All Forum Posts by: Trent Currie

@Alma Mills Is your plan to have them finance projects on a project to project basis or do you plan to hold capital for a period of time over multiple deals?

We have worked with private financing a number of times, currently ranging from 9-12% interest. These are all short term financing terms and almost always are in junior lien positions. The big saver on the our private financing is that it all has come through social networking and business relationships. So the typical origination fees we have are simply our legal costs.

@Alma Mills Are you able to tell us more about the project and some about the lenders? We may be able to give better suggestions or advice at that point.

To follow up @Christian M.

Here are the multipliers for finding the area accounting for pitch.

http://www.browningrg.com/sloped-roof-pitch-correction

Keep in mind there can be a significant amount of waste in roofing. Even though you may be really close on the number of squares and they give you a cost per square, there will be that additional cost of waste. A 17 square roof may actually end up being a 18 or a 19 square roof depending on the style.

The different style of roof should also be a factor in the cost per square. They should be able to help you with this though.

Something very helpful is to create a spec sheet. The spec sheet includes all your preferred finishes or expected finishes. There is some issues when the homes you have don't match your standard specs, but for the most part if you're replacing a door or most items your able to specify what is put in. We have a standard 14 page document I provide to re-modelers and we use on our spec homes. If a alternative material is going to be used they must specify the deviation. It creates a really simple method for sub's to create detailed bids. For example on a recent door replacement.

Replace front door with spec sheet door or comparable with MDF spec sheet specified trim. $450.

We knew the cost of the overall work for replacing the door and the materials going to be used since we specified them.

Below is a page from what we use.

Would it be speculation to expect another 100k in the ARV or is it supported by comps.

Guess I will jump in here. I have a few questions concerning some of the assumptions used in your analysis.

25% for vacancies? Is this Detroit or is the market seriously depressed? What/who are your sources for your vacancy numbers? 25% is extremely strong.

Maintenance is close to 10% which is used by a lot of people. What does the property consist of? Is there grass that needs to be mowed? Trees to be trimmed? My point being is that often with multifamily mowing and other tasks are overseen by management and the cost of maintenance or management(however you want to account for it is higher).

Your current management assumption is roughly 6.8% of gross. Finding good management at these rates in most markets we participate in is unheard of. You should get actual numbers for this. It shouldn't take more than a few phone calls to the larger management firms in the area.

Overall more due diligence is needed, since there are way too many unknowns.

Sign a NCND.........

I may have misunderstood the above. I had interpreted it as your assignment fee being 60k. If the total cost of the property was 40k purchase + 20k assignment+ 50k rehab= 110k you may be able to find an assignee for it. However if I were you I would be fully prepared to close on it yourself.

From the basic numbers it seems to fit a flipping strategy better than a hold strategy.

My math:

1200*.5=600 (50% rule)

600*12=7200

7200/115,000(total cost)= .062 or a 6.2% cap rate

Not the greatest for building a buy and hold portfolio. Also on the whole selling side of the deal the person you possibly would whole sell it too has to make money. Pulling 60k out of the deal would not work.

If you are paying for the utilities on a property that is an expense to you the owner.

Adding solar to cover the utilities reduces your expenses and increases your net income. Increases in the profitability of a property increases it's value.