All Forum Posts by: Lia Martinez

Has anyone else had experience with a Hard Money Lender charging fees for every draw you take during a rehab?

My partner and I are working with a different lender on our second flip. We met them at a local meetup and they offered 12% with 1 pt and we only needed to pay the 1 pt up front at closing. This was better than the lender we had used for our prior flip, so we decided to go with them. Our deal in Longmont, Colorado is very good: $105k purchase, $55k rehab, $300k ARV, so the lender was willing the lend us 100% of purchase and rehab. I asked if there were any additional fees and they said no. We closed and now that we are going to take our first draw, they have explained to us in an email that they charge $200 for every draw we take throughout the rehab. To me, at the very least this will be another $1k we pay them just in fees.

I looked online and on BP and couldn't seem to find any other situation where draw fees are mentioned. So now I'm thinking this might be a "fee" they created to try and get more out of us. We also cannot find it mentioned in our loan docs. This would be fine if we knew it was part of the deal, but springing it on us now a few weeks into the rehab seems very underhanded. 

Lastly, he mentioned Inspection fees as well. What are these and how and when can the lender charge them? If we send him all receipts and pictures of rehab on time, they should not need to charge for additional inspections, right?

Does anyone have advice or experience with this? Thank you!

Also @Sue Z., give me a shout when you come to Denver this Fall. I'd love to meet you at the GABF and talk real estate!

This is a fantastic thread and very inspiring! Thanks @Ali Boone for starting it, it's nice to see more women engaged in real estate. 

I'm a full time Geophysical Engineer and work for an equipment manufacturer in Denver. I travel internationally about 40% of the time for work, so juggling real estate has been difficult, but not impossible. I started in RE about 2 years ago and now own 4 rental properties, one is a duplex, and another I rent by the room in a 6 bedroom house (NET $2k+/mon on one house!!), and the rest are standard SFR. I'm also in the middle of two flips with my company Greenstone Homes.

I'm really starting to get more interested in shared-housing and how that idea is catching on for the millennial age-group. 

@Jay Hinrichs This is the truth, I looked through the documentation she had saved. You can think whatever you would like, as there is really no use arguing over spilled milk, but that does not change the facts. She did not receive any letters, phone calls, or notice. And trust me, if you met my mother, you would also believe her because she is not someone who believes in even little white lies. Large banks often have a right hand doing something entirely different thank the left hand. And they are always out for the institution, not the people they supposedly serve. 

@Elizabeth M. Thank you for your thoughts. Luckily she living in a better place now and has moved on. 

If you are still looking for an attorney, I recommend Tueller & Gibbs. I hope everything works out for you. 

@Bill S. Yes, sometimes banks do just decide to foreclose and steal homes for no reason. This happened to the house I was born and raised in in Aurora. About 6 years ago (before I was in real estate) my mother tried to refinance her adjustable rate loan into a fixed through Bank of America. She continued to pay her mortgage during the refi. Two months later, out of the blue, she received a call from Colony Homes America (our favorite evil hedge fund) that they had just purchased her home at auction, but would be "kind" enough to rent it back to her. There was no notice given to her of foreclosure. After contacting a lawyer, she was told that she had not taken enough notes of her phone conversations with the bank to prove any wrong-doing on their end, even though that was obviously the case. I did not find this out until 2 years ago when I offered to buy the house from her and she broke down into tears and finally told me. I verified everything she said looking for some way to get the house back. This is someone who just retired from the VA this year, is a disabled Navy vet herself, and spent the last 35 years of her life working hard to get homeless veterans off the streets. It is great that my real estate experience has now allowed me to help my mom be a homeowner again in Salida as of a week ago, but it still hurts to lose the only place that ever felt like home after 32 years of Christmases and Thanksgivings.

This NYT article " A Quiet Giant of Investing Weighs in on Trump" pretty much sums up how I feel:

“The big picture for investors is this: Trump is high volatility, and investors generally abhor volatility and shun uncertainty,” he wrote. “Not only is Trump shockingly unpredictable, he’s apparently deliberately so; he says it’s part of his plan.” - Seth Klarman, Baupost Group

https://www.nytimes.com/2017/02/06/business/dealbook/sorkin-seth-klarman-trump-investors.html?action=click&contentCollection=DealBook&module=RelatedCoverage®ion=EndOfArticle&pgtype=article

I just closed on a duplex off Del Mar Parkway and Monteview (Aurora/Denver) for $255,000 that rents for $2400/month ($1200/side). It was on the MLS and brought to me by an agent. So it is possible to find great passive income properties still in Denver.

I have a house with tenants also growing in the basement. They grow about 50 plants at a time, but we charge them additional rent ($1800/month in a house that would normally rent for $1500/month). They have legal paperwork to grow that amount and we have checked that their operation does not affect the house itself to any great degree. 

@Account Closed's personal perspective. I am in my early 30's and so is the majority of my friend group. All of us are working professionals, and no one that I know has had any issues finding well paying jobs and keeping them ($60k-$100k). This includes corporate jobs. I have a friend that works for Level 3 and is keeping his job even with the merger, another two that work for IHS and Weatherford and have kept their jobs through the petroleum downturn, and 3 others that are fairly high up in Charles Schwab and make very good salaries. I work as a geophysicist at a local manufacturing business. In fact, I do not have any friends currently looking for employment here in the Denver area. 

I highly recommend calling Alejandro from A to Z Basements. His number is 7204048380. They were running $3200 to $4500 per window depending on size and cutting through concrete. I had them install 2 last year and he was fast, efficient, and the windows look amazing.