All Forum Posts by: David Song

My partners and I are about to close a deal with a landbank and private lot owners to develop 50 Modern entry level homes within walking distance to an awesome (recently renovated) historic downtown. We believe that these new properties will attract Millennials and recent graduates who are able to work from home to choose to live here outside of Atlanta where it's much more affordable. This new buying pattern is called the "donut effect". We believe that our location is the right place and right time for this type of project.

The plan (below) is 2BR/ 2.5BA will list for $260k. and cost us $160k to build (sticks and bricks). We import high-end construction products at 30 cents on the dollar (been doing that for years). Our plan is to build 4 at a time and start the next four when they pre-sale. 

My question: What would be the best way to finance this project. It's in an opportunity zone. Is it possible to get a straight bridge loan (10%, no points) or should we just do a normal spec loans? How can we leverage the tax advantages here?

 Some of these flippers are not good economic readers or they're just simply unlucky.

1) We knew from 2021 that Fed going to reverse QE in 2022. They started reserving QE on Jan 2, 2022.
2) Russia attacked Ukraine on Feb 27, 2022. Commodity skyrocketed and 10-year note reached new high a week later.
It's a perfect storm to melt-up the MBS market.

If the flipper bought in Q4 2021 they will see this problem.
Actually flipper in Bay area is losing money also in 2019 when Fed reduces QE.

Reading macro economy is actually more important than reading biggerpocket how much the cost a plumber, as if one can timing the market correctly , they can make good investment and avoid turbulent (not market crash) market. 

If one refinances their house with 2% rate in 2020-2021 ; you are all good for 30 years and this market crash is just a blip in history.

btw if you use statistic from Zillow H.I. There's still no crash, only flat market nationwide. There are huge price reductions where there's oversupply like NV and AZ. Most CF market is weak but nothing crashed. Even Hawaii property is still appreciating higher than Bay Area. lol...

What's actually scary is the latest Fed Chairman seems to be okay for people to lose jobs and unemployment started rising as long as they can kill inflation. 

Apologies if that came off as harsh. My point is that when "know-it-alls" screw up and make a foolish move, they have too much pride and ego to come clean - hence we never hear from them. And I'm not referring to you or anyone specific. 

Obviously not all flippers who purchased in Q1 lost their shirt, but a lot of them did. Don't expect any to come forward with their hands raised admitting it. 

Hey BP community I need your Help & Input  please . 

       I want to take advantage of the new Senate Bill 9 (SB9) in California . With SB9 Cities must allow up to two lots (and up to four homes total) within single-family residential zones without any discretionary review as long as your property . Every city in California is handling this new legislation differently and have their own procedures . Here is the city of riversides FAQ for anyone who wants general information about SB9. 

 SB9 Riverside FAQ's

SB9 Lot Configurations 

      I am a fairly new investor . I currently own a 2 unit property in Riverside, California . The lot is .53 acres and 60% of the land is vacant and the other 40% already has 2 units on it so this is perfect for a lot split . I have already talked to the city planning department and they were extremely helpful . My property passes their pre-clearance and looks like I will be able to perform the subdivision under SB9  . I figure I already own the land why not build on it if the numbers make sense . The plan is to perform an "Urban Lot Split" , subdivide the property 60%-40% and build a Duplex on the new parcel since I will be able to get another address and separate utilities. I am currently talking to a residential land surveyor to  work on a site survey and Parcel Map proposal for me ,  up to the Tentative Parcel Map Approval. 

Here is where I need help . I really need to get an estimate on what it would cost to build a duplex on my property. I have the funds to perform the urban lot split and pay an architect for plans . To finance building the project Ive talked to a couple Hard Money lenders and thinking about doing a second mortgage on the property . Thoughts ? The property is worth around $570k right now and I owe $415K . My estimated ARV with adding the duplex should be 1.2million. Is leveraging my original property to fund building a duplex on the new separate parcel a smart idea?

What do you guys think of this plan ? Open to all ideas . Also just curious if you guys want to follow me along my project I will keep posting along the way .