All Forum Posts by: David Begley

@Peter Tkachenko Thank you, and good luck.

@Peter Tkachenko It's probably easier to describe what I don't want in a Wholesaler. My "hot buttons" are - 1. Present fresh, off-market deals. Nothing turns me off faster than a Wholesaler sending me a "hot" property only to find it's listed or is a "bad penny" that shows up every other month. 2. ARVs using realistic comps - actual recent sales on the same street, neighborhood, or close proximity. Again, another turn off are wholesalers that back into their ARVs using ridiculous comps that reflect a value significantly higher than anything that's ever sold on that street. 3. Reasonable rehab estimates. If I drive past the house and the repair estimates presented by the Wholesaler are too low to even repair the exterior, not good.

Build a reputation by consistently delivering these three items and you'll succeed with repeat business. Too many Wholesalers seem to price their deals with "a sucker is born every day" mentality as opposed to trying to build a business with repeat customers.

IMHO... lol

@Stanley H. You may want to have someone do boots on ground there, but I have a different opinion. It isn't a "bad" neighborhood in terms of crime and abandoned/boarded homes; it is probably a solidly blue collar neighborhood supplying the airport and surrounding businesses with employees. Not a good neighborhood for equity appreciation but predominantly 4-sides brick homes built in the 1960s that will rent quickly with positive cash flow.

@John Marion , if I read @Derrick Jordan 's post correctly, he is searching for a lender for long-term financing for a buy/rehab/hold and rent strategy and does not qualify for bank financing. I'm sending you a PM too if you can share the contact information for the private or HM lender that will do long-term mortgage financing to support a rental property purchase/rehab and hold.

If you are able to close on it and do the minor rehabs yourself, then you may be able to market to a retail buyer. If you are able to close, but not afford to rehab, find someone to lease purchase and work out an agreement where you share costs for the remodeling. Require sufficient deposit/down that is non-refundable to help with your share and if the Lease Purchaser closes in 12 months, you win; if they don't, your house is rehabbed, you keep deposit and put back on the market. If you are not able to close, immediately drop the price just barely north of your breakeven and count your blessings your lesson wasn't more costly.

@Eric Robertson My curiosity has gotten the best of me. In your post you state that you "...know the numbers do not work for a rehab..", so what was your primary and secondary exit strategy when you put on a contract on the property? Also, needed information missing in your scenario is a good estimate of market rent for that particular property if rehabbed. If a buy & hold investor purchased at $75K and had to invest another $15K to make it rentable (you say $5.0K but count on any investor using at least the $15.0K figure), then he would have $90K in the property. The investor would be hard pressed to obtain financing without putting even more money into the deal, since we are now looking at a 86% LTV property. However, if he could finance the deal, PITI would amount to more than $650/month. If expenses were only 35% of monthly rent (45%-50% is more the rule of thumb), assuming a 1.2 debt coverage ratio, the investor would need monthly rents of at least $1,200/month+.

Is this an area where monthly rents average at least 1.25% sales price?

If no, lower price. A lot.

If this is a Islamic Buyer following strict principles of Sharia, you will likely need to locate a "Shariah-compliant" home lender. You should be able to google Shariah-compliant home loans in your area to find more information. Good luck.

@Jeremy Davis as Mr. Holdman indicated, your terms will be a hard sell to a private investor and not even in the realm of possibility for a HML. As you will discover quickly, as I did, the answer to your question "...who wouldn't want to make a 8%-12% interest on their money for 3-4 months...?", is probably 100% of the lenders/investors you ask. You must remember that the interest rate you are quoting is an annualized rate, and at 10.0% the investor would make a paltry $4,750 to $6,300 for 3 or 4 months, respectively; or 2.5% to 3.3%. This, combined with an LTV that no HML would touch, makes the terms you are seeking nigh near impossible. The risk/reward tradeoff isn't there. You should expect to put some of your own money in the deal, along with paying upwards of 2 to 4 points (or more) on the borrowed money. I do wish you good luck and hope I'm wrong!

@Pyrrha Rivers I would highly suggest you do your own due diligence on any wholesale deals presented by these folks. The two or three properties I've analyzed from them presented inflated ARVs and repair estimates that were about 1/2 to 1/3 what the actual rehab costs would be for the subject property.

Through my local networking and contacts, I plan to interview REI/Contractors as JV partners whereby I would purchase houses for cash and fund 100% of the rehab and the Contractor/Investor/Partner would provide the permitting, and all construction, rehab, landscaping, etc. I'm a licensed real estate agent, and my target would be to list and sell the rehabbed property within 6 months after construction begins. We would then split the net profits.

If there are any BP members that have successfully structured a similar deal, please let me know what percentage split is "standard" in a situation as above, along with any suggestions or pitfalls to avoid.

Thanks!

David

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