All Forum Posts by: Blake Donald

Hello Blake! You kind of sound like you know what you're doing but I have some recommendations. First of all make sure there is demand in that area for your plan and is your use needed? I would try to keep your total cost to 150K or less so you can rent and still profit after the debt payment. All ways have a positive cash flowafter debt payment. If you know what you're doing it will make financing easier. Yes, you want contractor agreements in writing and a limited first draw amount with all work being completed including the punch out work with a signed lien waiver signed before making that final payment. You need an acceptable ARV Appraisal hired by the financier. I would not depend on Zillow. Closing costs should be considered skin in the game. Whenever possible try to get the property owner to finance your deal. Show them on paper how they can make them more money. If they need some cash let that be a second note with different criteria. Be creative. Some financiers will allow interest only on their payments. Your split with a Partner is whatever you agree on. Interest could be paid monthly or accrued and paid when you refinance it. Do whatever makes you happy. There should be trustworthinest between you and the investor before a deal is made. Feel good about him and his responsibility before taking on a Partner and know what he totally expects. Good luck to you!

Firstly, thanks for your response.

Currently I would only be considering duplex properties to ensure of having cash flow positive properties after debt, tax , and maintenance payments. Definitely low cost with high margins to minimize risk at this point.

Are you recommending using owner financing for the property and an investor for the rehab? In a case where an investor is financing the full amount they would have the rights to the property barring not being able to refinance or an incomplete project Correct? How would this work with seller financing and an investor?

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After much research I recently purchased my first home as a primary residence.

FYI (Purchase Price - $132,500

Renovations - $ 34,000

Appraised at $190,000 before renovations

I think I did a decent deal for my first time and not being a cash buyer or having much leverage, but now more than ever I am interested in pursuing investment opportunities in real estate. Being that I just purchased my first home, financially I do not have the capital to finance a deal myself. I know wholesaling is a “no money down” option which I am considering but I am currently interested in learning more about working with investors and partners with investing in rental properties and flips. I do have the work ethic, hustle, persistence, and I am working on gaining the knowledge to find these deals for potential investors/partners or even use hard money lenders.

What would they like to see brought to the table (a great deal of course) but would they like to see a verbal agreement or purchase agreement in writing before being approached?

When providing a calculation for the ARV, would comps using Zillow's recently sold homes be sufficient? Or an actual appraisal?

For the repair cost do you want an actual written up estimate from a proven contractor?

When flipping a property there would typically be an agreement to split the profits before beginning to work with each other. How do investors receive returns on rental properties? Are they paid interest during rehab period and paid off once refinanced?

Financially what is considered “skin in the game”? I know this is a vague question but with a few thousand dollars how can you prove your commitment to an investor? Pay closing cost?

I understand they would like to know the Exit strategy, rental or flip. Can rental properties be refinanced solely based on the cash flow and being able to sustain itself? Or should you aim for 40% mortgage to rental income ratio (dti)?

(the answer to many of these questions may depend on the investor but I would like to hear different point of view).

I know these are a lot of questions and I am sure the replies will generate even more but thanks for any and all feedback.

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All Forum Posts by: Blake Donald

Blake Donald has started 1 posts and replied 2 times.

Post: Calling all investors (Newbie Questions when first starting out)

Post: Calling all investors (Newbie Questions when first starting out)