I have to admit that I'm out of the loop on Blue Moon Financial, but it seems to keep coming up in other threads. I figured we'd open discussion on this company if there is interest.
I'd also like to hear if anyone has any experience with them. I have spoken with them before and get periodic follow-up calls where they try to get me to invest. If I remember correctly, their business model was to sell rehabbed property at 80% ARV which would allow the investor to get in at no money out of pocket while maintaining an 80% LTV. The investor then would be setup with a renter at roughly breakeven or perhaps even slight negative cashflow and then could sell after 1 year (or hold). I was never convinced that this was a great investment for me, even though it meant no money out of pocket. I have never invested nor have I spoken with them for quite some time so I could be off on the details so please don't take this as gospel.
I'll admit I've been out of loop on this one as well, but it seems to me that getting into a property at 80% LTV is pushing it a little when trying to make a profit off of a rental. I mean, unless we are talking about houses that are little more expensive than average, then it would seem to me that the simple holding costs for a year would eat up a lot of your equity spread. And that's assuming that the purchase market in the area where the house is, will be strong enough in a year to make selling at a strong profit a reasonable expectation.
Just my two cents.
I agree John that this appears to be very thin for the investor. However, viewing it from my side a year ago - I was taking into consideration that I paid retail for my first 2 rental properties so this was putting me ahead of the game when compared relative to those (as an aside, those retail purchases have worked out just fine for me). Now that I'm a bit more educated (with a long long way to go) and realize that there are many sources where I won't need to pay retail for property, what they have to offer is much less appealing. Again, I could be misrepresenting since I never got too serious with them plus I think they have expanded their offerings which when I first engaged with them was exclusively in Philadelphia and Atlanta.
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