All Forum Posts by: Cristian Aviles-Morales

Originally posted by @Von Dionne:

Hi BP - just looking for some assistance on a possible deal 

I have a possible deal in China Springs TX and need to know the best way to structure it

1. ARV is $230k - Needs 60k in repairs (built in 1976)

2. Owes $120k but the seller wants 30k (150k total offer)

3. Mortgage - p.i.t.i. $1,100

4. Rents -1,400

4. Wants $0 down 

I would like to take the property over using Sub-2 then possibly sell it on a lease purchase for $175k with a $15k option fee.

Is this the correct strategy to use? Any suggestions would be appreciated.

Thanks in advance! 

 Question, whats a 15k option fee?

Jesus no kidding. I just found a property through a friend who is going through a divorce, can't move the property because it is a new construction in a area where there are constantly building.  

Sounds like the perfect subject2. But I don't want to get involved too much until I find out how to approach them and know what I am talking about. 

@Charlie MacPherson Thanks for that! Very different then what is preached by gurus. The time crunch is unnattractive but imagine if you go under contract and dont even bother beginning the financing paperwork with your lender. Missing the closing date oof.

@Charlie MacPherson Floridian Here! Studying for my license and have read about the technicalities of performing on a contract. I have gathered that not having the intention to close is illegal. Would love to know the verses that are written that hone in on wholesaling.

• @Alexis Lightfoot I look for condos to leverage against. Definitely recommend you run the numbers and a quick way to do so before you get too deep and waste alot of time is to write down this:
• Purchase Price 
• Cash to Close 
• Rent
• -------------------- 
• Property Tax per month
• Insurance per month 
• HOA
• Mortgage 
• Vacancy (x%) 
• Repairs (x%) 
• Property Mgmt (x%)
• Total Expenses: X
• Then find out your cash flow 
• INCOME - EXPENSES
• Cap Rate
• NET ANNUAL -MORTGAGE ANNUAL / PURCHASE PRICE
• Cash on Cash Return
• NET ANNUAL +MORTGAGE ANNUAL / PURCHASE PRICE
• Takes like 10 to 15 mins to evaluate the numbers. If it's good then commit more time like figuring our a rehab budget. Determining ARV. Etc. If not, move on.
• Bullet points because on mobile and formatting failed.

@Dane Hamilton Pick 2-3 areas you know and start their for your direct mail marketing. As for the content of your direct mail, definitely look up examples online. Alot of Blogs state the hand written ones work, and I remember when I first purchased my home I received letters like that and I'll admit I was actually quite perplexed about the junk mail and read through it. But soon after, I was used to it and threw it away. 

And for the content it should really be quick to the point about what you are trying to do. If its to buy properties for CASH then advertise that part and hone in on the CASH aspect. 

Hope to see you out here making moves! I'm getting ready myself to pull triggers. 

Originally posted by @Chris Mason:

Originally posted by @Chris Viglietta:

@James Calabrese I'm going to plug my firm here and say that we don't charge for an appraisal when we look at a deal. Essentially, we eat the costs for our borrowers. If you're looking at a property and plan on using a HML to work with a traditional lender, please consider my firm as your HML. @Chris Mason please feel free to chime in if your firm can be the traditional lender.

 James, I'd just get written consent from Chris V to share the appraisal with you, and I'd get some sort of written promise from you that if it comes in high you will not share that with the seller (so they don't get any clever ideas on renegotiating price w/ Chris). 

Chris, what does your timeline look like and how ready are you with all the paperwork for me to preapprove for the refinance after the fact so you aren't stuck in James' hard money? 

 Not to bring up dead threads but I consistently keep coming across the issues that the OP is having when I analyze my deals. I guess the deals I analyze are BAD deals but maybe if I explain myself here someone can tell me where I am not assuming some cost or expense? 

So lets say I wanted to structure a deal like so...
Purchase: 229,000
Cash to Close: 45,980 (HML/Private Money foots this bill)
Rent: 2600

Expenses, 10% for Vacancy, Repair/CapEx, PM + mortgage and insurance, taxes: $2372, round to 2400 for easy numbers.

So I have Cash Flow of 200/month. 
Cap Rate which is Annual Net - Mortgage / Price = 18600 / 229,000 = .081 or 8.1%
Cash on Cash is Annual Net w/ Mortgage / Price = 2400 / 229,000 = .010 or 1% (Horrible, Bad Deal, but lets continue)

If I financed this deal with a HML who probably wouldn't have financed this deal, and I go to refinance, I am limited to only refinancing either the Purchase Price + Closing Costs (235,000 for whole numbers) if it is before the seasoned period, or the ARV of $250,000.

With the first refinance, I only get 70% of the loan which will equal out to 164,500. 

In the second refinance, I would probably get 70% maybe more, but probably 70%. Which will equal out to 175,000. 

I would owe 183,020 before refinancing so in both cases I would lose/not be able to refinance to pull any equity out and would still not be able to pay back my lender who footed the bill for the closing costs. 

My question really is, after spelling everything out, is there a QUICK way to figure out if a property I am considering will be worth it (so before calculating expenses, calculating CapRates and CoC returns etc etc) so that I know at the end of it I can pay back the 20% my lender puts up?

Originally posted by @Chai Xiong:

@Cristian Aviles-Morales I started during the housing bubble and they are all conventional loans.  I stick with BP rules they are all above 200 bucks per door.

 
Nice that's my aim too as well. How are you enjoying using conventional loans mostly instead of HML or private money?

When you first started did you already have cash waiting to be put to use? 

And by chance, do you rehab on your own or do you contract out? 

Excited to be talking to someone who is local to me so sorry if I come at you like a train with my questions!

@Chai Xiong Nice! Glad to see someone making it specifically here in Kissimmee and Orlando! When you first bought your long term rental, how good was the deal? Did you put any money into it or have a HML? And if it's not too personal, how much do you make on each door after expenses average?

@Blair Poelman Awesome thanks for the reply! I will see if working for a commission can pay equal to what I make now or more by talking to some close broker friends here in the area. Thank you!