All Forum Posts by: Paul Daniels

Rent is approx. $1,400. 

Conventional financing meaning flip and hold financing as opposed to hard money.

Hello, all.  I would like to gather some input from some season investors about a possible deal I am pondering.  

About me:

I run a general contracting construction business located in central NJ specializing in distressed property repair.  We complete rehabs for investors, banks, realtors. flippers, etc.  We also do a lot of work for homeowners, insurance companies, etc.  Last year we completed 6 of our own flips.  These were low end homes bought for around 30K totally rehabbed with every single thing brand new and sold for $140K in C type neighborhoods. The work takes about 30 days but the entire process is closer to 4-6 months.  Marketing, finding a buyer who can get approved, closing, etc

About my Deal

While I very much enjoy the property flips it ties up cash flow, which prevents us from doing many properties simultaneously. There is a lot of opportunity in the rental markets in Trenton NJ.(F type neighborhoods for those of you unfamiliar with the area. Very poor high crime areas). I am interested in a SFH with an asking price of 30K. Rehab cost are approx 30K to have the home look amazing. We might be able to cut some corners and get the cost a little lower as well. We would purchase the property and complete the rehab with cash. The ARV should be around $120K. We should be able to take around 15-20K in cash equity out of the project using conventional financing upon completion. That would leave us with a mortgage payment of around $400 per month. Taxes are $1,569 per year, another $1,200 per year for homeowners insurance. We will also need to budget for lawn care, snow removal, repairs etc.

I am able to calculate flips very well but rentals are a totally different animal so I wanted to see what the BP community thinks.  My crew can easily handle the repairs of the property as needed so I do not consider that a major problem.  We will be replacing the major components of the property so we should not anticipate any major repair issues.  The question here is would this seem like a good deal for long term buy a hold even though the property is not producing major monthly cash flow numbers.

Let me know your thoughts.

Thank you all in advance. 

We are hoping BP members can help identify some of the government agencies in NJ that will pay the realtors finders fee (usually one months rent) to place a tenant in a rental property. We had some rental properties in NY years ago and we used a realtor that was always able to find us a tenant very quickly. I know she worked with section 8, the VA and some agencies that provided temp. housing for victims of domestic violence. None of the realtors we have contacted in NJ are affiliated with the aforementioned programs. We are planning to build a portfolio of single family homes in a tough area and want to line up a steady steam of tenants if possible. Thanks in advance for you help and advice.

We would be happy to speak to you and see if we could help each other. We charge a small fee for a evaluating the property and preparing a complete itemized scope of work. If you do the job we credit the fee back to you.

I appreciate the feedback.  I have done a few properties in the area as an investor.  I have also flipped over 100 properties as a contractor  I should of obtained financing from the beginning instead of using all our own funds. 

looking at approx. $75K for a property with an ARV of around $150K.

I thought someone would have some hard money lenders with better terms.  I am not familiar with a microloan.  

We also have a business line of credit available with Kabbage that we can use as a last resort.

I am looking to obtain financing for a fix and flip property in NJ and would appreciate any recommendations.  I purchased the property for cash as well as about 75% of the rehab.  We have about 2 weeks to go before the property is ready to be listed for sale.  I would like to obtain financing on this property so I can use my original investment on a different property.

I do not want to use conventional financing because it will take too long to close the loan and we anticipate the property to sell very quickly.  The hard money lenders I have contacted are charging almost $5K in fees that are due upfront which is in addition to 10% interest. These fees seem too high for a loan that should be repaid within 60-90 days. 

Thank you in advance for your assistance and recommendations.