All Forum Posts by: Corbett Brasington

So I am buying a property through a wholesaler, I already put down 7k of earnest money on the property, a hard money lender who I am working with (and got from the bigger pockets lists) asked for a "Good Faith Deposit" of $1500.    

The wholesaler, and other hard money lenders are telling me they have never heard of a lender doing that and that all money should flow through title, nothing should go to the lender directly at all. 

Is the hard money lender wanting a "good faith deposit" after EM paid a red flag?

TLDR: When you are wrong on estimating TIME in a phase of a construction project....how off are you?   x1.5?  x3?  x6? x 10?  And yes I know the technical answer is "IT DEPENDS" so I will ask that we skip the micro as this is a question about MACRO for the purpose of understanding risk.

Detailed:

So I am a big fan of PERT method for estimating time of work.  PERT works with an optimistic number, expected, and pessimistic number gives you a planned amount based on a bell curve (which you can skew if you choose).   I come from the software world and when you have a feature you have to estimate a distribution that has worked well for me is this.

Expected Time of feature is 1 week.

• Values a function of typical load.
• Optimistic value: .8 of expected (When its better than expected its really only 20% better)
• Expected value: 1 of expected time
• Pessimistic value: x 6 of expected time.  (When we are wrong...its not a little wrong its usually off by a lot from things we cannot predict.)

Using the Normal Distribution (Normal Bell Curve)

Normal PERT

• = (Optimistic Value + Expected Value*4 + Pessimist Value) / 6 
• = (.8 + 1*4 + 6)/6 = 10.8/6 
• = Planned Value of 1.8 Weeks
• *I use this if residual risk is low

Negatively Skewed PERT  

• = (Optimistic Value + Expected Value*3 + Pessimist Value*2) / 6
• = (.8 + 1*3 + 6*2)/6 = 15.8/6
• = Planned Value of 2.63
• *I use this if if the residual risk is medium

Very Negatively Skewed PERT

• = (Optimistic Value + Expected Value*2 + Pessimist Value*3) / 6
• = (.8 + 1*2 + 6*3)/6 = 20.8/6
• = Planned Value of 3.46
• *I use this if if the residual risk is medium

In my professional life this approach has served me very well.  So when you are wrong on estimating TIME in a phase of a construction project, in general....how off are you? x1.5? x3? x6? x 10?  And yes I know the technical answer is "IT DEPENDS" so I will ask that we skip the micro as this is a question about MACRO for the purpose of understanding risk.

Thanks I appreciate your help!

Thanks all!! Learned something here.  Looks like I should start looking into commercial loans.  

Right but a whatever plex can be sold by the units correct?  You dont have to sell the entire thing correct?

If a seller is selling the units of an 8 plex, but all are for sell....is there any reason why I could not house hack 4 of the units through a VA loan that I personally own, then buy the rest in my LLC with a commercial loan?

I am but I am still new.  On market is crazy competitive and leaves very little room for error.  Given that my main strategy is going to be to find off market leads through forms of personal distress or property distress.  

There are also areas like, Denver Heights, that have been gentrified for years so people are asking ridiculous prices for homes that are unlivable.  

But like I said, I am a new investor so take what I say with a grain of salt.

So I don't know what to call this but I have this vision for an apartment building designed for young working professionals who are super busy but all about being their best selves.  They have all the things needed, on site, for you to live your best life and give you the separation of working remotely because an entire floor would be a co-working space.

This idea came from three places, air craft carriers (which are like mini cities), military bases in general (which typically have everything you need on them), and experiences I have had working as a consultant in hotels that were wonderful.   In the thought of if I could have my living experience be whatever I wanted...what would it look like.

I came up with this list: 

Barber shop / Salon pallor, Car wash center, neighborhood grocery story (with good produce, beer/wine, premade but fresh over ready meals, and all my hygiene needs, on site bar or restaurant, community gathering area, a co-working space with small offices I could rent if need but a shared space also, a lap swimming pool, a real deal gym (not a hotel gym), sauna, on site laundry service (offered at a premium), and on site cleaning crew (additional cost of course) to clean my place.

All of these things would be set up as additional sources of revenue for the apartment some that are directly operated others that just lease out space (like the salon parlor or something)

Structurally it could look something like this: 

Sub basement: Lap pool / locker rooms / sauna

Basement: Full real deal gym (anytime fitness level type) - could be directly operated or space leased

First floor: The amenities floor - could be directly operated or space leased

2nd or third floor: Shared co-working space (residents get a discount and are priortized but its still open to the public for a cost)

All floors above are living space.

Has anyone ever though of this before?

Does this exist?

This is defiantly a niche space so a major city would likely be required for the location to work.  I just love the idea of everything I need to live my best life is on site....like when you are deployed and you can focus all of your energy on whatever your mission is.

I would love to talk to people who work in niche type multifamily spaces or just get feedback in general.

First off I am new so take my advice with a grain of salt....that said my experience so far very much aligns with "great deals are created not found"  Which means....you have to get off market deals to get great deals.    Are you looking on market or off market for deals?

@Jaron Walling I like that well analogy.  

@Rick Pozos isnt that the point of the GC?  And finding ones filtering them building trust etc?