All Forum Posts by: Christopher Manus

Good Evening!

I checked out a property today and I'm ready to move forward with an offer - I would love to get some last-minute feedback to ease my nerves a bit. The breakdown of the deal will follow: 

Purchase Price: $35,000

Rehab: $10,000 (Conservative Estimate) 

Closing Cost: ~$1,500

ARV: $60,000 (Conservative Estimate - Low end of the ARV range)

Rent: $775

Cash Flow: ~$190

Cap Rate: ~10.6%

I have a private investor who will cover the entire cost of the project (Purchase Price & Closing Cost + Rehab = $46,500.) I will pay him an 18% annualized return until I refinance - The goal is to refi within 8 weeks; as the rehab should only take 3-4 weeks, max. 

So, I'll have holding costs in the area of $1,000 month to cover interest, insurance, taxes, and utilities. I'm going to assume that I'll hold the property for 3 months before refinancing to play it safe. I will refi at a 75% LTV in order to pay off my investor. If the ARV comes in at $60,000 - I'll have to come out of pocket another $1,500 to cover the spread to get the LTV down to 75%. I'm going to assume that I'll have to come out of pocket another $2,000 for refi fees (Correct me if I'm wrong here).

Total Cash Needed: $6,500 (Very Conservative) 

Cash on Cash: ~35%

Initial Equity: $15,000

I tried to be as conservative as possible in my estimates so this should represent the worst case scenario. If I can get the property rented out immediately after renovations are complete and if the ARV comes in higher than projected, that would offset some of my holding and backend cost and increase my COC return.

I'm new to this so please, by all means, poke holes in any of this if it doesn't make sense - Thanks in advance! 

@Shawn Holsapple

Thanks for the add, Shawn - I recently listened to your podcast, very informative!

As for your earlier inquiry, I'm looking to buy - I have ~$100,000 worth of private funds earmarked and with yours and Michelle's referral, I believe I now have a lender in place on the backend to refi. 

I just finished the pre-licensing course for my brokerage exam and I plan to leverage the MLS quite a bit after I complete the state exam in a few weeks. However, at the moment, I'm having a difficult time tracking down deals in the Indy market. Per your podcast, I might turn my attention towards HUD and Auction.com but if you have any wholesale deals available, I'm definitely interested in analyzing them!

I completely spaced I made dinner reservations tomorrow evening but I'm going to try and push it to after 9, I'd really love to attend this meeting and meet everyone. 

FYI - I believe you might have met my boss last week at a CIREIA meeting - Does Marilyn Kleist ring a bell? 

Thanks again, Shawn! 

Steve, thanks for the quick response and information! 

Looks like an amazing networking opportunity, I look forward to it!

Good Afternoon!

I'm looking for wholesalers in the Indy market, please add me to your list :) 

[email protected]

Thanks!

Chris 

Good Morning Richard and Doug! 

Thank you both for the insightful information! My primary investor uses his SDIRA and I'm pretty certain he'd be willing to go up to a 75% LTV if the deal made sense, which this one does! I ran the numbers as both a flip and a buy-and-hold and they would work for me either way so I'm moving forward with the deal. Worst case scenario, if I cannot lock down financing when the rehab is complete, I'll put it on the market and use the profits as a downpayment for my first rental!

I did just join a local REI group and I'm going to check out a meeting in a couple weeks, can't wait! Thanks again, gentlemen, have a great weekend!

@Mike D'Arrigo Thanks for the quick response and heads up on HELOCs, Mike! I should have clarified, my issue is finding a lender that'll do NOO loans. To be honest, I just started the process a few days ago and have been reaching out to local banks in the area and I have several inquiries out there. I'm sure I'll get a hit before too long! I wanted to get some advice on here to make sure I wasn't spinning my wheels and making sure I was looking in the right areas. I'm starting to focus more on local credit unions, I've heard they tend to accommodate investors a little more than the big chain banks.

Thanks for the advice regarding the deferred financing program, I'll definitely have to look into that! 

Good Evening Ladies and Gents!

While I need to provide some context, I will attempt to keep brevity in mind, as I know time is our number one commodity here :) 

I just began my investing endeavor earlier this year - I was able to find a private investor who was willing to take a shot on me. I found a foreclosure, put in an offer under my newly created LLC and before I knew it, I was underway. Throughout the course of the rehab I payed my private investor an 18% annualized return every month on his invested capital. Once the project was completed, we found a buyer and I paid him off in full and I pocketed the profits. Despite a few unexpected hiccups throughout the rehab, it went exactly as planned.

I just put in an offer for my next project, with the intentions of using the same private investor to finance the deal. However, this time around, I would love to convert it to a rental as the cap rate would be close to 20% and the LTV to cover the entire project costs would be roughly 70-73%! My question is this, what advice do you have for me regarding pulling the money out and paying off my investor?

I've read forums suggesting HELOCs, Conventional Loans. etc. etc. - I would love to hear some input regarding my exact situation. I would also love to hear if anyone out there in the BP world has any experience with any local banks or credit unions in the Indianapolis market that would be willing to work with me! I've been calling around the last few days with not much luck. Any information is greatly appreciated, I look forward to hearing from you! 

Chris 

Good Morning Upen!

Thank you for the information, I was wondering if there were seasoning requirements and if the property had to be in my name or my LLC.

Quick followup question - These rehabs are not going to take 6 months to complete. Would you suggest that I move forward with filling the property with a tenant - I imagine that would assist with the bank's decision to finance the property, being that it's already generating positive cashflow. 

Thanks!

Chris 

Good Morning! 

Thank you both for your time and advice here - I'm going to make a list of some local banks and start calling, hopefully I can find one that will work with me! Thanks again, gentlemen. 

Chris 

Good Evening Ladies and Gents! 

First time poster, thanks in advance for the assistance! 

I recently completed my first flip in Anderson, IN and made a modest return. Looking back on the deal, tho, I think it would have made for an amazing buy-and-hold investment. Being relatively new to the REI game, I was hoping I could lean on one of you knowledgeable and savvy investors for some advice.

I have a private investor who is willing to finance the entire costs of my rehabs, this includes the purchase price of the property, for a very attractive annualized return. He is paid interest monthly on the principal and then paid in full once the property is sold. On my next investment, I would like to personally hold onto the property as a rental - If the numbers make sense of course. 

The properties will be bought under my LLC, House to Home Rehab, and then rehabbed and if I do my due diligence, I should have at least 20-25% sweat equity built into the property once completed. My question is, how would you suggest I go about pulling the money out of the property to pay off my private investor for the original loan?

Again, thank you in advance for your assistance and advice! 

Chris