All Forum Posts by: Glenn Espinosa

Thanks Tom C. and Brian Huggard. I will definitely explore keeping it in my personal name and what benefits it may bring me.

I want to buy a HUD home under my LLC to serve as my primary residence and to flip 12-24 months down the road.

In August I will need to move up north about 2 hours due to military orders. I will be living in this house half the time as I will be commuting down every 2-3 days.

Will buying under my LLC send off red flags to HUD personnel? Again, I will be owner occupying this for at least the 12 months required in the HUD contract.

Thanks

Glenn

I practice talking myself out of a deal as opposed to talking myself into one.

If I find that I can't talk myself out of one then I know I have a good deal. On the other hand, if I notice that I am talking myself into a deal and relying too much on everything to go right in order for a deal to work... that's when I run.

If it's been there for 6 months then it might be prime time to put in a lowball offer.

How would you pay for this? Just asking because you can't expect a bank to finance a distressed property.

I definitely do not have that much experience with HMLs but I can tell you what I learned from looking for my first lender:

1) A lot of it is deal oriented. The better the deal is the better your terms may be (eg. less downpayment, maybe less points/rate)

2) The more experience you have and the better your track record the more likely you will get funded. If you don't have this then more emphasis is put on finding a killer deal. Don't expect premium terms at the start.

3) The way you present yourself and the deal is paramount. I put together a pretty detailed investment summary that laid out all the numbers for my HML. I even included what their potential profit would be using the terms they provided. First impressions count a lot in this business so make sure you have your ducks in a row prior to reaching out to any HML's.

Lastly, putting money down on your own deal shouldn't be regarded as a negative, at least not initially while you are growing. Why would someone want to invest in your deal if you yourself aren't willing to put more of your own money into it?

Just my 2 cents, others may think differently.

Glenn

Rough estimate:

$275k x 70% = $192.5k
$192.5k - $50k (repairs) - $142.5k

Using the 70% rule of thumb, you would need to buy this house at no more than $142.5k in order to have a reasonable chance at a profit.

Think about it, just selling this house will cost 6% realtor fees. At a $275k selling point thats $16k+. After rehabbing for $50k and accounting for realtor fees you're already in the negative if you buy at $215k. That doesn't include financing fees, utilities, insurance, holding costs, marketing costs, etc.

BTW, I'm using $275k as my ARV just to be conservative. The numbers still don't look good at a $300k selling point, however.

What you are proposing is less than ideal because of numerous reasons. I'll list the two that come to mind instantly:

1) No bank or private lender will want to loan to a person who has no skin in the game. Also, no bank will loan against a distressed property. If you find one, let us know. I doubt the terms are worth your while.

2) IF you are able to accomplish the above, you will pay tons in interest. By doing the work yourself you will turn a 2-3 month job into at least 6 months if not years. A lot of profit is thrown down the drain by holding a property that long and moving slow on the rehab.

Put yourself into the shoes of a lender. Would you want to put up the money to buy and fix a distressed property to a person who plans to do all the work themselves and have no skin in the game? I'd do it but only if that guy has a verifiable income, has a hefty bank account, can prove that they have the skills to rehab, and is willing to pay me a crazy interest rate plus a hefty deposit.

There just has to be an easier way.

Glenn

Hi Joseph,

Welcome to the site! I am sure many of us would love to hear more about your flipping days and how you transitioned into lending.

What areas do you lend in and what what do you mean by sophisticated investors? Are you talking technology wise?

Do both. Flipping can at times seem easier (and a lot of fun) but landlording and having rentals is where the real wealth (passive) is at.

I flip to fund my rentals.

Will Barnard I really like your kitchen design as well as the ceiling beams in the living room. Also, the curb appeal is just plain ridiculous. You sure know how to put in nice sizzle factors. Best of luck on a quick sale!