All Forum Posts by: Jeff Wills

You will want to keep an eye on you water utilities availability as well. That is currently a very big challenge for most developers in the area. There are about 20k units of SFH development in the pipeline already in that area, all fighting for the next available water rights. $50k per unit as your base price is also fairly high. MF developers are down to maybe $15k/unit at best in tertiary markets like San Antonio, and Builders like Lennar etc will pay probably 85k per finished lot, but with 47 acres you will only likely get max 164 units or so after drainage assuming no wetlands are in play. Keep in mind site costs per finished lot are floating around $50-$60k per lot, so your profit to a builder is then truly only $25k-$35k best case. The commercial does boost your value, but the acre out there is only worth maybe $500k-$750k to a QSR.

These numbers are assume utilitles are already to the site. If you have to extend anything, assume roughly $1250 per foot for any sewer utilities connections. 

This deal seems very overpriced from the outside looking in, since you are in LOI, continue to work your DD and go from there. 100% financing is possible, but not from a lending standpoint. A deal this size is too big for most private lending firms, but traditional banks will be fine to work with. You will likely want to max at 80% LTV from any bank to have this make sense, the other 20% can come from private equity, HNW individual, or similar. Since you are new, they will likey want a 90/10 split, having you come up with the 10%, but it will be very hard to leverage your 10% (of the 20% equity chunk) because they will have to be in 2nd position as a lien which is never an ideal place to be.

Since you are finding the deal, you could work yourself in a finders fee of 3%, then include that as equity to the deal to be included, but you would be short the 10% required thus further diluting your equity stake in the deal. A great way to learn, but the income side will be slower and smaller, as the first money in always goes to your lender to pay the note, then to your PE/HNW partner, then it waterfalls to you. 

Yes, I would defer to a tax attorney for best practices in your state, but yes I have my holding company, then a new LLC for each deal/investor. This way, you insulate yourself from any singular bad deal taking down your entire empire you are building.

If you find a broker who is also a direct lender (Gershman Mortgage, as an example) then they will be able to do that for you. They have access to over 33+ lenders, and can do NON-QM loans internally allowing you flexibilty. With the right lending partner, you can forgo this route entirely. A soft pull is likley required here, but at least it will not be multiple soft pulls. 

Agree that you should use the Real estate to help payoff your debt, this is the cleanest easiest way to do so. Owning for 2 years should have allowed decent appreciation in addition to the cash flow. 

Find a credit union or solid broker in your market to help you, that is your best bet. 

Be cautious here as others have said, but you should set your own lending guidlines, and let it follow as such. 

If this was presented to me, I would only offer my terms, not accept hers. Title has to be clear, my attorney will draft docs, held in an LLC, then 12% annual and 6% origination on whatever amount she needs.

Should they decline, that's on them, but will weed out any scams and ensure your capital is secure and you are not breaking any usury or other laws. 

Another option you may have not yet considered would be a blanket insurance policy, this could save you substantial operating costs, which would boost your funds available on a refi due to lower operating costs. 

Depending on your portfolio size, Mortgage Automater is a great tool but may be too pricey to make sense for you yet. 

Refi's in my humble opinion should only be utilized when the market rate makes sense to make another purchase or improve the property, and that expected return is about 25% above that rate. Otherwise, the renewed PITI may hurt you more than help in the long run.

Rate Opt, find a good lender that acts more as a fiduciary/partner than a lender. This way, they will look out for you and actually show you how to get the best rates. Most lenders wont tell you, but you can actually buy down any rate to the lowest possible, but the cost is the biggest crux. Most time the pricing will be put you over the golden ratio of 36 months to recoup the savings on the lower rate. If you can buy down the rate, and recoup within 36months, it should make sense in the long run. 

Keep in mind we should see rate cuts this year, so patience on that front will likley be your friend. 

All the people that I have tracked that survive all markets are the ones you do not lever more than 70% LTV on any asset they have. This hurts growth yes, but ensures you are around in the downturns, which should allow you opportunities to pick up on others higher levered mistakes as well.

I would say that you certainly need an attorney who specializes in lending law in your state to draft you lending docs. You should always be first position, and only lend on the borrowers LLC to avoid homestead/owner occupied foreclosure proceedings which are always less favorable to you.

Personally I do not go over 70% LTV AS IS, but terms are at your discression and comfort level.

Right now, I charge 12% interest to borrowers, and return 9% to my investors Annually. I then charge a 6% origination fee to the borrower, but no other fees apply. 

I think you just set up on LLC/Company, and then all loans should be "originated" from there. If you plan to coinvest, or invest personal funds as well, use a seperate LLC so that you become a client of your parent company, further insulating your liability.

If you have any questions please do not hesistate to reach out, sounds like you have a great foundation already. 

Where is the property located? We can lend on this property given the AS IS Value, or use other properties as collateral, we just require to be first position and has to be held in an LLC. No red tape with me either, all asset based, no credit checks etc.

Avoid 2nd position like the plague, and consider saving up until you have roughly the median sales price of homes in your area. This will give you wiggle room when you find your first client. Never go over 70% LTV on exisiting, ignore ARV values. Only lend on what you can see today, everything else is speculation and where you stand to lose the most money. Ensure you have a great Attorney who specializes in lending law to draft docs for you and your clients.

Lots of great info in this thread already, so I will only add to what has not been shared. 

Ensure you have a great title and attorney team for the docs, as those can make or break both the lender and borrower, and ensuring both sides have equal footing is crucial.