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All Forum Posts by: Clayton Silva

Clayton Silva has started 24 posts and replied 443 times.

While anything is possible, I would connect with builders in the Sacramento area.  There are a couple of decent real estate meet ups where you would be able to meet some developers and pick their brains on the do's and don'ts.  I am not far from Sacramento and can send you a few of the meet ups in the area that I attend personally.  As for building, it can be a very good way to get into a deal for below market costs of existing inventory but it's all about the numbers, location, and your ability to get the property built well and efficiently.  Honestly, I think the hardest part is going to be finding the right lot in Sacramento in the right area with the right zoning and the right size etc.

We made it smaller and more "bite sized" and we do some unique stuff with the fee itself to make it much more affordable and give the "little guys" as you put it an advantage!

And same here, I am always learning new things and new ways people are expanding their business!

Quote from @Jay Hinrichs:

OK got it..  I dont think I could ever qualify for that.

But thankfully we did not need to give any concessions of any kind.. I had folks ask what are your builder incentives  IE window coverings Refer washer dryer ( like Lennar does) or buy downs etc etc.. just about half of our clients either paid cash or put very large down payments we were 50% empty nesters who sold larger properties 1 to 3 mil and were down sizing to our 750 to 1 mil..

As we simply did not have to give any concessions since we allowed these folks to customize so we took those buyers from the other builders .. We simply built a far superior home with all sorts of extra's that they cant get from the production builders.. Different product. WE were totally blessed  And my wife gets the credit.. I just do what I am told.. and of course I made sure we had the funds to close on the dirt and banking relationships for horizontal and vertical vertical is pretty easy but getting Horizontal NOT so much. 

Anyone can qualify for it, and doesn't have to be for new builds either.  Rental property owners can do the same thing if they own a couple of rentals and wanted to offer it to their prospective buyers.  Typically the cost gets somewhat reincorporated into the property.  Since you can offer a lower rate, you can justify a slightly higher price.  

 And yes horizontal financing is much more difficult indeed haha I feel your pain there!

Quote from @Jay Hinrichs:
Quote from @Clayton Silva:

Do you guys utilize forward commitments?  Can be a great way to attract a larger buyer pool and offload inventory more quickly.  Right now, buyers are just struggling to find value and affordability and forward commitments can be the key to creating those win wins for developers and buyers.


whats a forward commitment ?  is that a loan commitment or a pre sale not heard that one before .. thank you 

 When DR Horton or Lennar are able to offer "builder rates of 5%" and want to get around the seller concession limits to offer competitive rates, increase the buyer pool and offload inventory they purchase what is called a forward commitment or a hedge before going in Escrow to be able to offer their buyers those rates. Happy to chat more about them 👍🏼

Step 1) get pre-approved and see what you even qualify for.  If you don't qualify for anything in NYC, it might be a moot point with your money better saved and invested elsewhere.

Step 2) Get familiar with tenant/landlord laws in your area.  I know NYC is wildly difficult to be a landlord in.  Make sure you understand the risks of being a landlord there and that you have the income and capital to float for a long time in a worst-case scenario.  KNOW WHAT THE EVICTION PROCESS looks like.  As someone who has had to deal with it in different states, it is wildly different state to state.

Step 3) Understand all the costs associated with a condo. Each HOA is going to be drastically different in terms of cost and what they actually cover in terms of repairs, maintenance etc.

Step 4) Know the rental market in the area and assess whether the rent is high enough to justify the PITIA.  Also make sure you refer to step 2 and know what price controls are in place, and what rent increases are allowed.  This will help you project your numbers out into the future.

These are just the first things that came to mind to help you frame your decision making and hope they help!  Definitely talk to other landlords in the area and get a feel for the environment.

Do you guys utilize forward commitments?  Can be a great way to attract a larger buyer pool and offload inventory more quickly.  Right now, buyers are just struggling to find value and affordability and forward commitments can be the key to creating those win wins for developers and buyers.

Post: Buying a house

Clayton Silva#1 Private Lending & Conventional Mortgage Advice ContributorPosted
  • Lender
  • California
  • Posts 450
  • Votes 283

Treat it like a business partnership.  Have an attorney draft up an agreement and ask you both all the questions that could come up.  Might cost a little bit up front, but will save you both a lot down the line.  I would literally sit down with your partner, and an attorney and hash out all the details.

Post: Buying Land & Building

Clayton Silva#1 Private Lending & Conventional Mortgage Advice ContributorPosted
  • Lender
  • California
  • Posts 450
  • Votes 283

Yes typically 3 options available for most of our clients who do the same thing:

1) Land loan for acquisition (we can do 80% leverage on residential land up to $500k loan amounts). These are hard to qualify for because of the lower DTI requirements and they are on 10 year amortization schedules so the payments are pretty high even though the rates are reasonable.

2) Hard money/ground up construction.  These are ideal if you are ready to buy and build immediately terms on these vary pretty drastically depending on leverage requested, experience level, FICO, etc.  Once completed, people refinance out of these into a primary or investment property 30 year loan.  (You are going to want to get pre approved for the refinance BEFORE you get the hard money loan to ensure a smooth exit).

3) One time close: these are for people who want to keep the down payment low and avoid the refinance process.  These come with some significant downside because your offer is going to be less attractive than most due to longer escrow timeframes.  Typically these take 45-60 days to close and are a nightmare for the contractors who request the draws to get paid.  They are inspection heavy and fairly arduous underwriting endeavors, but can be a great way to get into a property and get building right away.

For options 2 and 3 you are going to want to have plans, permits, budget etc. very dialed in before close of escrow to ensure a smooth process.

Hope this helps!

First step is getting pre approved for the exit.  Let's say you fix it up and owe 750k on it after it is all said and done.  Do you qualify for the refinance loan on the back end?  If no, the rest of it is a moot point and you are going to be stuck holding it with a hard money loan or forced to sell anyway.

If you do qualify, then we back into it. First we see if there are ways to tap equity in the rental and primary (likely a HELOC or something that has no prepayment penalty to bridge the gap and acquire the new property).

Second, run the numbers on a hard money/fix and flip loan to get the new home purchased, fixed, and move in ready as quickly as possible.  I would also be showing your current home to prospective tenants and start the screening process here to get a tenant lined up if you plan on keeping your current home.

Lastly, refinance the new property after acquisition and rehab and move in, raise your kids, and live happily ever after. 

Hope this helps!

99.9% sure you need a qualified intermediary.  If you custody the funds in any capacity (even a separate bank account) you are going to be on the hook for capital gains.  I would reach out to Russel Marsan at IPX1031 I've used him before and so have a ton of my clients.