All Forum Posts by: John Quebedeaux

Short sales is a better way to go

He means Bankruptcy

You can partner with a rehab lender. If you do make sure each properties has each own LLC.

How much is your credit cards balance and monthly payments? Use snowball effect from your cash flow property to pay for credit cards.

What is the value of your free and clear duplex? Use the money from the free and clear to  leverage more property. Invest into an appreciation asset and NOT deprecation assets like credit cards unless to free up monthly cash flow.

You are bless. Learn from that contractor.

Pull comps in the area. Ask her why she has to go back to work. Probably her son is a drain on her income.Ask her what is her retirement income is . If you where to offer an responsible structure where her recent income is stable for her not to go back to work, then she will do it. Probably  the extra 1000 is killing her. Remember these people are on a limited income. How old is she?  

Jon Holder is Right on the money! No lender will loan you the money to build until it is shovel ready. Plus you need skin in the game at least 15 to 20% down.

Loan to Value:

Up to 80% for Multi Family, 75% for all others.

Loan to Cost:

Up to 90% cost loans are available for select properties

Construction Loans:: Floating over LIBOR or PRIME; fixed over LIBOR

DEFINITION OF 'LOAN-TO-COST RATIO - LTC'

A ratio used in commercial real estate construction to compare the amount of the loan used to finance a project to the cost to build the project. If the project cost $1 million to complete and the borrower was asking for $800,000, the loan-to-cost (LTC) ratio would be 80%. The costs included in the $1 million cost figure would be land, construction materials, construction labor, professional fees, permits and so on.

INVESTOPEDIA EXPLAINS 'LOAN-TO-COST RATIO - LTC'

The LTC ratio helps commercial real estate lenders assess the risk of making a construction loan. The higher the LTC ratio, the higher the risk. A similar, commonly used metric, the loan-to-value ratio, compares the amount of the loan to the fair-market value of the project.

Plus you have hard cost and soft cost.

Soft Costs Explained

• Soft costs are those not directly related to the physical construction of the building, but that are still necessary to complete the project. They include such things as architectural and engineering costs, marketing and sales expenses, taxes, finance charges, insurance, interest payments and general administration costs. These costs often cannot be charged directly to a specific project, which is why they're sometimes called indirect costs.

What Goes Into Hard Costs

• Hard costs are the direct costs of a construction project. They typically include such things as labor, materials, basic building services, shell features, interior enclosures, fit-out costs, and basic mechanical and electrical systems. Hard costs for a project can also include things that are not part of the construction contract but that are still necessary to make the building usable, such as furniture, fixtures, equipment and specialized mechanical or electrical services. These costs are often paid directly by the project owner, rather than through the construction contractor.

Do your home work first!

Sight unseen I would pass.

Make sure each house has each LLC. Your lawyer can explain this to you.

Percent After Repaired Value (ARV%) is an important consideration When searching for investor properties. It is important to understand what% ARV is based on in order to perform due diligence on the property being considered.

For investors,% ARV is an important figure to understand. ARV stands for After Repaired Value, que is Essentially all the market value after repairs are complete. While it is simple to calculate, it Gives an excellent notion of what an Appropriate offer is for purchasing a property. Also It is the key figure in Obtaining Hard Money Loans That are based off the property value rather than the buyer's credit score. The rule of thumb for purchasing with hard Money is not Exceeding 65% ARV. Whether or not you use Hard Money, you need to figure out Especially in a declining market like we are in currently. This Gives you enough cushion in case values continue to fall for a while. The key is to not realize that values are declining Not Necessarily a bad thing, as long as you use them to your benefit to negotiate a better deal.

We have automated the calculation ARV% based on the market value and repairs Estimated That the seller has input. Keep in mind, the calculation is only as good as the information put in. That is by the seller. This is the reason why it is very important for any investor to understand% ARV So THAT Their Own They can perform due diligence and double check the advertised values.

To calculate ARV, perform the Following:

Comparables (Comps): You should start by researching recent sales from the last 3-6 months. Normal markets would require a 6 month window for comps. In a declining market You should use more recent comps. NOTE: Beware of automated Calculated values That some websites provide. These are notoriously unpredictable. However, Most of These sites include access to comps Also That You can use for a sanity check.

Repairs: Have the property inspected and come up with a realistic value for what the repairs will cost you. Keep in mind That even for the Most experienced rehabber, repair costs go over budget Often. Make sure you leave enough cushion for the unknown.

Asking / Offer Price: Use the seller's asking price. However, adjust as needed to account for a lower offering price.

Takes into account ARV Percent Asking Price plus the Repairs as a percentage of the After Repaired Value.

Here's an example of how to calculate ARV:

Comps show a value of $ 100K

Asking Price is $ 50K

Estimated Repairs are $ 10K

% ARV = [(Price + Repairs) / After Repaired Value] x 100%

In this case% ARV = [($ 50K + $ 10K) / After Repaired Value] x 100% = 60% ARV

In the above example, 60% ARV is an excellent deal and leaves the remaining 40% for PROFIT (minus buy / sell / carry costs) ... Assuming the numbers used Were accurate! That is why it is important to take all of These values into account and adjust based on current market conditions. Percent ARV Gives investors a good "feel" of the deal That They are looking at. Also keep in mind many times That you see an investor property advertised on other websites,% ARV is Often misused by leaving out the repairs. What good is a property at 30% ARV if it will take the other 70% and then some to repair the house? Make sure That You know how They are calculating it.