All Forum Posts by: Mike Klarman

shot your a dm Brandon.

@Ioulian Stoitchkov sent you a PM

Sanju, 

Your agent can write up your offer....

If this is an as-is sale, then your contingency requests will be limited at best.  The whole point of an as-is sale is no contingency.  As-is sales do not come with a warranty deed that guarantees a turnover condition.

Inspection periods last 1 - 2 weeks, Financing will take 4 - 5 weeks, the close itself will happen in a day.

Atlanta is a competitive market, and also remember on these Wholesale deals the transfer taxes are on the buyer along with a bunch of other closing fees.  Wholesale deals sometimes wind up costing more than you. think.

EMD is always handled through Title companies and if you are in an "Attorney State", by an attorney. Never to an agent or a broker, never.

Hi Mathew, I just refinanced a house for an investor in Manlius, a house on Eureka drive.  I am also doing another refi for a client on 125 west 1st street in Easy Syracuse.  I have funded deals in the exact area you are in and I'd be happy to speak with you.

This would have very tight margins. You are buying for 107k, ARV is 195k.

195k * 70% = 136,500. 

That's your max loan amount and if the purchase is 107k, then you have about 30k - 40k max in room for rehab.  30k - 40k is not enough for everything.  Can't remodel kitchen, baths, put in new floors, new drywall, new paint, and update mechanicals for 30 - 40k.

I'd really take a look at the budget for the house.

The seattle market itself is pricey and competitive.  The median home price is like 750k.  The Seattle market has some of the lowest inventory in the US.  Just not much there ever goes up.  That tells me that a lot of it is held by off market players like wholesalers and agents.  Very competitive, very pricey.

If you are listing for 750k when done, then the investor shell of this home will cost 400k - 500k.  A deal with an entry point of that amount will cost 100k - 150k in capital to see it through to the end.  

I'm sure there are areas in Seattle where you can get in cheaper, but the fact that the market has one of the lowest inventory rates, tells me to get a deal here is hard, you need to know someone or make the right connections. Shells on the MLS, if they even exist are probably priced above what the investor formula says you need to be at.

This is why you see ppl invest out of state.  Their home market is too high, too competitive, or an unproductive market.

Why do people choose a market between Pittsburgh and Indianapolis?  

Entry point is affordable for most beginners

There's inventory

Active sale/listing markets

But what is the hardest part of this?  The contracting by far.  You can line up a great asset, get the best lending terms, but if your GC does not perform then project will be a nightmare.

Contractors walk off the job and ghost you

Contractors can never get things done in the time they say

Contractors will skimp, cut-corners, and save money on the finishes: WHICH HURTS YOUR SALE NUMBER!!

Contractors will always hit you with change orders

Good contracting is EXPENSIVE for a reason and those guys are booked tighter than Tom Thumbs azz.

This is my advice when it comes to contracting and I have dealt with many across multiple markets.  Pay for the quality.  If a GC comes in 10k - 20k lower than anyone else's estimate then don't take it!!!!!

You can do a 1.0 DSCR but all that means is you do not have a good cash flow asset and you are just holding for appreciation only.

The refinance portion will require another appraisal.  If you order the appraisal before the work is done, they will hit you with a deferred maintenance which means they can not offer a value because work is not done and now they will have to go back out there for a 1004D and it will cost you more money.

In the BRRRR acronym, Rent does come before Refinance.

Austin, even with a loan from a lender for a property, you will still need to bring money to the table.  I'll be honest, I have coordinated 40 - 50 deals for investors and the ones that struggle is when the investor is light on funds and on razor thin margins.  When people can't cover their costs is when things spiral out of control.

The rehab portion of this industry is not easy to navigate.  Timelines, budgets, quality of finishes, they all need to go well for your exit and if your in bed with a GC that only cares about himself then all those things will not go right for you, but he'll still get his money.

People really underestimate the following:

1) The cash they need to close and carry the project

2) How hard it is to have a GC stick to what they promise

3) How long it may take to exit through a sale

Chris, sent you a DM

Well Josh, if your credit is good and you have some experience you should be able to get 85% or so leverage.

Now, there's a ton of HUD fees that are outside of the lending: property taxes, transfer taxes, title charges, sometimes the wholesale fee is not included in the leverage cause it throws the equation off.

What is the ARV?

That's the other obstacle that can affect pricing. If you are buying at 180k. How much work does it need? What is ARV?

Multiply the ARV by 70% then subtract your rehab budget. What's left is what the lender can offer you in leverage on the purchase.