All Forum Posts by: Eric Sullivan

If you are purchasing the property as an investment, I am not sure how you would get better than 80% LTV. At least not that I am aware of. Assuming your plan is to continue to rent this out as a hold as long as the numbers check out I would think you would not have an issue getting approved. If you were trying to take on a condo conversion or new construction project that would present some issues. Mostly they care about debt service coverage ratio on the property and your personal ability to carry the property if it came down to it. If I were in your position I would try to speak with local banks as they are typically more flexible for lending.

Thanks @Lien Vuong. I actually did two for 2020. I don't believe you can apply the depreciation to W2 income as far as I am aware so that is one challenge for LP investors who may not have substantial gains from RE per say. Granted the depreciation carries forward and is never a bad thing to have. But I would be careful about stating that you can apply this against W2 income because you need to have a RE professional classification. I am not a CPA or any type of tax professional this is just what I am told by our CPA Firm and cost seg group.

@Andrew Camarda while @Lien Vuong is too modest to say anything. If you want to become an investor focused agent she's one of the best in the Boston area. I have personally done deals that she has brought me (3 family condo conversions). The difference between her and 99% of the agents out there is she runs her team like a real business with systems and processes. You should align yourself with her.

While my numbers may not be your numbers this is how I would break it down. I am based in the Boston area. We self manage our own construction so this is also if you hired all your subs yourself.

- $1200/fixture for plumbing (the shower would be 1 fixture and there maybe an extra charge if they have to dig up the foundation, if it's also in a basement you will want a backflow preventer which the plumber should recommend)

- $1400 Tiled shower labor & bathroom floor which this includes thinset and goboard or duroc (a little less if its just the shower)

- $500 tile & grout

- $50/ shower valve I use pfister & $150 for shower trim kit (amazon)

Total: $3300

I would round up to 4k to allow for a contingency.

Welcome Greg, smart decision of yours to plan ahead. We have all heard the stories of pro athletes who aren't spending the time to make these kinds of choices and they are broke 2 years after they retire. RE is one of the best spaces for multiple reasons which I am sure you are familiar with after your readings. But realize you don't have to go at the journey alone. Mentors and experienced partners are a great way to expedite your RE education and help to mitigate the costly mistakes in the field as you learn. BP community is a great resource of opinions and strategies for you to leverage. Best of luck in the journey!

We use Hemlane. I have used cozy in the past. I think both are solid choices you just need to decide on the features you are looking for.

Something I did not learn right away is that to a degree the terms you are given are all negotiable. I did about 3-4 deals before figuring this out. I keep a running sheet of local banks that I update about every month on their terms for holds and terms for development.

Here is what I am seeing right now around the Boston area:

Flips:

LTV - 75-80% is what I see

Origination Fee - 1/2 to 1 point fee

I look for 100% coverage of hard construction costs

Interest rate - I’m between 4.25 and 4.75% at about 6 local banks right now

Term - highest is about 18-24 months. If you need an extension for some reason most are really good about giving you a little extra time if it came to it because they don’t want to have to do the work to take over the project.

Holds

LTV - 75-80%

Interest - 3%-3.75% as an arm from 5-7 years (we don’t plan to hold forever so better rates are more appealing to us here)

Amort - I push for 30 year but a lot are 25

No fee

Rehab loan if needed which rolls into PITI as you draw funds. Usually a term of 1 year to complete renovations

@Arn Cenedella I think you hit a big intangible point about relationships and connections. If moving into a new market with out relationships you should plan to spend the time to figure out who the players are there.

@Diana Dorantes in Boston and surrounding areas there are still a lot of transactions happening. Inventory is low so most of the good deals are all happening off market. I think this is critical where investors who have spent the time fostering strong relationships in specific markets they want to operate in are paying off.