All Forum Posts by: Christian Wathne

Erick Garske I used individual policies; I only have 2 rentals at the moment

I shopped around, but settled on USAA as the best value on my rentals. For flips I'm using Foremost because USAA doesn't insure flips. Foremost is a partner of USAA though. 

I'll get some heat for this comment, but the 1% rule is pretty much impossible to hit in any large city worth living in. I look for the 2/3 through 3/4% type property as being generally good deals. But you also have to look at condition of the property; does it need rehab and if so how much. What does the next 5yrs look like in maintenance. Is it in an area with upside appreciation potential...etc. ....also, is it in an area that you WANT to live?

Definitely do the rehab. Gut and throw away everything that isn't staying; then build

How do you know he hasn't made copies?

Hi @Bryan Pham. Yes, its possible to get a 2nd hard money to come in for the remaining 20-30% but rates will be higher. 

Every lender and deal is different, but standard is 80%ltv; 2points; 10% rate, then 2nd loan for 20%, 2points 15% rate

Assuming your numbers at 1,400,000 arv and 1,200,000 here's how your deal looks

Purchase price 1,200,000

closing costs (2%)= 24,000

points upfront on both loans (2ponts avg on 1.2million)= 24,000

renovation budget $50,000 (i would be very surprised if it was this cheap, you prob dont want to go builder grade on a 7 figure house)

carying costs (blended avg rate=11%, lets just round to 12% for easy math)= $12,000/mo, figure 4 months end to end, so this becomes $48,000

ARV=1,400,000 (cost of sale=8% = 112,000)

so 1,400,000 - 112,000 - 48,000 - 50,000 - 24,000 - 24,000 - 1,200,000 = -58,000

It would appear you would be on track to lose $58,000 on this deal

@Lonnie Hammond we signed a contract, very similar to an llc operating agreement type format. We wrote it ourselves, and it may not be 100% legally enforceable, but we at least put something in paper. 

I've done this 3x. I recommend you buy; renovate, then move in. Give yourself 2-3 months or whatever you need to do the work; then you'll be moving your family into a really nice new home. The alternative is moving into a fixer and dealing with dust and chaos. You'll be paying 2x housing costs for a few months but just work that into your budget.

@Nathan Smith Yeah; we get a 90% private money loan from somewhere else; then we each put in 5% of the purchase and split renovation budget 50/50. Contractor gets paid $0 for his rehab work and I get paid $0 for my work of acquiring the hard money loan/finding deal/design; then we split profits

@Nathan Smith personally if the contractor was not bringing cash I would not do profit sharing with them; instead would just pay them a pre-negotiated wage like I would any other contractor.