All Forum Posts by: Nick Wing

Welcome Tony,

I am local to Southern California, this market is our backyard, if you would like to talk a bit please contact me!

Best Regards

Curtis,

You may want to take a look at this deal and re-analyze it. If you bought it at what they owed ($387K in a short sale, this is the route I would try and travel), you will be buying it at $430 sqft. For this to make sense it is totally dependant on the neighborhood, where is it at?

Also if the rehab is going to cost $175/sqft.... that makes it a $157K Rehab? In my experience, around 50 Flips last year in SoCal, a 900 sqft house should need no more than $15K in a normal area, and $30K in the highest end of neighborhoods. Even with added sqft, it should not exceed $50K - $60K.

How much cash do you have to bring to the deal? I would not pay anymore than what the current seller owes on the loan. Try and get the lender to approve a short sale to you at the amount they owe, which may get them to work on it before foreclosure. 

Based on what I saw in the statistics from realtytrac and other statistics presented by C.A.R, it looks like housing prices have reached a plateau recently. I agree with the article in that home prices have gone up however I am not sure they will rise by double digit % by next year. The article also states that inventory for "new housing" is low, does this include only new homes? More people are now "above water" on their mortgages and are able to sell, or people want to sell to get the equity from their now high priced home leading to a rise in inventory in various cities. If I remembered correctly home loan apps were down 5% from last month, and home sales are down 10% from last year. With housing prices going up, affordability is going down. With affordability down, less people can afford to buy, therefore slowing demand. A general rule of supply and demand in economics is: slowing demand and growing supply, results in stagnant or lowering of pricing. I do not think prices will drop, but I do think they will stay stable and not rise like the past few years. What have you personally seen or feel about the market?

Great Job with the rehab. The changing of the floor plan was a great way to make this a marketable sale. 

Fund a loan through a hard money lender, you may be able anywhere from 8-11%. Good return without the headache of tenants, maintenance, etc. 

@Rick H. said it very well!

I use the metaphor of car maintenance. Are you the type of person that knows, likes, and can trust yourself to get their hands dirty to change the oil or brakes on your car to keep extra money in your pocket? OR, Are you the type that is ok with paying the fee, sitting back, and trusting the dealership to successfully complete the maintenance. 

I would say neither is necessarily better than the other, it just depends on the type of investor you prefer to be. 

btw Rick, good to see you on here, we have met a few times at the LAREIA meeting. 

@Account Closed @Scott McCloy we lend 100% of Purchase Price and Rehab. In California as long as the Loan Amount is under 72% of the ARV, and the complete project cost is less than 75% of the ARV. We also do a different 100% financing program out of California.

@Curt Davis is on to something. lol

Look into fractionalizing the Note, just like @Account Closed said. We are able to do that in California.  Multiple people have a designated interest in the note. Lets say Investor 1 puts in 40% of the loan, Investor 2 puts in 60%; if you default, investor 1 will get 40% of the default judgement amount or proceeds from foreclosure sale, and investor 2 will get 60%. 

@Jon Holdman @Hattie Dizmond said it exactly correct. The loan servicer usually provides the payoff statement (aka payoff demand), or lender, or escrow(i guess out of CA, a title laywer/closing agent) with the final numbers. Here in California, they also prepare a Deed Of Reconveyance which will be recorded at the county of the property showing that the lien has been satisfied. 

Never pay an upfront fee to a lender, besides maybe an appraisal fee!