All Forum Posts by: Joe Villeneuve

When I said how many properties do you look at, I didn't mean physically visit and look at; I meant properties you reviewed, in case I was not clear. 

 Joe, I see what you’re saying to some degree, but it’s hard to fathom that you buy every property you make an offer on.

Did you mean that you make an offer on every property that meets your buying criteria and you only look at the property after you get it under contract?

 I think you are closer to a decent offer than @Joe Villeneuve.  While I consider him Very knowledgeable, we have very different investment philosophies but both seem to have done well with our investment philosophy. 

>Investor would get a discount on ARV and be cash flow positive during the holding period.

My issue is the premise this is a discount purchase.   I do not do a rehab unless it projects a value add of at least double the projected cost of the value add.  This is because they have risk and take work.  Your price barely meets this minimum criteria, so it is not a discount.  In addition I have yet to encounter a seller cost of value add being as high as my conservative cost Projection for the value add. Maybe if everything went perfect, but that never happens.  

Assuming the buyer can qualify for conventional financing and your numbers are accurate (which I suspect if I was purchasing my value add cost would be higher)  

They purchase at $400k. They spend $50k on rehab in 2 months. They refi with conventional f/f (~7%) at value of $500k at 80% LTV. They pay back the loan.

Issues the numbers are too tight.  The property will be negative cash flow as a rental. 

Now as flip, numbers are too tight and selling and holding costs deplete the $50k added value. 

I will say most properties are currently not working as an investment property but with your value add being needed this is being offered as an investment purchase.  It will not meet any halfway decent investors expected return.  

This does not imply that you are not on a workable offer, but you are not that close as proposed. 

If you think I am wrong, do the rehab yourself and sell post rehab.   The reason you do not is that the numbers do not justify the effort.  

Good luck

I am a hard money lender .... 

I asked a very simple question dont need a lecture... 

https://www.investopedia.com/terms/n/negativeamortization.as...

1. Nets around 25k a year...
2. Not renovated in one of my inferior pockets - but still good area
3. I have no debt on my properties  

I have heard of keeping the 2 documents seperated, thank you for confirming that for me. I spoke to a local lawyer who mentioned keeping all documents together instead of seperated, as being sufficient enough to cover all legal issues. That advice was different from what I usually heard in the investment circle on Facebook, YouTube. So I don't think that'll be a good partnership moving forward it seems. The more I look into lease option, the more of a specific, niche market it appears to be, especially with the nuances of the legal ramifications if done incorrectly. Thank you Joe, I appreciate you taking the time to respond.