All Forum Posts by: Timothy Maloney

@Kayla Holbert Here's an example of our typical BRRRRR borrower: They buy the fixer upper for 100k. We loan them 90% of purchase price and 100% of the 50k rehab. They now have a loan amount of 140k. 2 months later the rehab is done and the property now appraises at 220k. Either we refinance them into a 30 year or they may elect to use a local lender or credit union. We refinance many of these since we (and most HML PML) don't have a seasoning requirement. So we refinance them at 70% of the new value and give them a loan of 154k. They often pay 0 or just 1 point at closing on the 30 year so they "walk away" with 10k - which was the original down payment. Fix and flip loans typically have points of 1-4 with rates in 7.99 to 11.99 while 30 years have 0-1 points rates 5-8. I hope that helps.

@Brent Paul The simple answer is to buy like a cash buyer. There are programs that will allow you to close in 1-3 weeks and even provide you an approval letter or proof of funds. MN is a tough state (in fact I don't even loan there) but search BP for the right HML in your area and beat this guy!! Good luck.

@John Maynard The SBA 504 program will allow for lower down payments but can be a bit cumbersome to close.    Conversely, a commercial mortagage *can be* quicker, easier but will often come at a higher rate.   For you to go SBA 504 the property would have to be 50%+ occupied by your business.     You can always go SBA 7a but the rate/AM may not be what you're after.   Good luck!

@Fab Ragh  You're on the right track turning to BP!    I have the unique perspective of looking at 100+ flips a month.     What I see that works:

1.  Don't over rehab the place.  Chances are the NYC fit/finish demanded by the buyers would turn a FLA flip upside down.    

2.  Get with the trends - Even if you are high end (WPB for example) be 100% CERTAIN that your design choices match the highest comps in the area.

3.  Get in and get out fast.    Time is literally money.

4.  Add X,XXX to the realtor's recommended selling price.     Your home *should* set a new comp for the area and not simply match a home that sold in the past - presumably not freshly rehabbed.

5.  Please keep a journal/diary of your daily activities.    One your next flip you'll thank yourself that seemingly innocuous notes will really save you time/money.    Example:   Frank Smith with WPB code enforcement at phone # XXX was fair, fast and a huge Dolphins fan.  Or King's Concrete never showed for estimate.

6.  Keep posting updates to social media.   Your friends/family will appreciate it and you may even find a buyer!  

Good luck!

@Tim Grout Most lenders only lend to an LLC anyway so this isn't a problem at all. Unless you are planning to owner occupy the place the LLC ownership is right on the money. Good Luck!

@Eleanor Curry If you can imagine a HML on the left and a traditional bank on the right private money lenders can fall anywhere in between. The differences are typically better rates than HML, more aggressive LTV/LTC, and more access to capital. Loan programs vary widely but expect more paperwork than a HML but often not even close to a bank.

@Matt McGuire We fund 20+ deals a month without looking at income or tax returns. There are even guys on here that won't pull credit. Your friend should keep looking for HML who will lend him the money (or you can pick up the deal if it makes sense to you). Good luck!

@Artem Gonchakov

We love Brooklyn and lend there frequently.   However, please note the most common NY issue that will arise;  Your property rents will likely only barely cover the mortgage and expenses.    Therefore, your ability to borrow 70, 80 or 85 percent of the purchase price becomes an impossibility.     My advice is to be certain of your numbers before dropping a deposit down on a place.      

You can borrow 80% or more of the purchase if:  Total annual rents less all expenses divided by annual loan payments results in 1.2 or larger.   

If it doesn't you'll be relegated to a "bank loan" that will look at your income for the shortfall.     

@Sharrod Greene No, you do not need a realtor.   You need competent council from an experience RE attorney.    It sounds like there may be an opportunity to get it even cheaper - you may want to explore with the lender the possibility of a short sale (might not be ideal considering it is a family member).    

If you're getting it at a deal just know you'll need some seasoning before being able to refinance/cash out at it's true value. Bank seasoning is typically a year with some HML trimming to 6 months or less.

@Nicholas M. - IMHO - No, I would not. There is a positive correlation with a person's success in CRE and their credit score/liquidity. Yes, we all started somewhere but if the majority partner needs an investor to get this deal there is a reason.