All Forum Posts by: Stephen McKee

I stick to the recent forum feed and try to review the last 24 hours every day. I would love to read the blogs but they are so poorly organized. I've read some great stuff in the weekly emails.

First of all congrats on another successful deal.

I loved reading all the other issues you had. It's all to often I end up cleaning up my clients messes. They partnered with a friend, brother, mother, what ever, and the whole deal goes sideways. In this down market I've been seeing A LOT of money passing through subs and back to the partner. Or worse yet the HM lender is crazy enough to give the money to the partner instead of pay the contractor direct.

WOW! Just wow. One of my first mentors luckily did all the DD years before me regarding multiple properties and insurance. I had no idea until he explained it to me. His attorney and insurance provider said it best. "Increase all your properties to $500,000 in coverage. Good luck getting 500k out of an insurance company"

If you don't get an answer to this on here you can call my buddy Dan Shanahan @ [PHONE NUMBER REMOVED] Tell him I sent you.

Hard money or partners. I prefer partners because in all likelihood you're going to give the HM lender 50% of your gross profits when the dust settles.

You can get hard money that defers interest for 6 months. That's not very difficult to find in Socal. You should be able to borrow up to 312K (60%) LTV assuming your value is correct. Repair money will likely be given on a draw bases to a licensed contractor

My concern is that you want to keep and rent this property. After the property is repaired you'll need to get a 30 year fixed non owner occupied loan. The loan will likely be around 320k after all expenses, repairs, deferred interest, etc are paid. PITI that's a payment of roughly $2,250 @ 5.5%.You'd need to rent it for about $3,000 a month for it to make sense. I don't specialize in San Diego but I'm almost certain that's going to be high.

Also, your debt to income ratio is with your future income will only allow you a loan around 280k-300k. You may not qualify to keep it.

If you do decide to buy this property I'd suggest flipping it. Your looking at roughly $35,000 in total sales cost and commissions. If 520k is the actual flip value and your 320k into this project you should have a healthy profit. 520k - 35k = 485 -320k = 165k. That's a 50% return. This would be a highly lucrative deal.

But...Zillow is worthless and I'd have an agent check it out for you. Call Joel Lee in SD @ [PHONE NUMBER REMOVED] if you need some free professional advice and be sure you tell him I told you to call.

You can ask for it to be removed before or after you close escrow. It's best before because you can hold them hostage. They can waive the restriction afterward. I saw it done last year.

Have you looked into kickstarter.com Josh?

One of my favorite quotes about this came from my creative writing professor. "Why do we need to motivate people? If we did that there would be no one to clean bathrooms and pick up trash. If you guys don't want to do the reading I still get paid" He was making the point that it is entirely up to you to do it your self. I've probably been asked 30+ times to be a mentor. The first thing I tell them to do is pick their favorite neighborhood and learn it so well they can tell me the value of every home as we drive through it. Not one person has done it yet.

I'm with Will on the Statefarm policy. No catch 22's for California policies.