All Forum Posts by: Brandon Wood

@Brian Ellis

Since it’s my first deal, my risk tolerance is lower than most.

@Todd Rasmussen

At $81,000, there would’ve been no wiggle room on the rehab. I budgeted $10,000 extra as a cushion on the rehab, and it seems as though others were simply hoping nothing unforeseen came up. I was thinking there had to be a reason someone left the job after dumping ~$20,000 into it. Either they ran into something they didn’t budget for, or they ran out of money. Both worried me enough to budget the extra $10,000. Also, does 12% interest seem close to accurate for hard money? I had a friend who was able to get 8% on private money, but they wouldn’t finance the rehab on his project.

I recently missed out on a deal after spending 3 days calculating, calling contractors, and trying to schedule a time to look at a property. It was a two-house deal under one deed. One was partially renovated, but the renovations looked sketchy (20-inch wide shower, rippling siding, exposed lam beam in the living room hanging down about 10 inches, etc.). I calculated my maximum allowable offer at $71,000 because I have to use hard-money or private money at 12% as it’s my first deal. They were asking $85,000. I was finally able to look at the property only to be told as soon as I left that they just assigned the contract that day. I asked him how much it went for and he said $81,000.

Does 3 days seem unreasonable for due diligence on a first deal?

@Rich Somers

I see. Thanks for the info.

@Kathy Henley

She’s supposed to be calling me tomorrow. They will want an appraisal, but I’m not going to bother to submit the application if they can only credit $20,000.

I'm just getting started in REI and went to my bank today to inquire about opening a HELOC. My bank said they would loan 80% of equity. However, when calculating the lendable equity, she used the formula:

Estimated Home Value - 370,000

Current mortgage balance - 276,000

370,000 x .8 = 296,000

296,000 - 276,000 = 20,000

She said my lendable equity is 20,000.

My understanding is that the calculation should be:

370,000 - 276,000 = 94,000

94,000 x .8 = 75,200

Lendable equity should be 75,200.

Am I missing something?