All Forum Posts by: Christopher Blanco

I am close to buying my first flip.

Purchase Price: $125K

Rehab Budget: $49,900

ARV: at least $220, if not higher.

The seller has had my offer for almost a week. However today the realtor said they haven't signed anything because the seller is making sure she has enough cash to close. What are some creative ways to ease this worry? 

@Al Wright Some people here are afraid of hard money...don't worry about it. What you are proposing is a great strategy. I am employing the same. I am using Lima One Capital and they have been great to work with so far. I am doing a flip with them, but I plan on using them for both my rehab and rent when I do a rental. They have a great program just for BRRRR. One of the ONLY lenders I have found that do that. Feel free to PM me and I will give you the details.

I would be wary of a 20K repair budget that is going to net you a 100K increase in value. 

@Vee Vu Personally there are several reasons why I like HML,

1) closing is fast 3 days to 2 wks. 

2) I have a bankruptcy in my past from a divorce in 2011. Big bank lenders won't touch me for at least another 4 years. 

3) High leverage. Using the example above with a traditional commercial loan with 25% down, I would only be able buy 3 houses a year instead of 8-10. So while the HML is expensive to begin with I can make that up in volume.

4) Flexible terms, most banks I have talked to won't do a 30 year note on anything less than 100K. My HML doesn't have that restriction. Making a property cash flow on a 15 year note is tough...

5) One last thing I forgot...HML have no issues with, and in fact prefer to close in an LLC. Most banks will not do that.

@Joey Hampton  I wasn't talking about paying it off in one year, well not fully. The refinance into a 30 year mortgage pays it off. Take this example:

Purchase Price: 50000

Rehab: 5000

ARV: 80000

My hardmoney loan (since I am new) loans out at 12% with 3.5 pts ($495 a month interest only). With that I get 90% LTC, I put down $5500. After a seasoning period of 6-12 months, I then refinance for 60000 for 30 years (or whatever I am getting good cashflow at) and go on. 

I ran this scenario, and starting with $60K I was able to buy over 40 properties in three years. So even though the hard money was more expensive at first, it gave me the leverage to buy many more properties my first year.

Why not start in Albuquerque before going out of state?

I have used Eco-Tax this year and have been really impressed with their level of service and coaching. 

There are hard money lenders that offer refinance. You just have to evaluate if the extra money in interest is worth it. In my numbers, because my HML offers 90% LTC it is worth it, because I can buy many more deals. So the 6-12 months of higher interest will pay for itself in more deals. In addition you can add that cost into your numbers calculation and make the deal pay for it.

Depends. How heavily leveraged are you in your property? If its under 70% then you want to buy another property. If its over 70% leveraged, can you refinance (BRRRR) with your improvements and higher ARV to get it to 70%? I ran many simulations to see weather leveraging or debt pay down led to wealth more quickly, and it wasn't even close. The more properties you have the faster wealth accumulates and the faster wealth accumulates the more properties you can buy.

Alex, we should connect. I live in the area and I am looking at deals now.