All Forum Posts by: Adam Avinger

Now.... Plan B isn't like "marvelous" by any means, but, what I do get to capture both equity, and depreciation for 5 years. I get the 250/mo. I get the 20k pay day at the 12 mo mark, and after a year off the market, I can (if needed) put the property back on the market to sell, and possibly cash out twice.

Rinse and Repeat bro.

and if it doesn't, you need more an additional exit strategy. The short of it, is that you owe the ENTIRE balance of the loan on day 181. Hence the risk. Investment loans aren't considered long term loans. they're short term loans. No flipper wants to get a home, rehab it, and hold it for 5 years before they sell it. So... obviously, your taking a risk purchasing a property on whats traditionally referred to as a ballon loan.

For me, I analyze each property for both its ability to earn money in a Flip, and to cash flow as a rental. If it meets both rules, and is in my farm area. I make an offer.

Now, I usually like to complete my rehab NLT than day 90. I list for 6 weeks, and around the 45 day mark before my loan is due, if I don't have a contract, I move to a 5/2 20yr ARM, for the next 6 months and rent it out, to cover costs and cash flow, and THEN at the 12 month mark, I refi AGAIN, because my 5/2 ARM isn't a really a REFI because its "in house" and take cash out, to the point where im still cash flowing a min of 250.00/mo. Usually ends up being about 20k

@Dylan Vargas - By trade my wife and I work in Physical Therapy. I was in Oroville on a traveling contract for 9 months and absolutely love the area. Oroville is a bit sketch but everything around it is absolutely my cup of tea. Ill send you a PM. Would love to discuss some additional stuff with you. 

Disadvantages would be much higher interest rates. Typically between 8-12% interest only for around 12 months max. Good HMLs won't charge you for early pay out so if you get your property under contract in 6 months rather than a year, you can save yourself that overhead. But account for it nonetheless. The way I look at it is if i accounted for it, and spent it, thats what it was there for. If i didn't, cool deal, i saved some money. at least im not scrambling to cover the expense.

If your credit is good, go talk to a local bank mortgage officer. If they don't offer the product your looking for, they can direct you to who in the area does. Thats how i found my local bank. I get 80% LTV financing, commercial loans which close in as fast as 10 days... i get it at 4.5% interest only for 6 months, and i can then decide to roll it into a 5/2 ARM or a 30yr conventional fixed rate if i wanna Buy and Hold. I use this because its just like hard money, but cheaper.

Okay so yes and no. There a few avenues of approach here. Conventional lending, Hard Money, Commercial HUD, and your HELOC are the most common types. Without getting into the super fine details, you'll likely need a commercial HUD or a Hard Money loan if you want to get your rehab costs included. So basically what this does for you is that you approach your lender and say I have this house that CAN sell for "x" once it's fixed (ARV). They then look at your deal for holes or flaws, and typically if it's a good deal for them they will give you 70-80% LTV on the loan. Which can give you access to the rehab money, considering your purchase point. Hope that helps.

Great post. I'm interested in this particularly because my wife and I are moving to Chico. Have you had any experience with Flips/Buy and Holds in Butte County? Oroville, Chico, Paradise, Yuba City?

Dawn Brown - do you lend to those looking to buy in the state of Louisiana?

In any event, a Hard Money Loan is still a high interest rate endeavor weather you have a 750 or a 550. The thing I've never understood is this idea of mitigating risk through % increases. If I'm a 550 Credit score, and I take out a 200k loan from you for 12 months, am I more or less likely to make the payments if they are more expensive or less? To Add, id also say that if Someone did default on this loan, your company is still out 200k. Regardless of the couple grand said person may have paid back or not. I would say that having a couple hundred thou in the bank would make me feel better about lending too. But at the same time I'd figure they can afford it, charge them for it. And again, if they default, the bank or investment company is still out the entire principle - the very few grand they may have collected on the payments side.... Things aren't this way though. And my credit is good, so I typically don't have to worry about it. But it never really has made much sense.

I'm going to be doing both of the things you recommended, actually. I've already closed on my first deal, and I'm not about to stop. I drive my farm area about twice per week. I have written down the address and phone number of all the rental properties with a sign in the yard, as well as the FSBO signs. I'll be closing my next deal with a commercial loan from my bank which closes in 10 days or less (already successfully done this once) and is interest only for 6-9 months. The reason for mailing campaign is I want to be proactive in all the areas I can be. I don't think I'm gonna meet every single person who I could potentially buy from, so to better my chances, I should increase my contact. As the question states, I'm looking to flip, so retail prices are out of the question. Also as stated in the OP, I'm looking for those in pre foreclosure, distressed property owners, and a good number of the other things you said. So if anyone could PM me a good service they've used for getting such a list, i would be grateful. Also, if anyone knows a service which actually stuffs and mails for you as well, I'd again be grateful! Thanks for any and all advice, BP Family!

I'm looking for a reference to someone who can generate a list of potential sellers (pending foreclosure, distressed, etc) in which I can do a mass mailer in my area of North Louisiana. Thanks everyone!