All Forum Posts by: Kenneth Garrett

@Mitchell Endicott

I've used a number of different private lenders. I have never asked for money. I go to REIA meetings real estate investing groups and other networking sessions and meet people. Listen carefully as people talk about things. Some talk about how they could never flip or be a landlord or wholesale. We'll maybe there to network as well.

Attend meetings where they talk about self directed IRA's or 401K's. That is a meeting private lenders would attend or at least people interested in becoming private lenders. Be a good listener around you. You can talk about a deal your working on and looking for a money partner. With no experience you might want to partner on your first deal with an experienced investor to get your foot in the door and make valuable connections and how a project goes

together. Just some tips.

I like to create a 3-4 page prospectus on a deal and share it with investors. Leave the address off, but you can have the town in there. It describes the project, what I plan to do, rehab it and numbers, am I flipping it or renting it (brrrr) what interest rate i will pay, how long before the money is returned and the profit they can make. It should include as much about the project so they can analyze the investment. You can also talk about your team you put together and how the project will be successful. This is just a sampling of what I put in there.

@Nef Ojeda

Cashflow Quadrant by Robert Kiyosaki.

Great book on how to look at money and what constitutes an investment, ROI and cash on cash.

@Shae Langley

ARV is your estimate of value after repairs have been completed. I calculate my own ARV on my BRRRR projects. The loan process is based on appraised value not projected value. Markets fluctuate. Your calculated ARV when you bought or started rehab could be different then when you finish. It's a fluid market. At times, mine has gone higher, it also has gone lower.

Appraisal is what banks look at. Even with my DSCR loans, it's still based on an appraisal.

Best of Luck.

@Ryan Richard

Private money is generally a short term loan as in a flip or BRRRR. Long term private lenders might fund for long term if they are part of the deal. Private lenders charge a higher rate that is why it's usually less than 12 months. In my area it's usually 10%-12% maybe a point or two.

You need to build relationships to earn a private lenders trust. I had always met them at REIA meetings. There are many on BP here as well, I have never worked with them as of yet. It's all about relationship building.

@Jay Y.

It is unusual to request a drawing for something that doesn’t require a permit. I’m going to assume the engineer is looking for an as-built drawing to put in the file or to confirm it’s not located in an easement. There are two different things going on here;

1. Building permits are required or not required by the building department.

2. The engineering drawing being requested has nothing to do with a permit.

I would clarify if they are looking for a hand drawn sketch or a drawing prepared by a civil engineer. There is a big difference here.

I always find it best to communicate with the requester and find out what exactly they are looking for. At the end of the day maybe it’s no big deal.

@Chris Leppanen

I use DSCR loans when I do BRRRR projects. The number of loans a lender will give is lender dependent. In theory, there is no magic number. The more loans with one particular lender the greater the risk for the lender.

I use multiple local lenders. I find small local banks and or credit unions are easier to work with. They do like you to have some experience and good credit. I've seen some lenders require a 680 FICO score while others want 720. Obviously the higher the better. DSCR loans are more expensive.

@Chris Lai

I think private lending is one thing that seems ideal for high net worth individuals who don’t have time due to the number of hours and responsibility.  It’s a hands-off way to invest with a great cash on cash return of there money.  12%-15% return compared to the stock market right now seems like a great return.

I will add a second bathroom if I can get a return high enough on the ARV. In my area there are plenty of 2/1 and 3/1 so the second bathroom is not that big of a deal. When I do my rehabs I do a pretty high level almost flip style so then maintenance and capex is very small. I don't worry about those items. I generally just bank the cash flow so there is always money to take care of things. Most rehabs include; carpentry, electrical, plumbing and mechanical.

Sorry to hear about your situation. Condemnation only means the house is unfit for occupancy. It doesn’t mean anything more than that. I disagree the city only cares about revenue. It is there obligation to ensure the unit’s are compliant with building codes. Fees are just a means to get compliance.

During due diligence, I always fill out a FOIA request (Freedom of Information Act) through the city. I ask for any code violations on the property, history of permits, outstanding permits, outstanding water bills, zoning district and compliance and litigation that might be ongoing. The information is free and takes about a week to receive the information or less. That would have avoided this unfortunate situation.

Contact the city and work with them on what needs to be done. I think it’s unnecessary to move tenants out for them to inspect. This is going to be sensitive with the city. Just because a property is condemned does not mean it’s recorded. A title search will not necessary reveal this.

You may need to hire an attorney if it becomes ugly with the city. I was a building and zoning official for over 30 years feel free to dm me.

@Bob S.

Sorry.