All Forum Posts by: Abraham Kaplan

No, your cost for 1 building that is 7 units would cost less than $600/unit. Probably closer to $1500-$2000. $600 for a condo is robbery BTW.

 Thanks Todd. I'm glad I got those condos but the purchase process was a real pain. I felt the seller had ties to the title company and appraiser.

Main difference will be the financing. With a 5-12 unit you will need to get a local bank to finance it, which is tough for out of state investors. The loan will be a commercial loan, with 20-25 year am and 5-10 year balloon. You will possibly get into the $1mm+ loan amount, where you can tap in to agency debt and get a 30 year am, fixed for 10-12 years. 

Other differences - 

Possibly licensing and inspections with the city

Appraisal for a 5-12 unit will be much more expensive and is based more on the financials of the asset vs the comparable sales. 

@Abraham Kaplan that loan does sound too good to be true. I agree with @Kyle J. even their contact page doesn't have a complete phone number. I'd be leery of these folks.

Do you already have a property you are targeting?

@Abraham Kaplan  They're not a real lender.  The first red flag is that their website is very poorly written and looks similar to most of the other ones run by scammers from outside of the country who have poor command of the English language and don't know what certain terms mean in relation to real estate/lending.  

Even little things like ALL of their social media links (Facebook, Twitter, Instagram, etc) on their webpage just lead right back to their webpage.  They have no presence outside of this page.  Odd for a company that claims to have so many years experience and so many satisfied customers.  

Speaking of that, their website boasts:

Did you know their website was just created June of this year??  

Lastly, and perhaps most importantly, there is NO company by the name of "Harmony Investments Ltd" registered as a licensed lender or even as a company in the state of California (where they claim to be based out of).

So in this case, as in most, if it sounds too good to be true, it probably is.

On a commercial property you don't calculate comps. The value of the property is going to be based on the NOI and the market cap rate for the property type and class. NOI is the income - expenses not including debt service.

Your proforma (this could be thought of as your ARV) can be based on the performance of the property after your business plan has been executed. By saying you plan on flipping it I would assume part of your business plan is to renovate the units and increase the rent. Once you have leases signed you may want it to be stabilized for 3-12 months before marketing it to maximize its value. Most buyers are going to want to see a T12 but some will only want to see a T3. In my market we have brutal winters and hot summers so our expenses tend to fluctuate and I always want to see a T12.

If you are able to increase the income and decrease your expense you can take the cap rate from your purchase +/-.5% and calculate your new value. Whenever I evaluate a property I include a proforma along with the current performance of the property so I have an idea of the properties value after the business plan has been executed.

Their website stinks to high heavens, @Dixia Martinez, with all the telltale signs of a scam through and through. Bad English, foreign idioms, unrealistic (really weird) terms, and an expectation that you will send them money via Western Union. Scam!!!

With typical hard money rates around 10 to 12 percent plus a few points, do you really think someone is going to make a $10M loan to you, a newbie, at 6 percent? Do you really think they will approve you for this in 6 hours after you send your application, as the say? This is nothing more than a scam, designed to extract an up-front fee from you and likely your personal financial information, which also has value.

LinkedIn, Facebook, Craigslist, Connected Investors, and most other online sources are cesspools, Dixia. Even the lender list on BP is not vetted.

Lending is a business based on relationships, not online anonymity. Stay off the web when looking for money. There are just too many scammers out there and it’s very hard to tell who is who or which website is even legit.

Local real estate clubs are your best bet; face-to-face. Under normal times, you’d be hard-pressed to toss a stone into any real estate club and not hit a private lender. You would go to lunch, bring a list of informed questions like these, and develop a relationship. There is almost never a reason to do business with an online stranger.

Until we can socialize again, your best option is to go to Meetup.com and call some local real estate club operators. Ask which lenders regularly attend their club and who have the best reputations. Call these people and have a conversation with that same list of questions.

Never rely on anonymous strangers you met on the web, Dixia, to find your money.