All Forum Posts by: Derek Montes

I'm an REO Asset Manager- so basically I would be the one negotiating for the bank.

From my standpoint the bank probably can close in that time frame (for cash deals things close in about 15 days once sales contracts are signed, loans usually take longer to close). When buyers back out of deals we 99% of the time refund their money with no penalty. I negotiate with buyers sometimes even after we have signed contracts- every deal is different (multiple offers, inspections, etc). You have nothing to lose by trying to negotiate more. Of course I'm not sure which bank/auction you're going against. I've heard from Realtors that investors don't like buying homes from auctions like Hubzu (sp?) because of fees. In the future I recommend negotiatingas much as possible up front.

The one time I got a hard money loan they required a significant up front payment just to activate/secure the loan. We paid around 10% up front of the loan. In this case it was not a down payment and did not go towards principal. Also our interest rate ended up being about 20%. 

It's a rip off and a racket- legalized shark loaning. But then again sometimes this is an only option. Good luck!

Hi All! Hopefully this is not too long winded of an introduction.

I am Derek Montes. 

I have a BS degree in accounting (no pun intended- Ha!). I have been involved with real estate since an opportunity presented itself in June of 2013, where a prior friend wanted to bring me in as a partner to manage the books, and behind the scenes business operations, because of my background. 

We formed a new residential development startup, approached a venture capitalist and successfully received the funding we needed to secure a hard money construction loan. Without going into too much detail, I exited the partnership in July 2014, but was contacted by my ex business partners in March of 2015- they needed more funding. So to safeguard interests I helped facilitate a buyout of the project. One of the two homes were sold and the last one is wrapping up with the finishes. This project was located at 3513 Bastrop, zip 77004.

I am creating a new partnership with a new partner that has over 7 years experience in commercial real estate project management, and much more integrity than the previous nightmare of a partnership I was involved with. We are about to get a 5 unit residential development off the ground. We are working with our builder to come up with more exact numbers so we have definitive numbers to work a deal with a new VC, and then it's off to the races. 

My goals: establish a successful residential development company, then acquire rental properties, and then branch into commercial real estate. 

I've learned SOOO much from my experiences. I also refer to biggerpockets infrequently, and it has served me well in furthering my knowledge. I cannot wait until I am at the point I am able to provide help to others.

Derek M.

Another thing I forgot to mention is that your cost to build at $60/sq foot is extremely low. You will only get this pricing if you're building a neighborhood. Unless if you have an awesome connection (and if you do, please let me know so I can connect with them!), then expect to pay around $110/sq foot or more.

I am currently looking to do a 5 unit build in the third ward area. It's looking to cost us around $140/sq foot, but we are still in the early stages of working numbers. We won't have accurate numbers until we have an architect draw up the design. Architects usually cost $3/sq foot to design a spec home. 

I'm not sure of your experience, so if I told you something you already know don't take it wrong. Just be careful what you decide to do.

What you are proposing is very tricky and too risky. 

I've only done one residential development here in Houston, and it was a definite new experience where I learned so much.

Here's the number one reason it has a 99% chance of not working: timing. This could be pulled off in such a short time frame if everything goes as planned. Now consider time for architect to design, time for engineering, permitting delays, sub-contractor errors, on-site theft (and having to deal with insurance), time to list/sell.... and anything else I did not mention.

Play it safe, especially the first time you do something like this.