All Forum Posts by: Account Closed

Don't really know what you consider expensive or too complicated, but here's an option for you.

Leverage a cloud-based telephony API like twilio.com. It will require a programmer to get it set up for you, but these systems are very flexible and powerful. What you describe seems on the simple side.

You won't need to maintain your own hardware, which is a plus. There's a lot of room to grow (recording all calls, getting transcripts, sending SMS messages with the directions to your office, etc.

The model does require that you leverage one of their numbers, either a toll-free or a number local in your area, but the cost is reasonable.

There's also a .01c per minute charge. I've found it to be a really great deal in my projects.

Bryan

Thanks for the replies, everyone.

As it turns out, this hard money lender does consider the points part of the closing costs.

Until this thread, I had no awareness of the important between discount and origination points and their possible tax/other implications.

As always, thank you for the education!

Bryan

Hi folks,

Hopefully a simple question.

I talked to a private lender recently and asked what typical closing costs were. I was told $5-6k, which didn't shock me too much.

Later in the conversation I asked what the points on the loan were, and were told 4. So the loan is 15% at 4 pts.

What I forgot to ask is if the points are considered part of the closing costs, or if they are on TOP of the closing costs. I do have a message in to the lender to clarify, but in the meantime, I wanted to ask those of you who deal with hard money how it normally works in your experience?

Thanks,
Bryan

@Jeff S
@Bill Gulley
@Will Barnard

Thanks, guys. These are all great responses, and right in line with what I was thinking.

I like Will's description- the main idea is to take a few less lumps from the school of hard knocks by seeing things in action first hand.

In my particular circumstances, I don't have as much time as the poster @Jeff S referenced, but nonetheless, I don't mind being a gopher/helper/carwasher for a few days in exchange for some education.

Thanks for pointers!

Here's a crazy thought ..not sure if this has much merit, but I'm just rolling with this sudden thought that is cascading through my mind ..

I'm a newbie, haven't done my first deal yet, but I feel like I am fairly well underway with the "pre-deal" education. That means, I know a lot of things "in theory" but nothing in practice.

You guys/gals that rehab and flip/rent for a living, (or at least a lot) ..would you be willing to entertain a newbie for 2 or 3 days to observe and learn?

I'm not sure if this would be effective, given the time frame of the whole process.

So, the questions are:

1) Is there anything to be learned through this?
2) Given a 2 or 3 day window (weekend, or weekdays) what part of the process do you think a noob might learn the most from observing first hand? (rehab estimation, etc.?)
3) Would you be willing to do this out of the kindness of your heart, or some compensation necessary?

Thanks,
Bryan

@Jerry Puckett,

This particular deal is in pre-foreclosure ..not sure, but I take this to mean I'd be dealing directly with a private seller.

I have visions of writing my own contract. Let's say it works out that way, and the contract is accepted. I'll write in, say an option period of 7 days with an option fee of $100. Earnest money probably at a standard 1% rate.

I've only bought one home, and that was FSBO without an agent about 10 years ago. As I recall, the earnest money went immediately to the title company.

Under this kind of arrangement, can I hold off on writing an earnest money check until AFTER an inspection and my final determination on whether to move forward or not?

So, under this scenario, I'd make an offer, it gets accepted (yay!) I meet with the seller or seller's agent to hand them a check for the option fee, then I conduct my inspections and rehab evaluations, then I make determination as to whether or not to move forward ..

If I move forward, I write earnest money check and go from there.

If I do not move forward I say thanks but no thanks, and the seller keeps the option fee.

Is that anywhere close to what I might expect?

Forgive me if none of this makes sense. I'm slowly learning my way around though, thanks for all the input.

Good to know! Thanks!

How do you normally structure the offer so that you can back out if upon further analysis and inspection it is not a good deal? Do you get out under cover of the option period? How much money do you typically put up for that privilege? $100?

@Jon Holdman

You caught another mistake. Your P&I calculation and mine are coming out differently because you are correctly calculating P&I based on the conventional loan amount, whereas I was calculating it off the "Payoff Amount" which we determined already was an erroneous figure.

You had mentioned that it is very difficult to get any cash out on the refi loan. Does this mean I need expect to only get a loan for the amount required to payoff the HML balance, or can I shoot for the 75% of ARV when it is higher than HML payoff in order to help cover closing costs on the refi?

Thanks again, this is very helpful!

Kyle,

You may not be off base there. I haven't analyzed the deal from the perspective of just going straight into a conventional loan. I was under the impression you could not find conventional loans for distressed properties.

Jon, you said: You will be able to collect rent as soon as you have it fixed up and ready. I don't see that rent in your calculations.

I didn't include the money from the period of time (after rehab) that I might expect a renter, except for in the cash on cash calculation. I'm not sure what the best way to factor that in would be? Would you apply that towards some kind of year 1 operating costs vs total oop (cash on cash for year 1, as opposed to other years?) Could use some advice on this..

Thanks,
Bryan

Thanks guys,

Already you're catching some mistakes on my part.

You're right ..I totally goofed and subtracted the interest payment from the HML balance. Obviously that doesn't work! Thanks for pointing it out.

Also ..I was assuming, perhaps incorrectly ..that an HML lender would refinance into a conventional loan after rehab was done .. "no seasoning"? looks like I need to review the whole seasoning concept.

The line: "Rent - 2% rule $1,060.00 $1,000.00" is intended to show what the 2% rule says I need for rent, and then show what I'm estimating for rent next to it. $1060 is my 2% calculation for reference. The $1000 in this case is what I am estimating for rent based on comps.

The Monthly P&I is for the refi loan. I assumed a 30 year note. Perhaps 20 years is more realistic.

Thank you both for looking at this! I'm trying to build an excel spreadsheet to help me quickly perform assessments and this review is tremendously helpful!

Bryan