All Forum Posts by: Brian Fung

@David Lant

Flipping properties and purchasing value add apartments is a great way for you to build capital. If you are comfortable in your residential market, another option you have that is not mentioned here is to flip properties, rent them out, bundle them into a performing portfolio and sell the bundles off. This can help bridge you into buying multifamily apartment buildings. 

With regard to leverage, I want to echo what has previously been mentioned and paying properties off completely. 46 years old is still young so transitioning to a ALL cash portfolio might be hurting your growth potential. Smart leverage is the way to go. 

Hi Victor, 

1. what do you think the current market value is? 

2. it sounds like there will be a legitimate "sale" of your parent's property. What's the estimated sales price? 

3. How much will it cost to rehab the property? 

4. What's the address? 

Feel free to private message me the answers to this if you'd like. 

@Darius Ogloza. Thank you for your response. What cash on cash return percentage are you targeting specifically? and what market(s) do you focus on getting those returns in? 

@David Avery, Thank you for your response. Based on your last 200 deals, what would you say is the average percentage of your sales price that you pay in closing costs when you sell? 

My financial model for my investors takes into account their front end closing costs, rehab budget, and carrying costs into consideration but I am trying to get the most accurate "general" figure I can use for closing costs when the sale happens. 

@Greg Dickerson 

Thank you for your response. Regarding your response for #1, you mentioned you use "actual costs". I agree that's the best way to calculate your returns but when you are evaluating a deal on the front end to figure out if it meets your 30% gross margin and 40k net profit parameters, what figures do you plug into your financial model for Commissions,closing costs, transfer taxes, stamps etc to confirm that the deal pencils out? 

I have 2 questions: 

1. When you underwrite a fix and flip deal in your upfront due diligence, what figures do you us for the cost to sell? (do you use a percentage, standard fixed fees + percentage, etc)

2. When you evaluate the profitability of a deal, what metrics do you care about most? (ROI, Cash on Cash return, Flat dollar amount such as 40k profit/flip? etc).

***full disclosure I am a real estate investor as well as a lender and I'm looking for these numbers to get a better feel for how other investors are thinking and analyzing THEIR deals***

Aloha Jeremy, great questions. For an owner occupied property you'll more than likely need to prove your income. That said, there are options out there that allow more creativity. With regard to investment properties, you can work with a hard money lender that will more than likely, not require you to prove income. They might ask questions but the bottom line is that if you have a great deal and the money in savings to execute on the deal, the loan officer you work with should be able to figure out a way to get it done for you. It all comes down to asking the right questions and working with someone that knows underwriting inside and out to get the deal structured the right way for you. I hope this helps. 

Hi Brandon Anderson, 

David Seroy has answered your question very well. I am also a private money lender. I agree with everything David has said. Most of our investors choose to hold title through an LLC. As private lenders, we prefer this as it gives us more comfort that the purpose of the transaction is business purpose and we are not providing a loan for an individual's primary residence.

We loaned about $1 Billion last year, most of which were to LLCs. 

Hopefully this is helpful for you. 

@Jason Unrath Great question. There are a lot of private money lenders in the industry. They all have different guidelines and subtleties that can make or break a deal. Building relationships with a few early on in your investment career would set you up for success as you become more experienced. Like @Manuel Angeles mentioned, private money lenders tend to want to see experience for them to originate a loan for you. There are private money lenders that will lend to you with no experience. Much of the time little to no experience just means a slightly higher rate. However, the more you build relationships with your lenders, the more they are willing to go up to bat with their underwriting teams to get you qualified with better pricing. 

Hey everyone, I'm looking to restructure my business for the best tax advantages. I have my w-2 job as a hard money lender but I also want to grow my real estate portfolio. In addition I want to use the tax advantages from real estate to offset the high taxes that interest earnings and commissions are subject to. Does anyone have any advice or referrals? If there are actual referrals, feel free to message them to me. Thank you, Brian Fung