All Forum Posts by: Jon Kelly

@Peter Kozlowski Don't necessarily think this is a red flag. I would be mostly concerned about the actual numbers. It would be a problem if their fees are 1.5x the other lenders

@Eduardo G. which location will make you work harder? Pick that one. 

@Joe S. How many other applicants do you have? If you have other plenty of other qualified applicants I would choose them. Otherwise, make sure you charge enough to cover the damage 

@Frank Rodriguez present for what? 

Speak with your lender about the refi process and how they will repay the hard money lender. If they need a title company involved you will be working with a title attorney. 

@Adam Taylor Messy is one thing, but are they good tenants? Do they pay on time and are they paying at or near market rent? 

If they're good tenants then I wouldn't be concerned about "messy"... depending on what you mean by messy. A lot of investors prefer a cash-flowing property from day 1, so they can overlook the mess. 

Purchase price is the most important factor. You may have to lower your asking price because of the "mess."  

@Frank Rodriguez Typically, lenders will require any liens to be paid off against the property when you close on the refinance. It may depend on the lender you're refinancing with, but my lender required an attorney to be involved during the refinance process. I disclosed I had an agreement with "XYZ company". The attorney requires a final payoff amount to the hard money lender. You can either obtain it from them or have the attorney reach out directly to the hard money lender. When the refinance is complete, the attorney wired funds to the hard money lender. 

I wouldn't worry about anything. Obviously, you want enough funds from the refinance to payoff the hard money lender with interest. 

@Mike Schorah The phrase, "if you find the deal, the money will easily follow" has nothing to do with buyer's vs seller's market.

It means when you find a great deal you will easily find the money for it. Either you will come up with the money or you can easily borrow from family/friends or other lenders because it's such a great deal. 

It's easy to find money when you find a great deal with 16% COC, 12% IRR, $200+/mo in cash flow, etc.

It's tough to find money when you have a crappy deal with 4% COC, 2% IRR, $25/mo in cash flow...

Year 1 assumptions seem to be OK. Most people split apart maintenance and CAPEX. You're assuming 10% for maintenance and 0% for CAPEX. If the property is an good-great condition then 10% should be enough for both. $500/mo for a duplex seems reasonable.

Year 1+ assumptions seem a bit off. Utilities and expenses are increasing faster than rent and taxes? Taxes are $10.5k/yr. Are they really increasing at 3%/yr? 

I would set all future projections to 0% and then see if it's a good deal. If yes, then you can add in future projections 

@David Taylor I would suggest having one lender as a backup in your home town (proximity to you) that can lend to all markets you're looking into just IN CASE you cannot find a local (proximity to the property) lender. This will avoid any last minute scrambling. 

It's usually best to use local (proximity to the property) lenders until you get to a breaking point on the number of lenders you use. 

For example, if you begin investing in multiple cities and states you will end up with several lenders. It will be easy to manage in the beginning but will become time consuming as the number grows. I don't know what the breaking point is, it's different for everybody. Maybe after using 3-5 lenders you begin to consolidate. 

@Ishmael Johnson either way of communication is fine. I’d follow whatever form you currently communicate.

I know a lot of landlords have done this. I also expect most, not all, tenants will understand and appreciate it.