All Forum Posts by: Daniel Ramirez

Hey Alex,

Can you share some further insight into a mobile home deal? I would assume a higher turnover rate and bake in some collection fees (courts, late payments, etc) into the financial model for the deal, but I could be wrong (never held a mobile home). 

Do you manage these properties yourself or use a management firm?

Thanks for the insight!

Hello BP Community - 

Precise market timing is impossible or at the very least extremely-difficult to attain (otherwise we would all be multi-millionaires/billionaires). However, there are a few indicators in my market (Charlotte, NC) that point towards it being a bit on the overheated side: deceleration in construction projects, house flip rates very close to 2007/early 2008 levels, price expansion (appreciation) slowing down (according to some articles). One major positive is the influx of people into the city is still high. Based on what I'm seeing though, it might be prudent to start look at more recession resistant properties. My intention is not to debate macro market trends, but rather to discuss what constitutes a recession resistant property?

In a slowing economy, depreciating property values, where do you place your money (within the scope of real property)? I'm looking toward multi-family units (mid-lower income areas). 

Thoughts?

I'm currently working with James & Glassridge for a project in Charlotte, NC. I have nothing but good things to say. Extremely attentive and professional.

I am not associated with them in any capacity, other than as a current client utilizing them as a hard money lender.

Hey Kuba - I'm financing 190k. 100k for rehab and 90k for purchase of property. I missed listing the commission costs on the sell side but are factored in 35-40k margin. I'm assuming 4.5% commission ad a buddy of mine will list for 1.5% and buying agent gets 3%. Properties are sitting for <30 days.

There is a human aspect to this business as well. I personally would give her a rate reduction for a couple of months. Not only is this the nice/charitable thing to do, but forcing her to pay full rent or having her push balances onto following months will almost surely result in more of a headache down the road. Cutting her rate for a few months will surely turn into great word of mouth to everyone she knows. If you have other properties, you will get solid tenants due to your solid reputation as someone who cares (from her friends/family).

My tenant's husband died of cancer 2 months ago. She has been great for as long as I've known her, so given the crazy costs associated with funerals, I gave her 1 month free. I can almost guarantee, that as a result, I will not have vacancies in the unit for a very long time. Try to build loyalty in your good tenants - worth the investment! :)

Hello BP Friends,

I'm going to post a house that I currently have under contract and include all data points that I have. I have deemed this to be a "good" deal and have the intention to proceed, but am hoping you all can help punch holes in my analysis. In other words, any help pressure testing this would be much appreciated. I tried to go conservative and buffer some numbers with cushion.

Property Info: Single family house, 2Br/1Ba, 860 SQF. Lot size is .22 acres, corner lot, in a very hot neighborhood. Every other house is being rehabbed or has been rehabbed. Schools in district are rated 8 & 9 out of 10. The plan is to expand the footprint of the property into a 1,500 SQF 3BR/2BA house. Comps within a 4 block radius (freshly rehabbed) have sold or are selling in the range of $300,000 - $340,000. 

Data Points:

101 Latham Place, Charlotte
Purchase price - $116,000
Buy Side Closing Costs - $5000
Total Rehab Cost Budget - $100,000
Total Financed Amount (purchase + construction costs) - $190,000
Estimated time to Rehab: 5 Months (based on conversations with multiple GC's and Architect)

HML Cost to Borrow Interest - 10,000 (12% rate on 190,000 borrowed across 5 months)
HML Cost to Borrow Points - $7,000 (3.5% on 190,000)

ARV - $310,000

Exit Closing Costs - $3,500
Staging Company to Sell - $3,000

Holding Costs (utilities, taxes, insurance) - 2,750

The Total Rehab Costs is based on what I believe to be a reputable GC who has experience flipping in this neighborhood. I've walked a previous project of his and has high quality finish. The scope of that project was very similar and was $110,000, but he emphasized that there were multiple issues with that particular property. This project is essentially a complete gut that will include addition of roughly 700 SQF, new roof, siding, landscaping, privacy fence, hardwood flooring installation, interior re-design into an open concept floor plan, upgraded kitchen with granite counters, new cabinets, stainless steel appliances, etc. High grade finishes in-line with existing neighborhood finishes. The $100,000 rehab cost includes all permitting, inspections, etc.

