All Forum Posts by: Jeff Rabinowitz

Has the borrower ever done a rehab? You stated they are being coached. Does the coach have a financial interest in the deal? Does the coach have any control? If not, this may be a newbie's project. Newbies make mistakes, sometimes expensive ones. How much money does the rehabber have in the project? Do they have enough skin in the game? Will it be easier for them to walk away than finish the project if they get into trouble? Will they have enough money to finish the project with your funds? If not, where will they get the rest? If 80% of the rehab is done, why will it take a year to complete? Is the market rising, stable, or precarious? What might the property be worth in a year? Is there a penalty rate if they exceed the loan term? Will payments begin if they exceed the loan term? Is there a minimum payment due if the rehab/sale is sooner than a year or if they find less expensive financing and cash you out? Do you have loan documents that protect you? Will a mortgage be recorded? Will you require title insurance? Any other insurance? (What happens if the project burns before it comes to market?) Have you done rehabs yourself? Have you funded projects before? 

If you decide to fund? Will there be an escrow account so funds can be disbursed as work is completed? How many draws will be allowed? What kind of documentation, inspection will be required for the draw?

I could go on but I hope you got the point? If you have never done this before there may be more things you don't know than you do? Are you willing to do the work needed to evaluate the deal properly or to clean it up if it goes bad? Are you willing to foreclose? How much of your net worth is the $60K? How badly will it hurt if you lose it?

Why 6 months? What is the borrower's exit strategy? Will they be selling? Are you sure? Have they been trying to sell? If so, for how long? Are you willing to stay in the deal if the lot isn't sold? Will you be receiving payments during the term of the loan? What will you do with the lot if you foreclose on it?

Why should they want to speak with you? What are you bringing to the table? Find a way to be of service and you will have more success making connections. Sometimes all you need to do is make an offer to be of service. If you attract an experienced investor, they probably don't need your help, but the offer will set you apart. Your pitch is not compelling.

That ad can get you in a lot of trouble if it is worded incorrectly. You must not offer specifics (rate, term, amount, etc.) to people with whom you do not have a relationship. If your ad is on the internet, you may be violating the lending and securities laws of all 50 States and the SEC simultaneously. Have you spoken to an attorney yet? 

The same thing you do in New York or anywhere else. You evict them and collect what you can. Start the process early, when you are supposed to, and they should not be there for months. Learn how to pick good tenants (collectability is an important consideration) and how to be a good landlord and you will need fewer evictions.

Pay what it costs to double close with transactional funding. That will shield the resale from the seller (until after the sales are recorded and become public records) and will result in a nice payday for you. If you wish to share the original purchase price with the buyer, then do so. If your analysis of the deal is correct, your buyer will be happy to buy your deal and will happy to buy another similar deal if you can find one.

For those of you who think the $100K assignment fee may be unrealistic or unreasonable, I once paid a $40K assignment fee on a $142K (total) purchase. An opportunity arose to sell that deal to another buyer within 90 days (with less than $5K of expenses for clean out) for a $27K profit. I would gladly take a similar deal anytime I find one.

I have since participated in another deal where there was a $40K assignment fee on a $100K purchase. That deal may result in > than a $100K profit to the buyer/rehabber. Another deal had a $50K assignment  fee on a $235K purchase (this was seller financed so the buyer/rehabber only came to the table with ~$80K). That deal may result in ~$70K profit to the buyer/rehabber.

@Jay Goscinski, may I share your comment on my Facebook page titled "Damn the Recession"?

There is a class action lawsuit against the City of Warren, Michigan regarding their practices regarding rental property inspections. If you own or have owned rental property in Warren you may be able to join the class. Here is a link to a District Court opinion regarding this suit:

https://www.leagle.com/decision/infdco20171115b93

There is a class action lawsuit against the City of Warren regarding their practices regarding rental property inspections. If you own or have owned rental property in Warren you may be able to join the class. Here is a link to the suit:

https://www.leagle.com/decision/infdco20171115b93

@Josh Sterling from Epic Property Management has been doing a good job for me.