All Forum Posts by: Ray Slack

Was that a question? 

You need to JV it or go with a HML that will use ARV as the V in LTV and not LTC c=cost.

Most will limit you to 60-65% LTV on the value but it's better than coming up with all the cash yourself.

Ray

I understand..  my deals are just usually the reverse.. Buy for $150k,  fix up is $50k and sell for $300k..  Well usually $275k (ish) 

Finding the deal brings a lot to the table. I (and most investors) wouldn't partner with someone who is just the contractor and there is a defined value to the role  10%-20% markup of the renovation cost and it's more profitable to hire a contractor directly than bring on one as a partner. 

If you have some funds of your own and have a track record of properties you have renovated and the investor has sold you can probably get a hard money loan and it's property more profitable than bringing in an investor.  They being said most are going to make you sign personally for the loan.. So, make sure your numbers are right on the renovations, timeline and the selling price or it could drag you down at 15% interest and if your deal goes south a hard money lender will go after anything else you have of value to get their money back.  

Also, make sure you research the costs to buy, costs to sell, taxes, average time on the market (and the cost of the money during that time) ... Alot of people look at what I bought a house for and what I'm selling it for 3 months later and think I'm making a killing but they don't know all the hidden costs.  

Ray

You have a few options.. hard money is one of those and usually doesn't require good credit. Only a good deal.. Most lenders are will loan a max of 60-65% of the ARV (after repaired value) including renovations. You will probably pay 10-18% with 2-5 points for the loan. You would usually need to have some money of you own in the deal.. usually 20% of the purchase price and the closing costs.

So on your deal with an ARV of $300,000 they would be a combined loan amount of $195,000 including purchase and rehab costs. They are going to be real sticklers for a true = conservative ARV

You also have the option of pulling in an investor.  Since you say that you are finding the deals as well,  next time you find one present it to your investor as a partnership.. 

He puts up all the money and you bring the property and all the renovations at your cost (no profit)  and you guys split the profits on the sale.. This is the most common arrangement for investors and contractors, although you can structure it anyway you want. 

I will say though being an investor and also a contractor I can't really see how you are spending $150k on renovations to a house that you are buying for $50k.  Unless you are just buying the lot and building a house from the ground up.   I can pretty much renovate any house under 2,500 sq ft for $75k or less (barring any structural issues)

Ray

a few more tips..

1. If you have a large order.. I think it's over $1,500 or so .. Take it to the pro desk and ask them to send it in for volume pricing.. I think they call if VPP... They scan all the items and then the computer gives you a discount.. Not much but I saved $50 off a $1,500 order today...

2. Also, keep an eye out for lowes coupons.  they send out alot of them (you can also buy them on ebay)  and Home depot will honor them as a competitor coupon

Ray

Well if you spend a lot of money.. You can get discounts with a pro account ..  The discount varies based on the product.  I just 30% off all paint.. ( I spend over $100k per year there)   They used to give you 5% with their commecial card and pro account.  Now they give you some stupid credit on Gas..  I guess it's better than nothing...   ALSO as said above if you are Military Use your ID and get a 5%-10% discount. 

I think the OP had the heat treatment done already.   I would first have someone come out make sure she truley has bed bugs.  (There are many things that can look similar to bed bugs)   Also, the company you just paid $925 doesn't have some kind of warranty?  That sounds crazy.

Based on your last comment that the floors are going to be replaced.. Find a painter that is really skilled at spraying..  You can have 2 guys tape up the house in 1 day and 2 guys spraying (one spraying and one back rolling behind the sprayer) should be able to spray the whole hours in 2 days then come back and do trim work in 1-2 days.

Ray

As a Flipper that price is high for what I would pay. I'm also a contractor and as a contractor it's still a bit high for what I would charge for the job.. I usually price out what the job would cost me to have my guys do it and then double the labor.  I figure labor cost would run 2 guys @ $15 per hour 2 weeks to complete everything..   labor = $2400 add in unexpected problems and bring the total to $3,000 labor and then add my profit of $3,000 for doing overseeing the project and add materials I'll probably be at $7,000 qoute .

That being said if I was paying someone else to do the whole thing on one of my flips I wouldn't pay any more than $4,000-$5,000. 

Ray

Yes. That works.. The only issue is that a good accountant will have you "write off" every expense to reduce your taxes.. The bad thing about that when you are self employed is that a lender will only use your net income after deductions to qualify you for the loan..    Let's say you make $100,000 a year and are self employed and you have a great accountant and have $80,000 in deductions.  The lender will only use $20k in income for qualifying income.  it's best to get 2 years of tax in front of you and then speak with a lender on the phone.   On the flip side if you haven't been deducting a lot of expenses (Also know as paying a lot of taxes)  you should be okay with being self employeed. Depending on your revolving debt you would need $20k to $30k in "net income" to qualify for a $100k loan