All Forum Posts by: Bob Woelfel

@Account Closed...if you are still asking if it's a good deal or don't know if it's a good deal then the last thing you should be doing is putting things under contract.  Now I'm sure there are some wholesalers or investors who say just get it under contract regardless and figure it out later, but these are peoples homes and lives.  It frustrates me when people just don't care and back out of contracts because they didn't do any due diligence in the first place.  Get educated and know what a good deal looks like.

@James Golden is right on. Each lender is going to be different, but most HML will require interest only payments each month until the property is sold or refinanced. Interest will start the day you close and is calculated like any other loan. In my opinion, HML's bring a lot of value to the table. Not only can they finance your project, but they are another set of eyes on the deal and most have systems in place to help protect you, especially from working with contractors by requiring lien waivers, etc.

Now if you had a relationship with a private lender then everything is negotiable.  Some lenders who know and trust me don't require payments at all.  They simply get their lump sum plus interest when I sell or refinance.  While private lenders are great, if you don't have any experience and you are borrowing money from someone who doesn't know anything about RE investing either you are missing out of that second set of eyes.  My two cents.

@Bresno Leon yes I do.  I don't think I'm allowed to shared them on the forums due to the rules, but if you want to DM me I'll share what's worked in my market.  Thanks.

@Pamela Sandberg is right about notes.  Newbies should stay away as there is a lot to learn and you can lose your shirt if you aren't careful.  You don't know what you don't know.  Plus you need quite a bit of money.  

@Vintus Okonkwo...the 3% fee is standard, but it only applies to the SELLERS.  Only the sellers pay this fee.  When someone lists a property for sale they pay agent commissions when the property sells in the amount of 3% for their listing agent and 3% for the agent that brings the buyer.  These fees can differ slightly, but are usually based on the gross sales price.  As a buyer you should not be paying any agent fees.

Now with that said the only exception I can think of is if you are offering on a off market property and the seller of that property is not interested in paying your agent.  Then you may have to work someone out where you pay them the fee for helping you.  

Hey @Benjamin Williams this is a very personal decision.  While you didn't answer the question of what you are studying and what type of career/income you expect to have when you graduate it sounds to me like you've already make your decision.  If that is the case and you want to move forward with real estate then I would encourage you to do so.  You could go full time with the job you mentioned, get your RE license, work for a property management company or any number of other real estate related jobs.  

Here's the thing....if your goal is financial freedom and you really don't have any debt now then you aren't really that far from it.  You could buy a duplex or fourplex and house hack.  That would put you on a fast track to doing just that.  If you get that far though I would encourage you to keep pushing and investing because before you know it you'll be 35 with a family and your financial obligations will look a lot different than they do now.  Best of luck.

We have this on a 6 unit building.  I just looked at what the first few months bills were and then began billing tenants back $25 a month for water usage.  It doesn't get us all the way covered, but it certainly helps.

@Georgui Kasaev I don't know if there is a right or wrong way it terms of when to fund and how much.  

It's probably more of a paint to split the rehab costs and fund a certain amount for steps in the rehab.  For example, if you split the rehab into 3 different phases then in theory each of you would have to contribute 5k per phase.  The advantage to doing it this way is you will have very clear idea of where you are at financially and where you are in the rehab as it pertains to the finances.  If you just deposit 45k into the account and start drawing down on it as you pay that 45k looks great in the beginning but if you aren't careful you might get to the end and wonder where it all went if you aren't done.  If you aren't experienced it's a little tougher to keep track of it all.

I guess I would suggest doing it in steps and here is why.  Most private or hard money lenders do this to protect themselves.  When a portion of the rehab is done they will release funds to cover that portion.  Every piece of the job that gets done will increase the value of the property.  This way if the deal went south and they had to foreclose it shouldn't be that hard to either sell it as is or pick up the rehab where it left off and finish.  It's a protection mechanism.  How it might work for you guys is it might help draw a line in the sand on the rehab and money spent so far should the deal go south.  I hope that makes some sense.

@Will Pritchett is right.  There are some shady lenders out there who don't mind foreclosing and taking the property back.  They sometimes show teaser rates and then you get to closing and the rate is drastically different.  What are you going to do at the closing table?  Walk from the deal?  

My advice is to find a HML that has a presence and a good reputation in your market. Go to REI meetings and find them there. Your chances of actually closing the deal and having success will be much greater IMO.

@Andrew Postell is right on. All HML are different, but yes some do not require any money down as long as the loan is under 70% of ARV. With that said, you must be able to document your ability to make monthly interest payments so even if you find a smokin deal and don't have to put any money down you will still need some cash laying around for payments. Most HML also work on reimbursements...meaning that as the work gets done and you pay your contractors, they will reimburse you for the completed work. This is important to note because the first contractor payment will typically have to come out of your pocket. When you get reimbursed by the HML you can then use those dollars to continue the job and pay your contractors again...get reimbursed and continue the cycle.