All Forum Posts by: Account Closed

Just to throw in a different perspective, I'd sell, assuming the condo is located in true "downtown." Lots of brand new Class A properties scheduled to come online in hotter locations like Midtown and Buckhead over the next couple years, which will likely hurt your value. Condo values got massacred during the last cycle and you're unlikely to see any real appreciation downtown, in my view. I'd trade for a SFR in Smyrna, for example.

I concur with not doing a JV, especially if the $200k loan will be secured by your property, i.e. the developer is bringing no cash to the deal. In essence, he is charging you a 100% margin on construction cost ($250k profit / $200k cost). That is insane, especially where it sounds like he has no cash in the deal. I would think it would be closer to a 15%-20% markup on actual cost for a GC to handle the rehab, i.e. $30k-$50k.

I would be concerned that 50% sounds almost too good to be true, like he is desperate for funding and has no other options...which would not be the case for an established builder. If you do it, ask for a second position lien and a guaranty. 

I would attempt to negotiate further with the holder of the first lien. They will not be made whole if they proceed with the foreclosure sale, so if you can offer them FMV, I would be surprised if they didn't take it, regardless of what they told your attorney in the initial call. Try again. Beg.

Bought two properties at the courthouse steps in atlanta in the past year. Competition is extremely intense. I would say generally no more than a 10-15% discount off retail. Did somewhat better on mine (about 30% margin). I went to the steps probably 4-5 other times without winning anything. Be prepared to sift through a lot of properties and have most of the best ones be cancelled at the last second.

Rolling the flip proceeds into other deals won't work if the note will be secured by the property - when you sell you'll have to pay off the note to convey clear title. Can't see any way around that, unless he's open to taking other collateral. Still sounds like a fantastic deal if you can clear $30k with only $3k out of pocket...

Be prepared for lots of "hurry up and wait." They demand immediate action from buyers but then the bank will typically sit on the contract for a minimum of two weeks. Expect to close two weeks after that if you're lucky.

My suggestion would be that you form a joint venture with a builder in which you contribute the lot (valued at FMV), the builder contributes the build costs. and you split the profits pro rata. You avoid the headache of *you* fumbling your way through the spec building process and substantially increase your upside versus selling the lot outright. I'm in the process of doing the same thing right now. No brainer, IMO.

Market rate in Atlanta is typically about 5-6% of gross rents for a building of that size, from what I gather (take with a grain of salt as I don't own or manage any multis).

Okay, fair enough, I stand corrected. But I bet you'd get an earful if you "accused" a McDonough resident of living in Atlanta :)