All Forum Posts by: Jeff Cichocki

@Rohme Williams,

Unfortunately, the lending space is filled with a lot of pretender lenders. Most are easy to spot though. Their offers are usually too good to be true. 

Small upfront fees aren't bad. But, those fees should only be for covering costs in case you don't qualify. IMO, the only acceptable fees are application fees (to cover the credit pull) and the appraisal. Excessive upfront fees are dangerous for the borrower. Usually the less than reputable lenders have the big upfront fees. Fees are a big profit center for many lenders. Find lenders who are reasonable and you'll be fine.

Good luck.

@Robert Tinker, The best tool that I've found out there for doing estimates as a rehabber (I'm not just a lender, my business partner and I are investors as well) is Rehab Estimator Pro (https://www.rehabestimatorpro.com/ - This is not an affiliate link - I don;t get anything for referring you). The guy that developed this software is also from Wisconsin.

We use it both when we are flipping a house and for when a borrower asks for a loan. I've found it to be accurate within 1-2% of actual. Matt spent a lot of time micro-analyzing rehab numbers to get it this accurate. He also put options into the software so that if you find that your area is a little different, you can adjust the formulas up or down.

Good luck. I hope this helps.

@Jordan Epping, I'm in Wisconsin as well, but I'm not an expert LL. But, I would think that putting a clause in either the lease or having a separate maintenance contract for just the outside of the house that they sign/initial may have you covered. You are not asking for access into their home. You're only asking to cut the grass and maintain the landscaping. I would think 99% of the tenants out there would jump at the chance to have a maintenance free home.

You may want to bounce this off an attorney, but I would think it's doable.

Good luck.

@Robert Tucker, if your looking for topics to blog about, I would suggest writing about how to use PM & HM properly and creatively. I'd talk about why HM is better than grandma's money. I'd talk about how to structure deals to use a blend of seller finance, HM and or PM. There are lot of investors out there who could really use some help in how to use money in general properly and to their benefit. As you know, there's a lot more to flipping a house than just taking out a loan. I'd focus on teaching them how to better use it.

@Justin Johnson, I agree with @Odie Ayaga. The best thing you can do to help yourself figure out whether or not HM is a good route for you is to run the numbers; compare the results. What will it cost you to pull those funds out of your other investments to do this? What will it cost to use HM? If you use HM, and you make money in the deal, when you add that profit with the profit from leaving your other investments in place better or worse?

HM, PM and banks all have their places in our investments. Typically, the highest yields from investments happen when you leverage someone else's money into the deal. Typically, the highest yield on your time, is to hire someone else to do the work while you do something else.

Only you can do the math and comparisons for your situation. Anything that people tell you here on BP is just an opinion. Others opinions may or may not be good in your situation. And, every property is a new situation. It may makes sense in one deal to use your own cash and to use someone else's money in a different deal.

Good luck. I hope this helps.

@Hugh Wagner,

Whether or not to lend from an LLC is more a matter of choice than liability (I'm not an attorney). Lenders don't really have much in the way of liability in the property. The only place it really exists is between you and your borrower. And, a good mortgage & note will strip the borrower of most of the frivolous stuff that can happen in a loan away from them. Your paperwork should absolutely be tipped in your favor. You're the one taking the biggest risk.

How much is your borrower putting into the deal? If yes, have them put those funds up as part of the purchase. Control the rehab funds through an escrow account. Most title companies can do this for you.

Are your rate & terms adequate for the risk your taking? How well do you know the area you're lending into?

If something goes wrong during the project, do you have the ability to jump in and take over if necessary? Can you call the loan due at any time? What are your points of control?

Does the attorney you're using to set up your paperwork have experience with lending? What kind? How much have they done? Hard money & private lending is a very niche industry. There are not that many attorneys out there that truly understand it. You may want to go take a course on it.

Anyway. those are just a few more thoughts I had about it.

Good luck!

@Kerie Choiniere, It's a common problem in strong markets. To me it sounds like you definitely need a good lender to work with. Ideally, you should get pre-approved so that you know exactly what you can and can't buy, how much you can borrow, what the rates and terms would be, etc. Having that all set up in advance would give you the confidence and speed necessary to move quicker.

If you have any questions about how to go about doing something like that let me know.

Good luck. 

@Brian Auman, Welcome to the family. Lots of good advice here. Something to consider is wholesaling or bird dogging. They're not as sexy or glamorous as Flipping or BRRRR, but either can help you generate chunks of cash without tying up yours or anyone else's cash for any real amount of time. No real need for loans with this. Essentially you get paid as fast as your buyer can close.

Just my two cents.

Good luck!

I'm not saying the guy is a legit. Lenders who promise 100% financing nationwide are usually full of some pretty smelly stuff. 

But, I've been lending in Wisconsin for a little more than 10 years now and I've always lent 100% (up to 65%) to borrowers in my state (not outside Wisconsin). My business partner and I are also investors (most lenders are not). We're not afraid of taking a house back in our home state. We know the laws and areas here very well. We've networked ourselves pretty well too over the years. Lots of friends and teams across the state to help us out if we did have to take one back.

But, if this guy is offering low rates, low fees and 100% financing across the country, he's probably someone you should report and run from. Way to many investors who get scammed by guys like this.

@Sid Shankar, The correct answer is... It depends on what you really need and want to accomplish.

Generally speaking, the 10 property limit is for when you put the properties in your personal name (which by the way is not a good long term strategy; you need asset protection). 

Sometimes a commercial loan from a bank is the right answer.

Sometimes a non-bank lender is the right answer.

The best course of action to beat the 10 property rule is to start meeting more than one lender. We are not all the same. Some of us claim we can fund anything. Some of us have niches. Our customer service is not all the same. Our programs are not all the same. Our creativity isn't all the same. Build your team of lenders and you'll never outgrow your funding needs.

Good luck!