All Forum Posts by: Sam Erickson

@Mike M. you need to be open to all avenues. Continue to search the MLS, but I'd also talk with Wholesalers. Tell them what your looking for and see if they can bring you anything. I'd also be on Craigslist looking for FSBO. You can't just focus in one spot.

@Jassem A.  Its unlikely that they would allow you to only put 5% down all 10 though correct?  Even though you can get 10 conventional most banks only give you the primary residence with the lower down payment, otherwise they will still require the 20-25% down.

It will depend on the wholesale deal.  Most wholesalers like to offer cash purchases to their sellers.  This is whats appealing to the sellers, quick cash with a quick close.  However it could be possible to change the terms of the contract if the seller is open to it. 

Don't have one myself, but you could try to search the file place.  Someone may have uploaded one at some point.

@Mike M. I'm curious as to how you got pre-approved for a Primary residence when your currently living in a primary residence?  Are they giving you the pre approval with the assumption that you'll be selling your current home?

As far as the 5% goes, yes you can cash flow. In the good old days people that did their homework were putting nothing down on houses and they cashed flowed. Its just a matter of finding the deals that do. If your not having luck with the MLS you may want to try to connect with some wholesalers, or start doing the direct marking yourself.

@Dolores Waldron there are many possible scenario, but essentially you are just putting together terms that both parties are comfortable with.  What the terms are going to be is going to be based on many factors.

On of my last private lending deals I put together broke down this way.  I'm paying my private lender 7% interest (annually) on all his money invested.  Its important to know the term of the interest.  Mine is annually so if I get the project down in 6 months, i'm only paying them 3.5%.  This particularly project was a higher dollar amount (then this private lender typically does) and had really good margins.  Because they were investing more and I could afford to do so I also did a profit split with them of 60/40, they got the 40%.

Here are how the numbers are projected to break down.

PP $125,000

Rehab $20,000

ARV $220,000

Term 6 months

With out getting into all the expenses, I'm projecting a net profit of $51,000, this is net after interest charges.

So at the end of the day my lender will get $20,000 from their share of profits and $5061 for their interest.  Brings their total to ~$25,000.

I'll then get $30,600.

So as you can see the lender is making out well on this deal, but I am too.  It is a quicker project and I always try to keep my lenders happy.  The other reason I gave them more is because the project totals are higher then they typically do.  However if I can make them $25,000 in a few months, I'm hopeful that this will open the door to more higher dollar amount properties with higher margins.

So when talking about interest rates, points, profit share, it isn't one size fits all.  You need to know your lender, what their risk tolerance is and what terms it will take to get them in the deal.  IF the project can warrant those terms it can be a good win for all.  The last thing you want to do though is give away all the profit, just to get the deal done.  If that happens you just spun your wheels for a few months for nothing.

Where is the property located?  Also people will need to know details about the property if they are to help you.  Sq Ft., occupancy, Rent per sq ft, etc.

If you can provide some of that info depending on where its located, I'm sure some in the area can jump in and help you.

Absolutely.  If there is more to your question let me know.

I think the 1st step would be to approach your private money lender and make sure they are interested. Since your also using Hard Money, your private money lender will need to be comfortable taking a second position on the property....not sure if they will like that or not.

Once you work all that out and negotiate your interest rate, points, profit share (if any), etc.  Then its just a simple promissory note with the property being the collateral.  The title company I use has an in-house lawyer who drafts all the documents needed.

Unfortunately @Wilfredo Pacheco I think the "protection" train as left the station.  Your steps to insure you were protected should have happened before a penny was spent.  Like @Jeff F. said I would be on a plane immediately to find out whats going on.  Are they returning your phone calls or are they just gone?