All Forum Posts by: LaMancha Sims
LaMancha Sims has started 44 posts and replied 117 times.
Post: Evaluating Cost of Capital - What's A Deal Breaker
- Lender
- Atlanta, GA
- Posts 217
- Votes 39
Quote from @Ned Carey:
@LaMancha Sims "Cost of Capital" is only important relative to what you might be able to get somewhere else. The % interest is irrelevant unless you can do better elsewhere. Many people today are complaining about high rates. If you can do better elsewhere then do it. If you can't don't complain.
What does matter is if the deal make sense. If I had to pay 20% interest to get a deal that makes me a 200% return, I would do it. That assumes the risk met my criteria and there wasn't another cheaper way to fund. The point; the interest rate is not important, the profit you make is.
Which goes back to what @Account Closed the cost isn't as important as the availability of money. Fast and reliable sources are important.
@Ned Carey, that is the answer that I have been waiting for someone to say. Well said @Ned Carey!!! Well Said....
Its not the rate...its the project that should be the focus and if no one else will lend to the investor, rate should be the last thing on their mind IF the profits are there. Take the money get the project done as quickly as possible, flip it, refinance it, and move on!
At least that is my thoughts! Like to hear from many others...New & Seasoned Investors
Post: Evaluating Cost of Capital - What's A Deal Breaker
- Lender
- Atlanta, GA
- Posts 217
- Votes 39
Quote from @Account Closed:
Quote from @LaMancha Sims:
What do you look for in a Private/ Hard Money lender when you are considering your cost of capital?
Mike,
Thank you for your insight...
Post: What's a Deal Worth to You
- Lender
- Atlanta, GA
- Posts 217
- Votes 39
Quote from @James Dainard:
Hey Lamancha,
I'm making sure the property has multiple exit strategies. I want to be able to flip it, wholesale it, or keep it as a rental.
If I'm going to keep it, I want to make sure that there's going to be some equity kicker down the line. If there's some city developments/improvements that are going in, or if there's upzoning that I can take advantage of in the future I'll be looking for those things.
I also have to have a walk-in equity position where I can force appreciation through rehab.
If a deal has those three aspects to it, I'll do more due diligence on it and probably take it down. Right now I'm padding all of my proformas and calculators with longer hold times and higher reno costs. We see that renovation costs are starting to come down as the market slows but it'll still be some time until we have competitive rates back on most of our subs. Control your costs right now!!
Thank you for that reply. Your approach is exactly what new and seasoned Investors need to hear!
I really like what you said about ---- walk-in equity position where I can force appreciation through rehab.
Very Professional reply!
Post: What's a Deal Worth to You
- Lender
- Atlanta, GA
- Posts 217
- Votes 39
Now, that was a Great reply Jeff!! I need to hear in depth insight so that others "Think" as they approach financing deals. Thanks
Post: Evaluating Cost of Capital - What's A Deal Breaker
- Lender
- Atlanta, GA
- Posts 217
- Votes 39
What do you look for in a Private/ Hard Money lender when you are considering your cost of capital?
Post: What's a Deal Worth to You
- Lender
- Atlanta, GA
- Posts 217
- Votes 39
Quote from @Caleb Brown:
Depends on what type. It'll come down to price, location and condition. If it is a rehab then investors want to be all in around 70% of conservative comps
Caleb,
Questions... All in at 70% but what is that max margin(in terms of the %) an investor has to have in order to feel comfortable? Is 70% really it or if the deal is really a great one would an investor go higher?
I am asking these questions to get an understanding about true risk/reward v/s costs an investor is willing to take...
Post: What's a Deal Worth to You
- Lender
- Atlanta, GA
- Posts 217
- Votes 39
Quote from @Jeff Roth:
Hi LaMancha-
I like your focus for the question.
1. Cashflow
2. Having a solid operator or property manager. Crucial. Maybe even more important to have in place before finding the deal.
3. Demand for housing in the area.
Thanks again.
Happy to help!
Jeff,
I agree with your 3. However, how (to what degree) does the cost of capital fit into the picture or does it?
Post: What's a Deal Worth to You
- Lender
- Atlanta, GA
- Posts 217
- Votes 39
So, you do not consider how much the financing will cost you? Or is that part of your calculation(s) when you ask - How much you will make from the deal?
Post: What's a Deal Worth to You
- Lender
- Atlanta, GA
- Posts 217
- Votes 39
How do you determine what's a good private lender? If you are using private/hard money to finance your deals?
Post: What's a Deal Worth to You
- Lender
- Atlanta, GA
- Posts 217
- Votes 39
I am curious as to what an investor looks for when truly evaluating a deal? What's the top 3 things that makes a deal worth your time?