All Forum Posts by: Wanda Alderfer

Would it be more risky to ask them to leave and have them destroy the apartment? I don’t know. I’m not a landlord yet but will be in about a month

Thank you. It is helpful to have a better understanding of the Hard Money loans. If it’s going to cost $10,000 ( interest and fees) to get the place for three months and then additional fees once it’s rehabbed to refinance it then I’m questioning if this place is worth the liquidity we would put into it or if we should just wait for something better. I’m anxious to start building our portfolio but trying to be smart about it. Our lack of experience doesn’t help with the lending situation!

We are looking at a deal and received a term sheet from i fund cities.  This is our first experience using hard money lenders and it seems inevitable since the duplex we want is mixed use with vacant commercial unit.  Our plan is to turn it into residential. (zoning already approved by boro) The terms sheet is not like convention closing sheets and doesn't say what we bring to the table, just what they bring.  The fees seem high and confusing, so could anyone tell me this is all "normal" for this type of lending? I've read a review that this lender backed out at the 11th hour - and if that happens we'd lose our earnest money.

Purchase Price: $150,000

Total Loan Amount: $126,000 (Includes $106K purchase and 20K holdback construction)

Interest Escrow for 3 months: $3178.00

Loan Processing/Application:" $2050 (Not sure what this fee is for)

Broker Fee: $2520

Loan Origination: $2835

Title: $1325

Interest Rate Promised: 9%

So we'd come up with close to $57 K at settlement.

We would hope to fix and rent it within 3 months

Thanks for the help! Assuming rents would be about $1300 each ($2600/month) once rehabbed

Investment Info:

Single-family residence buy & hold investment in Barto.

Single Family Home in rural area

What made you interested in investing in this type of deal?

We wanted something to hold and short term rental and have the know how in construction. Finding a deal in today's market seems impossible, so we went the BRRRR route for our first investment.

How did you find this deal and how did you negotiate it?

Found it on MLS. Popped up in my feed on Refin and I drove out to look at it that morning, met my Realtor there the next day and placed the offer a day later.

How did you finance this deal?

It was a cash only and we used our savings to get it. I was nervous about using hard money to start off with since we've never rehabbed a place and wasn't sure if this was going to work or if I was in over my head.

How did you add value to the deal?

We are doing some of the work ourselves and hiring contractors for the electrical (my aunt is an electrician doing the work not the side) and through networking we found HVAC and plumbers.

What was the outcome?

Still working on the project. We gave our selves 6 months to complete so it will hopefully be on schedule and finished by April 2022

Lessons learned? Challenges?

Needing a new septic was quite a surprise --- in fact it needs everything new - but its a small place in a great quiet location - so we are learning a lot about a lot which will be super helpful in our next project.

Thanks for the information. I am meeting with them today to find out all of this information. With The size and location of the property there are no comps. But they believe they owe about 81k . My guess is it would need about 30k in repair. I would still think it would be worth a purchase and a win for both of us if I can get it. But… I don’t know where they are exactly in the foreclosure. I’m hoping when we meet we can call the mortgage company and have that worked out. 

I have an opportunity to help my sister who just received a letter that her house will be going to Sherriff's Sale. We are in PA. My question is: Can the sub 2 method still be used when it has gotten that far? I will be meeting with her today to get all the numbers, but I'm not sure if Sherriff Sale is after or before a foreclosure process. To do this method, would a title company handle it all, or would I need to print paperwork and draw up sales forms myself? I read that this is a great way to do it and simple, but I'm not all that familiar with how to do it and I really don't want to see her credit ruined. I believe they own more than the house is worth.

Thank you for all the reply's. I assumed the Non QM was a better way to go, since it was based on the asset and not my personal financials. (My credit score is excellent and I have no reason to not qualify for a bank refi, but if the pros and cons were about the same, I would rather not have to deal with getting all my tax docs, bank statements etc...together)

However, listening to all your advice has me thinking twice. We have about 6 months to go on this rehab and then we will rent it (Location: Montgomery County, PA). In the meantime, would getting a HELOC to fund the downpayment to purchase another place makes sense, or does anyone know of a better way to get downpayment money? (All our liquidity is tied up into this 1st deal for the next 6 months or until refinancing can occur)

We are rehabbing a property we paid cash for. We should be done in six months and want to use it as a short term rental. Is it possible to get a non-QM loan without rental history or would we have to refinance the traditional way? I read that lenders don't like STR‘s and want to see at least 12 months rental history but maybe the trajectory of that is changing?