All Forum Posts by: Gilbert Dominguez

@Ana G.,

Ana, I would hate anything to happen to you to make you lose that beautiful and gracious smile of yours. I would run to my nearest real estate attorney and preferably one that knows Dodd Frank and the Safe Act really well. Tell them about how you are going about doing your business and what you are telling sellers. 

@William Boudle

I would say this. During your first few meetings say nothing with regards to your real estate interest and certainly do not mention you are after obtaining money from him. Give your entire attention to his present business needs, show you concern for his business and interest in him personally. You want to establish a relationship. 

What value would or could a contractor bring to the table other than just labor?

. Years of experience and a complete knowledge of every detail you need to watch out for or make sure of for your entire deal. 

. Deal analysis for one, Insurance

. Quality control.

. Identification of non value adding tasks you have budgeted for

. Perhaps he is a designer as well able to save you money with creating construction plans

. Contacts with engineers, Better trade contractors and perhaps the ability to offer you discounts on materials. 

. Certainly making himself or herself available to you at your convenience

. Devotion, and dedication to your project giving your project priority. 

. If he or she is a journeyman level skilled trades person making that available to you on   your project. 

. Being a skilled, and knowledgeable real estate investor

. Project selection of locating for investment purposes. 

Honestly the advantages could be too numerous for this post. 

In your agreement I would provide for a certain level of ongoing monetary compensation but reduced compared to what you would pay out normally to a GC so that the contractor becomes vested in your project and the financial outcome or results of the project, 

In time I would ask the contractor partner to become more greatly vested in the projects, in other words put their own money into the projects from start to finish. You are welcome to PM if you would like to have a more detailed discussion on the subject . 

Whatever you will do as far as an agent is pointless until and unless you line up your financing, get pre approved and know you have a commitment from a lender or somehow really be able to put the cash together. 

Then unless you actually do a walk through and are able to get repair quotes or estimates from real local contractors I would not trust any assumed estimate you have made in your head. Also the ARV, comps have to be real.

I know of person in real life who did something like you are presenting here. He figured he could buy a house for $125K and needed $30K in repairs . The comps were around $325K

Looked like a killer deal so he went out and found a HML for the total $155K he thought he would need, in fact he got a loan for $200K at 10% interest. No money down, how wonderful he thought.

I am going to make a killing on this deal without using any of my money. The rehab added to his purchase price including interest, insurance, escrow and loan origination fees ended costing him $325K. He took 2 years to finish the project and ended up selling the house for $325K alright. What can you imagine went wrong?

I think people still get confused thinking cap rate relates to or equates to income total (ROI). Cap rate is only evaluating the building as a business independent of personal financial situation or condition.

Obviously if your NOI is $30K and your total expenses are $32K. You cannot earn money safely other than depend on appreciation and loan pay down over the years while operating at a negative cash flow. Simply not a good idea.

This is why total no cash down usually will not make sense because you will simply owe too much. There are a few opportunities to find buildings in locations where rents are really great compared to your total cost to purchase and or repair, plus all other expense but that will be very unusual. 

I see people here all the time find a 10% cap building and think Ah huh! I found a good deal then they proceed to find a HML for their 20% down and figure to get 80% owner finance. No money down, WOW ! Wait, add up all your monthly expenses especially debt service then subtract that from your NOI. Oh !!!!!!!!!!!!!!!!

Example: A building is for sale at $320,000.00 NOI is $32,000.00

$32,000.00/$320,000.00 = 10% cap, right

So Mr. Clever investor figures he's found a good building to buy because it has a 10% cap

but he is figuring he will borrow a HML of $84,000.00 to put a down payment down then he will get an owner financing deal for the remainder, $236,000.00. No money down, how wonderful. However,

The building's cap rate: is 10% but once you add all the expenses including debt service, total = $36,000.00 oh !!!!!!!!!! what's wrong with this picture?

Opps !!! you stepped in it. You should have asked before you put yourself under FHA's radar. Yup you have acted as a contractor, owner contractor by doing the construction yourself. That's a no no under Dodd Frank.

I was going to suggest you do a sub 2 and take a second with a down payment. As far as adding to the existing balance on the existing first , " forgeta bout it" 

I am going to bail on this one and agree that now you are better off going to an attorney and let him or her guide you. 

heheheheheh:) The way you pose your question is like asking someone to analyze the night sky for you. 

First does the land already come with soil analysis?, a recent soils report? 

Next does the seller have preapproved building plans? That would indicate that a soils report exist, the architect has designed an approved structure to be built and that a structural engineer has already provided structural calculations for that building. 

If you have none of these things you will start from scratch. 

Have you inquired any from your local building department civil engineering section?

Are there visible signs of electricity at the site?

Is there an existing water main to the old house?

Did you see a gas meter anywhere?

Do you know if the old house was on a septic system, is there a water pump anywhere on the grounds?

How about any roads. Is there a paved drive way or only a dirt road leading to the existing house?

before you simply start deciding you are going to tear down the existing house. Have you examined the condition of the existing foundation?

Have you thought about doing a remodel vs all new construction?

The difference between getting a remodel permit and an all new construction permit can be significant in cost and a remodel permit can be obtained between 30 days and 90 days on the average whereas a new construction permit will both cost more and take up to 2 years, maybe. 

Is the existing foundation in good shape and can it be incorporated into your new project?

Have you checked to see if there are any existing easements on the land?

If there happens to be an existing water main what size it is and will it be adequate for the needs of your planned, thought of or desired structure or will there be a need to upgrade it's size?

Give me, give me , give me , I need allot more information than what you are providing, tell me everything you know up to know. 

Do you know in what direction you are going to have the house situated on the land, What is the wind strength at the location of the proposed structure?

How many inches of rain does the location get per year?

need more, need more, need more, give me more to work with here. 

Sounds like to me that all you are missing is a deal. 

Hi mister investor I have this idea about how I am going to earn money .......

Lenders will not want to hear your idea, they do not invest in ideas

Mr. Lender I have this deal and this is my exactly plan of action. I can get this done in 

______ many days. This is my price point, this is how much I need for improvements and this is my verified ARV. I can earn X amount of dollars of your or X % interest for you in the following time period. I have verified my figures in the following methods, My team is comprised of ___________ contractor, etc etc, . They have ________x number of years in the business . Here are some pictures of their past and recent projects. The projects my team have done involved ____ amount of dollars and they were started and completed within _________ days. My project is right in line with the proven experience my team has on record.

This is the manner in which I will minimize the risk of your money being lost or My team not being able to produce your required results. 

Now !! I need X amount of dollars for this project and here is my breakdown of the distribution of the funds and calculated time of return of your funds including ____ X percentage of interest or __X amount of dollars. 

My plan for making you money over the following year is _______________________. I intend to bring you more business and I am going to work hard, my entire team is going to work hard to earn your trust and deliver results to you etc, etc. 

I am ready to go. My whole team is ready to get started please tell me your terms. I want you to work with me and my team. How can we get started doing business?

Remember its a competitive market out there so if you find a good deal you want to be ready to lock up the deal and the best way to do that is to have your loan amount pre-approved already so you know you can make an offer you can back up and all is good for you. 

@Charline R.

PM me I might have something for you in the Buffalo area.