All Forum Posts by: Account Closed

I have a BRRRR property with an ARV of $130k. I plan on taking advantage of the cash-out refinance (75% LTV) to recoup my purchase and rehab costs. I'd like to avoid coming out of pocket at closing for the closing costs (about $5k). If I roll the $5k closing costs into the loan, how would this look? Would the 75% LTV simply just shift by $5k and be based on $125k now instead? $130k ARV, $5k rolled into loan amount of $130k provides a cash-out refi of 75%LTV on $125k instead which is $93,750?

It may be difficult to cash flow on a $250k property because in order to just break even on the property with 75% financing you will need at least ~$2,000 in rent. I am not sure if that area commands that kind of rent.

@Navdeep Raj Lots to unpack here. 

First, are you working with a Real Estate Sales Agent? If so, have they ran any comps to give you an idea of fair market value for like-kind properties that have already been updated? It will do you no good to buy at $255k, put $5k to $10k into the property, only for it to be worth $265k or less. You could just buy one, comparably, already to go for that price! If you are not working with an agent and this is a wholesale deal, you have to do your own due diligence. 

Second, you mention monthly expenses will be about $1k. Are you factoring PITI into this total (you shouldn't be)? If so, then you are cash flowing $500 positively at $1.5k in rent which is pretty good. If not, then yes, you are correct and are likely negative cash flowing by about $350-$450

Finally, what exactly are you looking for here? To me, it seems that you have decided you want to buy and hold it for appreciation and are simply looking for positive reinforcement. Unfortunately, you will not receive that from me. I am a buy and hold investor and believe in cash flow. Speculating on property values going up - especially in today's market - is likely no less hazardous than trying to play the stock market. Just my opinion though. 

@Nathan Gesner Thanks for the feedback!

@Russell Brazil You are correct - there are a good amount of lead generating companies out there. However, as an agent myself, I would only be working with agents under the umbrella of our parent company - keeping the leads in-house - as anything otherwise may be viewed as a conflict of interest. 

I am a licensed agent. If I develop a sales funnel that works incredibly well at pre-screening and qualifying only sales listing leads, would it make sense to focus on generating these leads (locally first but then maybe regionally) and passing them on to other agents to follow through and close, simply sharing the commission, agreeably, in exchange? Is this a common strategy of some agents? What would an agent think if I continually brought leads to them but rarely worked my own deals? Would they view it negatively or would they welcome the leads? I am taking an 'ROI on Time' perspective on this.

I just earned my Texas Sales Agent License and am an investor. I am about to initiate a yellow letter campaign and am looking for guidance on how I should address the fact I am an agent in my yellow letter. Thanks. 

@Sam Grooms great information Sam, thanks for sharing. Circling back to the Acquisition fee. How is this typically structured into the deal? I would imagine it would be a line item paid out at closing to the Syndicator. This way it is included in the leverage and not directly siphoned, in totality, from the LP's investment capital. Is this the case or is it taken out of the LP's investment capital up front? If the latter, I would imagine it to be a hard sell (i.e. Pay Me $X now to earn $Y later)

@Sam Grooms thanks for the information. On a side note, how familiar are you with Cash Calls? If you are the GP, are you immune to cash calls? In other words, can only the GP conduct cash calls or can the LPs get together and do so? If the latter is true, can you word your subscription agreement so that if a cash call is required up to a certain amount, you are not required to invest additional capital or, perhaps, if a cash call is required, you can opt out of participating in exchange for a dilution in equity?

When just starting out in syndicating, if the syndicator does not have enough capital to buy into the deal (which I understand is necessary for newbies to promote investor confidence) can he/she simply roll all/part his acquisition fee into the deal at closing? If so, what does that look like? Is it all handled in the closing process by the title company or will a bridge loan of some sort be needed?