All in, I am estimating gross profit (pre-tax) of $35,000 - $40,000.

Let me know your thoughts folks! 

Dan

Hello BP Friends,

I'm going to post a house that I currently have under contract and include all data points that I have. I have deemed this to be a "good" deal and have the intention to proceed, but am hoping you all can help punch holes in my analysis. In other words, any help pressure testing this would be much appreciated. I tried to go conservative and buffer some numbers with cushion.

Property Info: Single family house, 2Br/1Ba, 860 SQF. Lot size is .22 acres, corner lot, in a very hot neighborhood. Every other house is being rehabbed or has been rehabbed. Schools in district are rated 8 & 9 out of 10. The plan is to expand the footprint of the property into a 1,500 SQF 3BR/2BA house. Comps within a 4 block radius (freshly rehabbed) have sold or are selling in the range of $300,000 - $340,000. 

Data Points:

101 Latham Place, Charlotte
Purchase price - $116,000
Buy Side Closing Costs - $5000
Total Rehab Cost Budget - $100,000
Total Financed Amount (purchase + construction costs) - $190,000
Estimated time to Rehab: 5 Months (based on conversations with multiple GC's and Architect)

HML Cost to Borrow Interest - 10,000 (12% rate on 190,000 borrowed across 5 months)
HML Cost to Borrow Points - $7,000 (3.5% on 190,000)

ARV - $310,000

Exit Closing Costs - $3,500
Staging Company to Sell - $3,000

Holding Costs (utilities, taxes, insurance) - 2,750

The Total Rehab Costs is based on what I believe to be a reputable GC who has experience flipping in this neighborhood. I've walked a previous project of his and has high quality finish. The scope of that project was very similar and was $110,000, but he emphasized that there were multiple issues with that particular property. This project is essentially a complete gut that will include addition of roughly 700 SQF, new roof, siding, landscaping, privacy fence, hardwood flooring installation, interior re-design into an open concept floor plan, upgraded kitchen with granite counters, new cabinets, stainless steel appliances, etc. High grade finishes in-line with existing neighborhood finishes. The $100,000 rehab cost includes all permitting, inspections, etc.

All in, I am estimating gross profit (pre-tax) of $35,000 - $40,000.

Let me know your thoughts folks! 

Dan

Thank you all for the responses.

The term the lender used was an "ARV Loan."

@Kyle Gray The points are in fact applied towards the loan amount. Before I proceed with anything, I will make sure to check where points are collected. 

@Wayne Brooks, you are absolutely correct.

I just wanted to make sure, I wasn't going to get hit with an astronomical point based fee if/when I proceed with note.

Hey BP Community,

I'm getting quotes on an ARV loan for a fix/flip project from a Hard Money Lender. They are offering 90% of ARV at 12%, with 4.5 points. My question is, does the point charge get applied to the Borrowed Amount or to the ARV.

Example, I'm borrowing $100k, would the point charge be $4.5k. Or, if the ARV is 200k, will the point charge be $9k (4.5% of 200k)?

Thanks!

Hey Guys/Gals,

So I'm under contract for my first true rehab project in Charlotte, NC and am hoping to close here in 2 weeks. I'm using a HML to finance part of the project costs, and as most of you well know, the cost to borrow is not cheap.

Initially, this was going to be a rehab/flip. However, given the rapid appreciation in the neighborhood where this property sits, I'm considering rehabbing, renting, refinancing in order to hold and cash in on some equity growth over the course of 2 years.

My question to you all is, once it is rented out, what is the quickest way to refinance the property? I've been working on a cash-out refi on one of my rentals that is free/clear and it has been 3 months and still no close! They keep telling me their is a market-wide backlog given the low-rates and their underwriters are swamped.

My concern is that once I rent it out, it will take 3 months to refinance, over which I will be paying 12% interest on the HML.

All you BRRR folks - care to share your thoughts?

Thanks!