rehabber from

Feb 20 '13, 07:48 PM


All inquiries have been replied to. Thanks to everyone who has expressed interest.

To succinctly answer Will's questions:

- Unfortunately, No. We are transitioning from hard money and are looking for cheaper financing.

- Feb. 27th. A small daily per diem will be paid by my company in the case that a lender requires a few additional days. If this is not the case then we will buy the property outright while continuing to entertain potential lenders.

-Yes.

-Fresh Start Homes' CFO (check my website for more info on my company and it's members)

-Yes.

I will update on the deal's status but until I state otherwise this deal is still open for lenders. Our goal is to establish a long term relationship and to align financial goals.

Thanks everyone,

Glenn



Jason Merchey

Real Estate Investor from Summerville, South Carolina

Feb 23 '13, 02:45 PM
1 vote


Quite enjoyed reading Will's questions since they get at some of the worries of a person who is interested in this idea of earning that kind of return (well, comparing it with CDs, stocks, bonds, etc not comparing it with an average flip or anything in this "real estate" category.
And @Glenn Espinosa, good job man. Your website looks good, and your goal of doing good while doing well is admirable. I can appreciate your request/parameters and if I had the money at present, I would probably be quite interested. I am kind of on my own journey re: developing expertise in finding/buying/flipping or holding SFDs and so I'm afraid any dollars I may liquidate from a condo I have that is underperforming will need to go to that. I'm kind of in the same shoes as you more than I am a viable lender.

OK this reply is dragging on: I wish I could help. In a few years I imagine I could, and if your reputation is still solid and you have similar needs we might could work together in the longer-term wya you suggest. I'll end with that.



Joel Owens Moderator

Real Estate Broker from Canton, Georgia

Feb 24 '13, 10:06 AM


Glenn have you landed any contacts from your local real estate association there for lending money?? Not the HML's but people with private capital.

It's the ultimate problem for flippers. Flips are getting thinner as more rehabbers enter the market. To preserve margins rehabbers are searching for private capital with no points and a lower interest rate.
High interest rates and points take what little meat is left on the bone for rehabbers these days.

HML's want a seasoned rehabber but still want to churn points and loans for volume. The ones willing to pay the higher rates are often the inexperienced and the most risky for a HML lender. So what everyone wants is usually at odds with each other. Same tale with buyers and sellers in that people have to find the common ground that works for both parties to consummate a deal.

I have looked at HML lending and other types of RE investing but I have not found a greater return for me than doing mailers and closing more commercial sales as a broker. From one 50 cent mailer I can generate sometimes a 40,000 commission or greater from a listing. So I just haven't found anything that comes close to that kind of return. I don't like with HML that your funds aren't liquid and all these things can happen where you don't see the return and it takes awhile to get your money back again. I think locally you might have some luck farming for capital. They are just changing the advertising rules recently so that is good.



Medium_allworldrealtyJoel Owens, All World Realty
E-Mail: [email protected]
Telephone: 678-779-2798
Website: http://www.AWcommercial.com
www.AWcommercial.com 678-779-2798 [email protected]


Glenn Espinosa

Rehabber from

Feb 26 '13, 06:21 PM


Joel,

I have done some networking with people from local associations. So far everyone I've met is either blowing smoke, charging way too much as compared to my current lenders, or are new investors who are not as far into their real estate journey as I am. Keep in mind, I've been out of the country for 9 months so opportunities to network face to face have been slim up until recently.

The few people that I have met that are worth keeping in contact with will need a little bit more massaging before I feel comfortable pitching to them. I only have one shot to pitch to the the big dogs and I definitely do not want to mess it up. In the meantime I will be working on building my track record and my business so that I am ready when the time comes.

As an update: Looks like this deal will be finalized in the next few days. I was able to find two new private investors to fund the entire 75k. Pretty excited and can't wait to over deliver on this deal!

Thanks to everyone who inquired and provided feedback.

Glenn



Will Barnard Video Moderator Donor

Real Estate Investor from Santa Clarita, California

Feb 26 '13, 06:26 PM


Congrats Glenn. I reviewed your docs and your resentation sent. I must say that for someone with limited experience, your packet is the most professional I have come across. Kudos for putting that together.

Though I am late on this deal and you appear to have funded it, I do look forward to speaking with you in the near future on additional projects.

-Will Barnard



Medium_be_logoWill Barnard, Barnard Enterprises, Inc.
E-Mail: [email protected]
Website: http://www.barnardenterprises.com
http://www.InvestorExperts.com


Glenn Espinosa

Rehabber from

Feb 26 '13, 06:42 PM


Will,

Coming from an investor who I've admired for the longest on BP, that compliment means a lot. Thank you!

I look forward to speaking and meeting with you on future deals. Once our current plates are near clearing I'll come knocking.

-Glenn



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