All Forum Posts by: Account Closed

Great question! I've contacted wholesalers a couple of times but either the numbers didn't work for me or the property was in a part of town I didn't want anything to do with. I've seen new bandit signs lately though and was thinking of calling.

That is great news! Congratulations! Do you have your second flip in the pipeline yet?

Agreed. Thanks Jon.

Oh duh, sorry, I wasn't doing the math. Yes, 12% annually makes perfect sense. Obviously, I have just proven math is not my strong suit.

Yes, if he defaulted it would financially devastate them. And I worried when my family member used the phrase "tapped out" at the bank, which is what prompted me to come here looking for answers. He has been successfully building high-dollar homes for several years so I wasn't sure what to think.

Thanks again so much for your help!

@Jon Holdman

Thank you Jon for your detailed response. I am more familiar with lending private money on flips where the lender is the lienholder, but I can see where that won't work on a house that's not even built yet. Thanks to your input, I see now that this could be a typical deal. What kind of threw me was the low profit of 1% that was offered (I am not sure if that is monthly but that makes more sense). And, yes, I believe my family member is to sign title over once the house sells.

I believe my family member was planning to loan the whole amount at once, which I think is to be between $300-350k; however, it makes sense that draws are the way to go so the lender is not out the entire amount if the deal goes south. Thank you for pointing that out.

This builder is a long-time builder (a couple of decades at least that I know of) and is currently "tapped out" with his bank. He is currently building somewhere in the vicinity of 3-6 of these homes. Apparently his own family has gone this route of lending with him and he is now asking the same of my family member. At first look, this case seemed quite different from the type of lending I'm used to but it looks like it can be structured very similarily to the way it's done on flips. Am I right to assume the major differences are a quit claim deed versus becoming the lienholder and lending the money in draws rather than a combination of the total purchase/rehab costs? Oh, and the 1% - is it common for that to be so low?

A family member is thinking of using their line of credit on their paid-off house for a friend who is a builder. I am curious if anyone has ever heard of or done this before. Apparently, when the house is built the family member will quit claim the house back to the builder. Also, the builder pays the family member 1%. I wonder about the risk involved as I have not heard of this type of transaction before.

@Will Ksander Welcome to BP! Google the phrase DORA Colorado and that will bring up links for Colorado's real estate licensing requirements. Within their site is an education tab that will give you a list of online and in-person colleges where you can get the training for your license.

@Ali Boone and @Jerry W. are correct, the housing in CO can be pricey compared to what you can get for cash flow, which is why some people in states like CO and CA invest elsewhere. You'll find out all about it, as well as possible avenues to purchase below market, just by reading BP. You'll learn a lot and it will be fun!

Also UPDATE: All three are finally closed so now on to the next!!

@Junior Salters That must be an awesome feeling - can't wait to hear about your next deal!

Welcome James! Very impressive portfolio that you have there! I love Tustin, worked in Irvine for years.

Welcome Marc!