All Forum Posts by: Matthew G.

@Daniel Brown Is your partner bringing anything else to the table besides capital? Will he be doing any work on the project? You can talk about adjusting the amount of equity you each get so that he might be more receptive to using a HML.

@Deonte Smith Hard money lenders are going to run their own comps and calculate the maximum loan amount based on their guidelines (usually around 75% ARV). It won't matter if you believe the ARV is a certain amount and that the property is a deal. They will come up with their own conservative numbers, so you don't really have to convince them that you have a deal. They will know.

@Luke Capozzoli You should consider more than just the cashflow you will be getting. Do you want to purchase a property that cash flows more but may not appreciate much naturally or are you okay with less cash flow but higher natural appreciation? This will narrow down your choices in where you should invest.

Everyone will probably recommend the city/state they invest in because they know the area and already have a team in place. It really just comes down to the deal you get and whether you trust the team you've assembled to handle any issues that arise.

@Sharon Duvall- Humes The type of funding you need really depends on the type of investing you are interested in. If you plan on flipping properties then you might look for HMLs. If you plan on renting then a conventional mortgage would be the way to go.

Typically for hard money you would need 10% down, 2-4 origination points, and fees. This doesn't include the cash you would need for rehab and the monthly interest payments.

For a conventional loan, it will vary based on the type of property you are looking for. If you have a W-2 then it will make it easier to get approved. If you are buying a rental property keep in mind the rent is included in the DTI.

If you just want to get started, but have no capital for either hard money or a conventional loan, then you can think about wholesaling.

@Spencer Carr If you are successful with your current flip, you might be able to find some private equity to partner with so that you can get a HML. Start talking to friends and family and go to meetups. Show them what you are working on and invite them over once you finish it. It will be easier to convince friends and family to invest with you if they can see you are competent at what you are doing.

@Andrew Lemmie If it is disclosed to the lender, then it should be fine, but the lender still needs to agree to it. Issues arise if they try not to disclose this to the lender who is part of the transaction.

@Andrew Lemmie Hard money lender will put money in escrow to pay for property and would holdback if they are lending for rehab. Unless the seller and buyer are trying to do something shady, you wouldn't be getting any money after closing.

BP is a great community, but it's more of an educational forum than a social network. It's unlike true social networks that use graph networks to recommend people you might know. The colleague requests is more just for PMs.

I understand not connecting with random people on LinkedIn because it makes it harder to request introductions to your 2nd tier connections when you don't know the 1st tier person you've added. On BP there doesn't seem to be any harm. 

If they make this into an actual social network, then I would probably consider being more selective. Until then just treat BP colleagues like bitcoin. Maybe one day those digital colleagues will be worth something and you'll be pleasantly surprised that you have them.

@Jonathan A. I've worked with a construction company, that had equity interest in the architectural company that bid out the work. We were able to bid on all the jobs the architects designed, but they didn't just give us the jobs. We still had to have a competitive bid.

If you just decided to use your company then that could be an issue. If you didn't get quotes from other contractors, then you may not have been acting with their interests in mind. What correspondence do you have with your partners on using your construction company? Look through your emails, do you say you're doing the job "at cost" anywhere?

A simple litmus test is if the cost of the project went over $275k, what would your contract and construction company allow you to do? Would your construction company eat the cost? Does your contract talk about change orders? If all you had was a one page quote with line items and a price, then I think it could go either way. If you had a full contract that states the scope of work and what you will and won't do, then you are probably covered.

@Abner Gomez If you have a general contractor, you should take them to some open houses of "hot" homes in the area you are buying in. Just let them know you want them to complete the rehab in a similar fashion. If you haven't done any contracting before, you should leave it to a general contractor otherwise you could miss important steps if you try to sub out the work  yourself.

If you are designing the space on your own, like the kitchen, get some feedback from contractors or friends and family. I recently visited a flip that looked beautiful in pictures, but when I started thinking about actually living in it, it didn't seem practical. The kitchen had a kitchen island, but had minimal countertop space. There was no built in microwave and no room on the countertop or an electrical outlet to put a microwave. Fail for a 2,200 sqft home. They could have easily made the kitchen have more kitchen cabinets and countertop space.