All Forum Posts by: Herndon Davis

 Yes I estimate 3.5% for closing. It works most of the time but sometimes it can be overstated.  You can get Title Costs quoted to you from your Title Company which include Title Insurance plus their other Title Costs BUT the prepaids can vary dramatically depending on the following:

1-The Type Loan you are getting. 

If you do Conventional, you will likely pay MORE in Prepaids. This would be 1 year Upfront Homeowner's Insurance + up to 6 additional months insurance at the Underwrite's discretion; 1 Year Upfront plus Taxes + up to 6 months additional Taxes at the Underwriter's discretion; plus HOA upfront if applicable

If you have a Non-QM (Non-Qualified Mortgage) they may NOT require additional months taxes and insurance if you can show a certain amount of liquidity after you close. OR they may require 3-4 months PITI that is refunded back to you after you make your FIRST payment

Either way its about liquidity and showing that you won't go broke after closing.  Again 3.5% is what I use and sometimes that's overstated but I'd rather that than be surprised in the end.

Yes you can do it but if I am the original seller I want my money up front.

A lot of it is a  function of where you live and currently looking. However, if you are looking in the Midwest or Southeastern fly over states, you can find deals there a lot cheaper and that will cash flow to your delight.  But when you're paying market value  or close to it AND at a much higher dollar value  for property then it makes it a lot harder to cash flow especially if you need to make repairs.  Try new locations.

When you refinance at 75% your Money Lender gets $80K they financed you to purchase + $20K they loaned you to rehab + any interest payments. Your ARV has to be high enough to clear this amount PLUS closing costs. So in this situation, your ARV: $140,000 (75% = $105,000)

$105,000
-$80,000 Purchase
-$20,000 Rehab
-Interest payments etc
So you have $5,000 - interst payments - Closing costs.

Your ARV is TOO LOW. 
Even if your Refinance LTV was 80% of $140,000 that only leaves you with $112,000-$100,000 = $12,000 - Interest payments and closing costs.

You would be lucky to break even in that scenario.  I would recommend you find another property that you can find a higher ARV to pay off your Private Money Lender and clear your closing costs or else you have to come out of pocket.

Too little information to tell. Try using the BRRR calculator

Thanks for sharing your deal, but to give a clear and measured recommendation, we need some more information.

1-What is your projected monthly or annual NOI once rehab is done?
2-Do you have a 30 or 15 year fixed financing solution secured yet
3-If so what are the financing terms?
4-What is monthly cash flow on the property?
5-What is ARV once rehab is done?
6-How quickly do you think you will be able to lease up to 100% occupancy?

Yes of course as possible! You probably get 75% LTV on your refinance

 Depends on how good your credit is try bridge funding or gap funding. Similar to hard money but you may be able to get better rates, longer-terms until you're able to get 30 year fixed financing

You have a national tenant in that shopping center in Family Dollar correct?  How many years have they been there?  How long is their lease? 

 If the numbers crunch properly, I would be hard-pressed to turn down mailbox money especially if the national retailer is paying like clockwork and they also have a cash out plan in place for your property should they end the lease early.

 If I were you I would add value by instalibg new equipment like six or seven visible but unreachable color video cameras across the property. A few extra spot lights.

I would also clean up the property exterior, repaint, repave the parking  put up newere signs.

I would highly encourage you to use the bigger pockets BRRR calculator

This will require a whole lot more homework and research for you to conduct.

1- How much do you estimate the repairs will be?

2-How much will insurance be on the property once  please complete 

3-What is the property tax on the property

5-You can use 10% for property maintenance if you don't manage it yourself 5% for monthly maintenance and 5% for Cap X as a general rule.

Once you complete the BRRR calculator please share the results I'll be interested to see what you discover