All Forum Posts by: Stephen Solano

$20,000 is a lot different than $30,000 and $140,000 is a lot different than $160,000. You need to get a solid handle on your rehab and ARV. $160k with a $20k rehab is good. $140k with a $30k rehab is not so good. What is the asking price of the property? Is $70k a guaranteed sale price or a guess? What is the scope of work and what "needs" to be done?

@Stephen Solano Oh ok I see the picture a little bit better now. 

Have you looked to see if there are any meetups near you? I would guess that some REI groups are having a Christmas party around, which is a great place to shmooze and meet people who could help you locally. Just get out there and tell people what it is you are trying to do and what you are looking at. I have not met an investor in person yet that wasn't willing to help.

Real estate investors are really a great community who enjoy sharing what they have learned during their careers.

If you are really eager to get started and can't wait to meet some people then hard money is the way to go. A couple that I have dealt with are Anchor Loans, and Lima One Capital, but there are so many out there that you can find through a quick google search. 

Keep posting here and I will help you out as much as I can.

Some HMLs wont even lend on a project that small. They will probably want you to have 20-25% down of the total project costs. I would do conventional if you can. PLOCs and Personal loans maybe an option to fund the rehab. But if you truly have no money, then wait till you have some money saved up. You don't want to get caught in that position.

What about the CAPEX items? (Roof, furnace, hot water heater, etc) Those need to be fixed/replaced in most cases before selling as well.

@Stephen Solano I am a little skeptical of your rehab estimates based off of what you say needs to be done, but you said you understand project costs so I will just assume that you are correct. 

There are a few ways that you can go about finding money for this sort of project. 

First, you can start with any local banks that are in your area and show them your numbers and see what they would be willing to do. (Although they probably won't be interested, but is worth your time to build relationships)

Second, you can find a hard money lender. If you don't know what that is, they are lenders that give loans for exactly this type of situation. They will cost you around 12% annualized interest every month, or about 1% of your loan every month with a balloon payment at the end of your term. Generally you be charged anywhere from $1500- $3000 to close on the loan at time of purchase. If you factor this into your numbers and can still make a profit then this is a great way to go.

Lastly you could get private money. This would be family, friends or another investor that you have met. I assume that family and friends are not an option because you probably wouldn't have asked otherwise. This leaves another investor that you have yet to meet. Find some local meetups and start rubbing elbows with other people who are doing what you are trying to do. I have found quite a few people willing to lend money this way.

In my opinion, the numbers on this property wouldn't really work if you were to pay the $70,000 that you say is the purchase price. After you factor in closing costs for purchasing, rehab costs, holding costs during the rehab, and then closing costs to sell, you don't have very much wiggle room if something were to go awry during the rehab period.

That is just my opinion of course.