High Closing Cost on my First Deal - need advice!

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High Closing Cost on my First Deal - need advice!

Armand R.
Member since 2020 · 4 posts · 1 vote

Hi all!

I just completed my first deal in Illinois and I am looking for feedback on the closing costs. Here's some information about the deal:

  • Purchase price: $105,000
  • Renovation cost: $27,500
  • ARV appraised: $140,000
  • Rented since October 1st 2021 for $1,500/month

What is troubling me is the cost I paid for the fees for the first loan. If I calculate well, it is well over $10k. I'm attaching below a masked version of the Master Statement. I used Finance of America to finance the purchase of the property + the rehab. I would appreciate some feedback on this from the community!

I am cash-out refinancing right now. 

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John Warren
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
4y

@Armand R. I am looping in my lender @Joshua Jones. He doesn't do reno loans, but he will know if those fees are normal. They look excessive to me.... but you got it done! A lot of newbie investors freak out over fees, interest rate, etc. If you close and are able to execute your business plan then this will all work out. 

I also work with a Chicago based private/hard money lender if you need an intro for your next deal. 

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  • Jason WrayPro Member
    Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
    4y

    Armand,

    This is an example where using a Bank or Direct Lender (Fully Delegated) can save you a lot of "BS" aka - Junk fee's!  You should not be getting beat up over broker fee's on top of origination (Plus margin built into rate).  You also have have to be careful of title junk fee's they exist and it may make some title companies angry but they charge for some unfavorable line item fee's.  Shop the title companies on all refinances and ask for a "leaner fee sheet" EVERY time you see those title fee's above that nickel and dime you to no end!

    [email protected]727-637-4289
    0Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    4y

    You’ll need a Chicago or at least Illinois expert. In my experience your title fees are double or mroe the most I’ve ever paid. But I’ve only purchased in NV and MN, so maybe that’s normal. A $900 closing extension? Who caused the delay? A $400 inspection fee on top of the $600 appraisal?  $500 closing fee on top of a $200 emote closing fee on top of so many title company fees? I DARN well hope that $1550 “escrow fee” is an example of someone bad at their new job and is really just prepaids  

    Hopefully someone from the Chicago area will weigh in and say you didn’t get as hosed as it looks  

    Ps  a lawyer fee? Never had one of those with a title company  

    0Reply
  • Armand R.
    OP
    Member since 2020 · 4 posts · 1 vote
    4y

    Thanks so much for the feedback! I guess I got screwed on with these fees, but hey lesson learned.

    I guess one of the things I was looking for is to have quick cash and also finance the rehab cost, which normally I wouldn't get with a regular mortgage. 

    0Reply
  • John Leake
    Rental Property Investor · Normal, IL · Member since 2016 · 170 posts · 85 votes
    4y

    I would agree the fees are a bit rough on this one but also that you now have your first one under your belt, Congratulations! I would look for and talk to some local lenders. I've been really happy with CEFCU in my area. They are a credit union and have minimal fees. A lot has to do with the person I work with just being excellent at their job as well. I have not done a fix and flip loan with them but I have with another bank in the area. There were extra fees because of the draw process and the structure of the loan.

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  • John Warren
    Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
    4y

    @Armand R. I am looping in my lender @Joshua Jones. He doesn't do reno loans, but he will know if those fees are normal. They look excessive to me.... but you got it done! A lot of newbie investors freak out over fees, interest rate, etc. If you close and are able to execute your business plan then this will all work out. 

    I also work with a Chicago based private/hard money lender if you need an intro for your next deal. 

    1Reply
  • Armand R.
    OP
    Member since 2020 · 4 posts · 1 vote
    4y

    thanks, @John Warren! I will definitely reach out and thanks for asking your lender to check out those fees! I'm learning so I can avoid making the same mistakes again. The deal is closed and had a smooth renovation and is giving decent cash flow, I just got bothered by those fees. 

    0Reply
  • Joshua JonesPro Member
    Member since 2020 · 70 posts · 32 votes
    4y

    @Armand R. feel free to reach out to me to discuss those fees. Also you want to look at your exit out of the reno loan as well. Thank you @John Warren for tagging me to discuss. 

    1Reply
  • John Warren
    Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
    4y

    @Armand R. it totally makes sense. At the end of the day, the fees get paid by the tenant (in rentals) or the new owner (in a flip). Yes, they stink, but as long as you did the deal you learn! My first flip in Berwyn I made almost nothing, but I learned so, so much!

    1Reply
  • Matthew Mccallan
    Lender · Charlotte, NC · Member since 2020 · 4 posts · 0 votes
    4y

    As everyone has stated already, since its over and done with nothing to focus on since it will be wasted energy that could be put in a positive place. For next time though, origination charges was the area that was the most unreasonable in my opinion. Title cost’s vary so it’s always wise to shop and setting up your escrow are always a tough in the cases that multiple months need to be accounted for but usually those are done accurately to protect you so your HOI and taxes are paid timely and their is no shortages. Feel free to reach out with any other questions if you have any. 

    0Reply
  • Michael K.
    Investor · Chicago, IL · Member since 2018 · 351 posts · 175 votes
    4y

    Your loan origination fee seems high, did you buy down the interest rate? Otherwise, the loan fees seem pretty normal to me. I can't tell if the title fees have a section cut off or not, but it seems like they are pretty high, also not sure what the closing coordination fee is all about. 

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  • Michael K.
    Investor · Chicago, IL · Member since 2018 · 351 posts · 175 votes
    4y

    Usually, I will tell buyers to budget 4-6% for closing costs, yours seem more like 8-10%. Then again your purchase price was low, so I can see how that might happen. Title fees suck. 

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