Carry on people......

OPTION 1: OPTION 2: When Seller Uses RE Agent & You're Using Property For a Rental When Buying Subject To & Selling to Tenant Buyer Pro: Doesn't require specialized knowledge Pro: Little competition "Adequate" cash flow - Nothing Exciting Can be little $ down You get appreciation if property goes up Can do Unlimited number Can Get Started Much Sooner Get down payment (Cash $$) back immediately Great Cash Flow No Bank Approval Needed No Maintenance or Repairs Con: Have To Have $45,000 Cash for Down Payment Con: Have To Have $15,000 Cash For Reserves (just in Case) Have To Have $15,000 Cash for Closing & Carrying Costs Due on Sale Clause Have to Get Bank Approval Must learn the technique Can only do 4 -10 properties depending on bank Competing with everyone else Requires 20% Down & other requirements If AC breaks - you fix it If roof needs replacing - you pay for it If toilet clogs - it's on you If house gets trashed - you un-trash it You take loss if property goes down in Value Tenant Can Trash The House When Seller Uses RE Agent & Using Property For a Rental When Buying Subject To & Selling to Tenant Buyer Asking Price MLS $225,000 $225,000 Balanced Owed $223,969 $223,969 RE Agent 6% $13,500 $0 No Agent Involved Seller Brings to Closing ($12,469) $0 So No fees Asking Above ARV $0 $0 Seller Walking Money $0 $0 Sometimes Walking Money If I Use ConventionalFinancing If I UseSubject To Asking Price MLS $225,000 $225,000 Amount Down - 20% $45,000 $100 (I Give $100 Down) New Loan Amount $180,000 $223,969 I Take Over Loan Title Report $600 $600 Closing Costs $1,250 $1,250 Monthly Payment $1,151 $1,225 I Take Over Existing Payment When you are new, looking for lenders & considering Fix & Flip, BRRRR, or rental, as a buyer, I’d ask the owner/seller to be one of my private lenders with creative financing.

The Deal: • Single-Family Fix & Flip in the Midwest • Purchase Price: $250,000 • Rehab Budget: $50,000 • ARV: $375,000 The Funding Structure: • Loan Covered: 90% of purchase + 100% of rehab • Total Loan: $275,000 (capped at 75% of ARV) • Term: 12 months, interest-only payments • Closing Timeline: 10 business days Client Cash to Close: • 10% down on purchase = $25,000 • Closing costs + points ≈ $8,500 • Legal/Appraisal Fees ≈ $1,500 • Total ≈ $35,000 Out of Pocket Monthly Carry: • ~$2,520 interest-only payment (plus taxes/insurance) Exit Projection: • ARV: $375,000 • Loan Payoff: $275,000 • Selling Costs (~8%): $30,000 • Net Profit ≈ $55,000+ For this client, we made sure the financing aligned with their exit strategy so they could move quickly on the property and keep more capital free for future deals. 

The real risks are to the seller..

FINAL NUMBERS:- Projected Costs: $380k ($357k in build cost & $23k in soft costs)- Actual Costs: $389k ($369k in build cost $20k in soft costs)Note: We had very minimal carrying costs because we utilized a CA HELOC with Premier Valley Bank that had a 2.99% introductory interest rate.- Projected Finished Value: $750k- Actual Finish Value: I think between $800-$850k, not sure yet.

crap I just wrote a long response and the site went down so here is the crib notes.1. ton of competition for investor dollars so investors look for highest returns and work backwards.2. sophisticated investors look at returns as a function of risk.3. less experinced investor tend to be bigger risk takers.4. to raise money one needs verifiable back ground and a deal that is simple to describe.

What's your risk tolerance?

To see deals in real time around LA, plug into investor meetups and site visits: pick two groups this month, show up early, ask who’s walking rehabs this week, and offer to carry a clipboard and ask smart, brief questions.

If your return for investing in another property is greater than 8.5%, than it would be beneficial to invest rather than pay off the debt (would want a sufficient cushion above 8.5% to justify the added risk and work of investing in another property vs simply paying off debt). 

All of them carry tax issues - either now or in the future.