All Forum Posts by: Jordan Geiman

I'm in Alameda also. Check out "Alameda Renters Coalition" facebook group. It has info about all the rent control in Alameda. I know there are protections on % rent increases each year and also if the tenant had been living in the home for more than X years if you want to evict them you need to pay them $Y that changes depending how long they have been there. And that can be a pretty significant cost.

@Hiroyoshi Suzuki what is your budget and what size units are you looking for in the multi?

Hi all, I'd love to start attending this but have a recurring breakfast event every 2nd Friday. is the monthly coffee going to stick to the 2nd Friday or move around each month?

Take care!

I'll second Anthony's comment above. I really enjoyed this thread from multiple angles. Lots of good solid info sprinkled in over the 100+ posts!

Probably a neutral comment: But he usually doesn't have skin in the game on his flips. He gets a HML for the 1st lien to cover 65% ARV and then a gap lender to pay the additional plus holding costs, etc... so his out of pocket in most deals is extremely minimal.

Not counting his buy and holds though, I believe he finances those himself solely.

Amazing information you guys are giving, I really appreciate it and I will need to go through and re-read - google your replies to make sure I have a good understanding of my situation. to answer some of the questions asked to me.

I believe the first lien is coming in at 65% ARV, which would be right around 375k. I would be the 2nd lien at 25k, a third person would be behind me at 24k, and the borrower is handling the remainder (roughly 20k). It isn't what he typically does, typically he just has a 1st and 2nd lien, but I won't put down more than 25k for my first go at this in case something does happen.

I am a bit confused on the cltv though, what do i use for the value of the house: his purchase price, the ARV price, the ARV-rehab price? It depends because one of those puts me in the 70% range :)

Regarding the rehab, i agree it seems low, I actually grew up in the area and know it really well. I also have seen a lot of pictures of the inside and know that his rehab team he uses does all of his jobs and they have done about a dozen in the past year and all but one came in within his estimate. So I feel pretty confident in his assessment. Honestly, from the pictures I am unsure where the 16k is going.

The ARV also seemed a bit tricky, but honest, some of the quick sales in the area were across the street on a golf course that I imagine would inflate the price of that sale. But his house is also bigger than those. To some degree I imagine this would balance out a bit. But his assumed profit appears to give me confidence that even if he doesnt get everything he wants, he still has room to gain a profit.

It is a set return, not annualized. If he can pay me back within 90 days I would receive 27k back. Within 90-120 days, I would receive 27.5k, and so on.

Thanks for the reply Joel. That makes me feel a bit better about the rates my buddy was telling me. I wouldn't think of him to give me a worse rate than market value. But since we are in CA, I guess it does seem reasonable.

And I agree with your other assessment of what I have been seeing. It is a little alarming. I live in the bay area and bought in Nov 2011. By the market rates in our area a conservative present value for our place already has it appreciating over $200k. Which is great from my perspective, but worries me that it is going too high too fast. But I'm new to all of this, so what do I know :)

Can I ask briefly about rates for other states? As an investor why wouldn't I want to invest outside of CA as a gap lender to gain these rates that are much better? is there that much more risk associated to the properties or does it just remain on the shelves for a few more months?

I'll ask about that cross-collateral at all, great suggestion!

Thanks for the feedback Jon.

Specs on home:
purchase for: 415k
closing costs: 8.3k
rehab: 16k
holding: 3.5k
total project cost: 442.8k

closing on sell: 11.5k
realtor costs: 29k

ARV: 575k (comps provided in his summary)

potential profit: 92k

Can you elaborate on your point #2? :)

First time poster, long time reader. I find the information here amazing. I am completely new to this business, but feel I have studied a good amount about real estate investing.

A friend of mine has been doing real estate investing for about 18 months and has been moderately successful. I approached him with my interest in the topic and he shared some info and also asked if I may want to be a gap lender (or other avenue of lending) for some of his deals.

I thought it all sounded good and am now preparing for my first deal with him.

I am primarily concerned with my risk in this deal. He has a hard money lender that will be in first position and I will be the 2nd lien on the home, my total investment into the property is $25k.

The terms are that I receive 8% on my 25k if he pays me back within 90 days, 10% within 120 days, and 12% within 150 days. Is this fairly standard? I thought they were pretty good terms compared to my other investments outside of real estate.

But back to my main focus of this post, what are the necessary risks of this deal? I am going to have my lawyer look over the contract that my friend and I will sign. I will have a 2nd position lien on the house. I know my friend has rental homes and a few other properties of equity. So bottom line... is this a fairly secure investment to test the waters for me into this space?

Is there anything in particular I should make sure is in the contract?

The house itself seems like a great deal to me, the numbers check out, the comps all made sense, and the DOM for the comps were relatively quick.

Thanks!