We're about 10 weeks in to real estate investing and just closed on our 3rd Deal. Beginning to learn a lot of valuable CF strategies after recently joining Subto this past Monday. We are about to go under contract on our first CF deal for Door #s 4,5,6+. This deal is one that has been heavy on my heart as the seller is a close friend of mine, my current realtor, and currently in Foreclosure/Default on her Hard Money New Construction Loan which was her first investment. Would be open to feedback on Deal Structure and advice in general as this is our 4th deal and first "BIGGER" project.

Background. About 3 months ago, I quit my job to start investing in real estate. Prior to that, I had been listening to books over the previous 4 years, 200+ Titles in Audible currently. We started a company that remodels homes and have been working on scaling since month 2. We just closed on our 3rd property and are shooting for 50 this year. We are hoping Subto helps with the gain in momentum as we’re going to need all we can get to hit 50+ in our first year.

Deal Structure (Pictures of Property at Bottom)

Property: 2 Acres of cleared Land. Subdivided into 1 acre each. The first Acre is a Cleared Lot & we plan to build on it.The second Acre has a small 661sq ft House on it, and an existing foundation for a 1392 sqft house which a builder started but stopped construction on due to not being paid as the HML would not issue a draw.

Entry - We currently own 3 properties we are almost done remodeling and we plan to hold. The plan is to take out a HML on one of them to cover costs associated with Acquisition and Construction, and DSCR Cash outs after the other two are complete.Exit - Plan to Hold all 3 soon to be Aquired/Built properties for rent / future appreciation, +Cash Flow, and +Net DSCR Cash outs.

Acquisition - Contract for Deed $130,000 @ 0% Interest 9 months

HML Payoff $73,000 + Legal Fees on Execution of Contract
Balloon Payment of $57,000 at time of DSCR Refi after construction of home on lot one, and the finish of construction on lot two is complete.
Mechanic’s Lien, $43,000 for foundation and other work done, paid by seller at closing when contract is fulfilled.

Rehab/Construction

Lot 1 - Home to be Constructed TBD. Looking into potentially Multi Family or what size of home will capture the most value.
Lot 2 661 SqFt House Rehab $5,000
Lot 2 1392 House Finish Construction on Foundation $140,000

Rent

Lot 1 TBD, We’re hoping we can construct Multi Family for max rent
Lot 2 661 SqFt House $750/mo
Lot 2 1392 SqFt House $1900/mo

Refi/Exit

Lot 2 ARV $350,000

$80,000 Cost of Land/House/Foundation
$5,000 Cost to Rehab 661 SqFt House
$140,000 Cost to Finish Construction on existing Foundation

Lot 1 ARV TBD

$50,000 Cost of Land in Acquisition
Total Cost TBD

Using a DSCR 75% LTV 8.3% 30Yr Cash Out Loan, I Estimate we should be able to pull out approximately $255,000 after fees/points. That's $30k net cash out on Lot 2. PITI for the two homes on Lot 2 will be approximately $2,483/mo. Estimated Monthly Rent to be collected is $2,550-$2750/mo giving us positive cash flow of $67-267/mo in year one on Lot 2.What we do on Lot 1 will depend on zoning and the type of property we will be able to construct. The end result will ultimately be positive cash flow/net cash out.

This may not seem like a home run in terms of profit, but to me, it’s a home run in helping a good friend out of a bad situation.

Tony & Kim