All Forum Posts by: Michael Borger

@Nick Moriwaki Raising private money is an entire subject in and of itself. There are countless posts on this here on BP and, I believe, a PDF guide here as well. This and marketing for sellers are the cornerstones of my business - I'm always growing both aspects. Just search for 'private money' in the site here.

@Jasmine C. You really need to figure out your ARV (after repair value / renovated market value) and work backwards from there.

I'm confused by your original statement that "her house is slowly falling apart but doesn't need major repairs". That doesn't quite make sense to me - you need to get very clear on what your renovation costs are going to be. Have a couple general contractors walk through and definitely get a home inspection -- once you're in contract.

Here's an example based on the following assumptions:

• The ARV is 860k -- this is what the house would sell for once renovated
• Renovations will cost you 50k
• You'll sell the house within 6 months
• You're going to resell the house using a realtor, paying 5% commission

If you cash out the existing mortgage of 500k using a hard money loan at 2 points and 12%, and then asked the sellers to carry a junior lien of 125k at 7% interest, then if you offered 625k you'd profit about 85k.

That's about a 10% profit of the ARV -- your criteria are up to you but I wouldn't go smaller than that. You could try lowering the interest rate on the seller carryback but it wouldn't make a big difference, and I don't see you getting a true hard money loan for less than 2/12. If your renovation costs are less than 50k, then you can increase your purchase offer accordingly.

But the big picture is that I wouldn't offer anything that starts with a 7.

A hard money lender would prefer to see experience, but equity in the asset (collateral) is more important. Regarding the structure of the deal itself, if both sellers are willing, you could structure it with seller financing, ex. Buy it for 750k with a 500k HML loan and they carry 250k in second position at an interest rate you negotiate (if any).

Of course, this all assumes it's an actual deal. You didn't mention if the home that sold for 860k was renovated or in fixer upper condition -- it makes a big difference if you're proposing to buy the house at 750k.

Aloha, @Matthew Facer - yes, REI is indeed a great vehicle for building wealth in multiple forms and Oahu is a fantastic venue for doing so. I've looked into a few Laie properties lately but haven't yet pulled the trigger on anything. Grab the getting started guide here and start making offers - multi-family investing can be very profitable.

Aloha, @Lei Sala - welcome to BP and the Hawaii scene. It's never too late to get started making a big change, right? There are many deals to be had on Oahu - I'm in multiple at the moment. The guide is a great place to begin.

Aloha, @Andrew Frazier - welcome to the site. It's always good to have another HI-based member of BP. I don't do rentals just yet - just rehabbing now - but perhaps someday!

I'd eliminate the house that's much larger. Stay within 20% of living sqft if possible. In Ewa, you should be able to get a few more true comps around the same size as your target property without having to use one that's 600 sqft larger. Eliminate short sales and REOs. Take condition and lot size into consideration. For Oahu, skip Zillow and use oahure.com instead -- much more reliable.

It all depends on what you want. Flip? Then you only need to buy it cheap enough - happens all the time. Buy and hold? Hawaii's not the best place for cash flow but you might find some worthwhile opportunities near the bases. Broadly speaking, SFR in Hawaii are not great buy and hold properties.

I was involved in a lawsuit against one of the sellers of this property. I hope you got a clear title, yes?

The Hawaii market is great right now, so if you're going to continue to invest you'll be in a good place to use any equity you take out of the property. That being the case, you already have a foot in the door in a hot market, so if you think that will continue to be the case in a year you may want to hold onto it. Will it cash flow in about a year's time?