All Forum Posts by: Cam Schwartz

Looking for Advice on a renovation.

Hey everyone! I’d love to get your input and perspective on my current real estate situation in Chicago, IL. I’m in the process of purchasing a 3-unit with unfinished basement property for $512,000, significantly below its appraised value of $690,000. This price reflects the equity I already have in the property through a partnership, and I’ve negotiated a deal to keep it affordable. Owner financing is not an option.

The property is located in an area that has been appreciating at around 6% annually, with strong long-term growth potential, I’m considering how to best leverage this opportunity.

My goal is to renovate the property to maximize income by adding more units. The property has 3 above ground units with each unit having 3bedroom 1 bath. Property is zoned RM-5 and has great potential for increasing rental revenue. I'm exploring options for financing the renovations, including potentially taking out a HELOC using the property's existing equity or considering a renovation loan.

Key Details to Consider:

- Purchase Price: $512,000

- Appraised Value as is: $690,000

- Equity Left in Property: $178,000+

- Annual Appreciation: ~6% ($27,000+/year)

- Planned Renovations: Convert and optimize layout to add more units

- Goal: Increase property value and generate additional rental income

Questions I’d Love Input On:

1. Financing the Renovation: Would a HELOC be the best choice, or should I roll into the a Conventional rehab loan, or other loan products? Or buy at full price and take the cash difference?

2. Renovation Strategy: What are the best layouts to ensure I get a strong ROI on the renovations?

3. Commercial loan vs Residential – once I increase to 4+ units the loan request would change. How to work around or best option here.

4. Cost - the basement alone may run me $140K+ to renovate to 2 units with income of roughly $2,300. Should I start renovating the other floors first? Renovation cost for other floors is unknown at this time or if I want to go that route. 

5. Exit Strategy: Should I hold long-term to benefit from appreciation or consider refinancing/selling after increasing the value?

6. Living Situation: I could use as primary residence or strictly buy as investment?

I’d appreciate any insights from experienced investors, lenders, or anyone who’s worked on value-add projects like this. Please share your thoughts, lessons learned, and recommendations!

I'm wondering if anyone's ran into this problem before and if they found a solution.  I put an offer on a potential flip and the realtor got back to us saying that they are only accepting cash offers.  Our offer was 120k via hard money which in my experience has always been treated as a cash offer.  Sounds like they want to see cash in the bank.  So, I'm dead in the water as I don't have 120,000 dollars lying around.  Has anyone else dealt with this, and was there a way to solve the problem?

We reiterated to the realtor that our hard money lender is as good as cash and can transfer funds with an accepted deal within 10 days.  The property is in the probate process.

Thanks,

Mike

Hi - My name is Manuel Balian, and I am a hard money broker working in 37 states. I provide my clients with great customer service, and I work with the best lenders nationwide.

I would like to discuss teaming up with you. I believe you can be more successful if we work together as a team. My broker fee is very low – below industry average.

Please see my website www.TeamBalian.com and call me at 818-616-0134 cell.

I look forward to speaking with and serving you.

Thank you.

Manuel Balian

Your Hard Money Broker

I’ve had quite a few new investors come in lately asking about 100% financing through hard money — meaning no money down, with both the purchase and rehab fully covered by the lender.

From what I’ve seen, that’s pretty rare unless there’s some creative structuring involved.

I know it can sometimes be done through JV partnerships, seller financing in second position, or gap funding — but even then, it's usually based on the deal's strength, experience, and having the right connections.

For those of you who’ve been in the game a while — have you seen a true 100% financing deal happen for a new investor? If so, how was it structured?

Curious how you all explain this to beginners who are eager to jump in but don’t have much capital yet. Would love to hear your insights, advice, or even deal examples!

When financing your flips, do you focus more on getting the lowest interest rate or avoiding upfront points?

I recently spoke with an investor who takes a 6-month loan at 16% interest with no points because he consistently flips in 3 months or less. Even though the rate is higher, he avoids the 2 points ($4,000 on a $200K loan) that come with lower-rate loans.

By closing out the loan early, he only pays $8,000 in interest versus a lower-rate loan at 10% with 2 points, which would cost him $9,000 total ($5,000 interest + $4,000 points). For those who turn projects fast, does a higher rate with no points make more sense for your deals? Or do you still go for the lowest rate possible?

Let me know what you think.

I’m looking to buy two recovery homes but only want to put 10% down on each is this possible to find something like this?

I own a Triplex and was planning to refinance the property after renovations and then rent it. The property does need a significant renovation about 425k worth to redo everything. The property can bring in $6,900/ month according to Small Area Fair Market Rents in this zip code. I can use a HELOC to fund the renovations but that would require me to unload other properties. I was wondering what other options are out there or if using my HELOC would be the best route?

I have successfully BRRRR'd 40+ properties in my 8 years of being a real estate investor. I recently listened to the BP podcast on the "Perfect BRRRR", where you pull out 100% of your investment. Out of the rentals I've BRRRR'd, I've only had 1 rental where I've left money in the deal; every other deal I've pulled out extra capital to put in my reserves or invest in the next property. This is all while maintaining $200 per month cash flow after PITI, vacancy, repairs, management fee, and capex. I have learned that cash flow is kind of an illusion with SFHs, especially when you need a new HVAC, roof or other large repair. That's why we started flipping houses; the money is made from equity, rather than cash flow.

Question: I’m about to do a cash out refi on a bundle of houses. Should I cash out the maximum amount of equity, while maintaining a much lower per month cash flow (still +), or should I stick to my $200 per unit target and be glad I’m getting all of my investment back?

I'm relatively new to flipping, but I understand that the majority of profits come from purchasing the property at the right price. I'm currently exploring SFH in the Bay Area, specifically San Jose. I think an 85% ARV seems reasonable and offers a small margin for profit, though I know some other flippers target 70-75% ARV.

With that in mind, what would you consider a typical purchase price as a percentage of ARV for a good flip opportunity in the markets you're familiar with? I'm asking this while excluding local market dynamics and lender requirements as much as possible.

Thanks!