Got the deal, got some OPM, what to do now?

10 Replies

So we were able to secure a great deal on 4 single family homes! All 4 homes are in a great location for our niche market and we were able to negotiate a fair price to make our BRRR numbers work. They all require a fairly extensive remodel.

The total deal will be roughly $400,000 purchase price and rehab included. We had planned to use a hard money loan to finance the deal and then refinance following completion. However, our LLC and it's members do not have the funds to cover the upfront cash. We have raised some private capital but are being told by the hard money lender that we cannot use that money because it did not come from within he LLC.

So we have the deal, we have some OPM but we cannot seem to tie the two together and make the deal come to fruition. Any suggestions?

@Chris Coleman @Odie Ayaga  We've actually been able to spark some interest in using seller financing for the deal. We are looking at seller financing the purchase and using our OPM to fund the rehabs. Any suggestions on tactics to use here? This will be our first seller financed deal so any details in structuring the deal would be greatly appreciated! 

Originally posted by @Kristian Conway :

@Chris Coleman @Odie Ayaga  We've actually been able to spark some interest in using seller financing for the deal. We are looking at seller financing the purchase and using our OPM to fund the rehabs. Any suggestions on tactics to use here? This will be our first seller financed deal so any details in structuring the deal would be greatly appreciated! 

Great!  The one thing I would suggest is when negotiating with the Seller, try to get a loan term that is sufficiently longer than what your project timeline is expected to be...and give yourself some margin for error.  For example, if you estimate 6 months for the rehab and refi, then you want loan terms that are at least 9-12 months.  This gives you some cushion room to manage things that inevitably don't go as planned.

Also, try to avoid pre-payment penalties if possible, or if not, make sure any such penalty still fits within your overall ROI numbers.

 

Originally posted by @Odie Ayaga :

Is there something in particular you or the seller are looking for in the structure?

The sellers main concern is simply to wash her hands of the properties. She wants to have some money from the properties but is beyond the point of exhaustion with managing and renting the properties. She's at the age of retirement and is ready to let go. 

Our main concern is holding on to our capital to fund the rehab and then making it to the refinance. 

 

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