All Forum Posts by: Jason Clark

@Clint Kreider I'm currently looking for a MFR to reprosition or SFR on a R-3 lot that can be developed to a MFR in the Sacramento area.

Doing some quick math, going with a 12% promissory note or forming a 50/50 LLC would net me nearly the same proceeds either way I go. Guess it comes down to exposure and liability, thanks for the tip @Albert Bui

@Brooks Rembert has a good point, especially if ARV or contingency rehab costs change/increase while on the project. In this case I'd rather share the owner responsibility. However, I get the sense this guys is an active-investor, the type that wants his wife to pick out the carpet and paint colors (as she knows best) and the type of investor that could slow/delay a project down so he can approve all the materials/subs, etc, etc.

You've all given me a lot more to think about, thanks for the feedback. 

I was recently approached by an acquaintance that is selling his out of state commercial property (in escrow now) and looking to lend some proceeds at 10-12% to someone like me looking to reposition either SFR or redevelop a SFR on high density zoning to MF property, rent out and sell as asset. My million dollar question: how do I structure a deal that gives the investor security (and his 10-12%) but allows me to capture net proceeds on the final sale? Assumptions: $600000 purchase price $150,000 Rehap cost $940,000 Projected ARV

@Ed L. has great advise! No reason to move forward on a deal that's not really a deal. Your time is an opportunity cost, and offering this "deal in disguise" to a realtor builds a bridge for prosperous deals in the future, worthy of spending time on. 

Good luck!

@Margaret B had some great advise!  

Another idea; ask your lender for a referral or two from past realtors they've done FHA MF deals with. This will guarantee you get what you're after.

Cheers!  

@James Roux I've had the same experience in the past. It seem some Realtors don't like working with FHA financing as it can sometimes take extra time to close - making your offer less desirable to the Seller. However, I have not found this to be true. I closed a FHA loan in 22 days.

MF 2-4 units (as long as you are living in one of the units) qualifies for FHA financing. Actually some of the rental income can even be applied to help you qualify for larger loan amounts.

Talk with a direct lender that understands HUD requirements, get pre-approved and get lender involved with your realtor to explain your income and credit strength.

Good luck!

@Chad Hurin The VA loan is for active, past veterans or surviving spouses veterans, however it is possible to assume an active VA Loan, where you yourself are not veteran. That is if you find a deal that will allow you to assume the loan.

LTV ratios I believe go up to 103.3% of property value, and have a higher front load values (up to 41%) than conventional limits allow (28%). No PMI is required!

@Tayvon Jackson My understanding is that HUD will only allow one FHA loan at a time and that you must "intend" to live in the property for a minimum of two years. Should your circumstance change and you need to move, you can do so within 6 months but can only have one FHA loan at a time. Which means you can keep it, and add a VA loan, conventional, or Department of Agriculture loan.

Like @Holden Latimer mentioned, it makes a lot of sense buying FHA, rehab to get LTV ration at 80%, then refi to conventional at better terms.

I think the product is great those trying to get in for their first time or "turning and burning" a large 4-plex that you can live in.  The loan itself is expense, and wouldn't recommend using it over and over unless you're committed to a low down payment.  The 5% down loan is available here in CA up to $417K values with credit score of 700 or <

Check out FHA's 203K rehab loan. It's a very lucrative loan product that wraps the loan and construction rehab cost into one loan. Best part its all at 3.5% down! There's only two leaders that I'm aware of that offer this:

Bank Of America and Wells Fargo  

Good luck! 

Congrats @Derek Jones on joining BP!  I know Fair Oaks (greater Sac) area well.  Hit me up if you have any off market rehab deals in West Roseville, Rocklin, or Granite Bay areas.

Best,

Jason

@Karen Schimpf Amazon wasn't cashflow positive for the first six years after going public, and rarely is today but investors were patient.  Now the company has in excess of $50B in yearly revenue and a market cap of $202B.  

Why did investors, invest in a negative cash flowing business? Because they were betting on the future.  And it paid off, it should be no different in RE.