All Forum Posts by: Adam Keffer

View report

*This link comes directly from our calculators, based on information input by the member who posted.

Background details:

I own my property free and clear (appraised at 165k, have a 130k HELOC available for the down payment and closing costs, etc,) which I would pay off once the deal on the duplex is finalized and our current residence is sold, ideally soon after. I don't think it would be a problem to sell my place for around 185k due to recent comps. I would look to clear 150-160k after closing costs/commission, etc would be paid out. With the remainder after down payment, closing, commissions are paid out, around 90-100k (it's an FSBO, owner is kicking in 5k seller assist), I'd be left with around 50k. Would look to invest half and then keep the remainder to pay down the mortgage on the 250k balance quicker so I could use the equity to obtain a HELOC on the duplex and use for a future SFH purchase.

My other thought would be to do a live in flip, and rent out my current residence for around $1100/month, but would have to eat the $314/month in HOA fees which would leave me with around $800/month cash flow.

Alternatively, the duplex would cash flow around $200/month (unique side by side duplex that's the owner added another garage/addition/deck on the owner occupied side we would live in) if and when we moved out (we have one child and are ok with having our 2nd in the duplex, but 3 would most definitely be too cramped, and we would forced to look for a SFH while renting out both sides of the duplex).

Thoughts? I know there are several different ways on the path to financial freedom and that the first deal is the hardest, but I feel if I don’t make a move on this property I’ll be stuck in analysis paralysis forever and never take the first step. I know the first deal is always the hardest!

View report

*This link comes directly from our calculators, based on information input by the member who posted.

@Michael Tripp

The 4% was an example of a contract he had/has with a separate party. My loan would be at the 15%. I may reach out to the current lender to see if his reasoning for exiting the deal is as my friend truly says it is. I feel this will give me some background into his dealings with my friend and if he was repaid on his previous loans.

Agreed that if I am not the first lien on the property, I would be very hesitant to do a deal with him regardless, as others ha e previously mentioned, I do not have any position to reclaim any of my funds in the event he should default for any number of reasons.

@Jeff S.

In regards to HML's, do they charge a fee to make an appointment or originate the loan with them? What would be their incentive to work with me to do so?

@Jeff S.

Thanks for the candid input, Jeff. I admit I’m not the most well versed in private money lending, which is why I was reaching out in the first place. I appreciate all of the feedback from the BP community and value the opinions and experience of individuals who have been through processes that I, myself, have not.

I am going to reach out to a local HML to gain some insight into this process and the proper ways to protect myself if I do proceed with a deal like this in the future. I plan on getting my real estate license soon, mainly to educate myself more in all areas of real estate as well as to make connections to more accomplished real estate investors who can provide guidance in all facets of the business.

I know that there is a fine line between taking action and not doing my due diligence. I don’t want to enter a bad deal, but in the end I know if I never make any moves, I will forever be standing on the sidelines. Experience, if done correctly, is the best teacher, IMO.

@Kyle J.

Thanks for all the input Kyle, much appreciated.

I'm going to speak with my lender to go over any details I may have overlooked from my HELOC and to make sure it makes sense from a cash flow perspective.

If it is an interest only draw period of 10 years, my monthly payment should only be $288 which would net me @$600/month, minus the initial attorney fees for filing the documents.

@Kyle J.

This was something that worried me a little as well. I told him I wanted to go through a contract attorney to set everything up, to which he had no problem doing and said he had done that previously with lenders the first few times they had worked together.

If we go this route, I’m still worried that not all of the other lenders would be readily known should he default and only then would I find out what position I’m in.

Apologies for all of the spacing, the mobile app likes to input extra spaces apparently.

@Kyle J.

I'm not certain I would be first position, as he has said that the lien could be held against any of the homes he had under his LLC (he's currently working on 3 at the moment).

Here is an example of a contract he has used with other lenders:

This agreement Made September 11th 2018 is between (names ommmited). The purpose of this agreement is for a loan in the amount of $175,000 (One Hundred Seventy Five Thousand Dollars) from (names omitted) to complete the renovation of (address omitted).

(Name omitted) has agreed to pay 4% interest for a term of 9 months of the agreement totaling $7,000 (Seven Thousand Dollars) From September 11th 2018 through June 11th 2019. If the loan is not paid in full on or before September 28th 2018, additional interest in the amount of $33 per day (Thirty- Three Dollars) totaling $990 per month (Nine Hundred - Ninety Dollars) will be due to satisfy this loan in full.

This is a “Lienable Loan” and must be paid in full with interest from the proceeds at closing from the above-mentioned property. In the event the loan is not re-paid or in default. (Name omitted) gives (name omitted) the right to lien this loan against (address omitted) or any other properties owned currently or in the future by (name omitted).

@Nick Giulioni

I haven’t walked through the property yet to see exactly how far along he is in the process, but I am going to do so in the next week or so to gauge if I think it will be able to be completed in 6 months.