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All Forum Posts by: Danny Cerecedes

Danny Cerecedes has started 18 posts and replied 89 times.

Post: Help with being creative with a deal?

Danny CerecedesPosted
  • Investor
  • Glendale, CA
  • Posts 94
  • Votes 20

The purchase price on the contract will be $650,000. The $100K is going to be given to the seller outside of escrow. Just looking for some suggestions Brent. Sorry if I’m confusing you thought I was pretty clear.

$100K is money being pooled from family and money my father in law is gonna pull from a small house he owns.

Contract will be written at $650,000

Post: Help with being creative with a deal?

Danny CerecedesPosted
  • Investor
  • Glendale, CA
  • Posts 94
  • Votes 20
Originally posted by @Joe Villeneuve:

Your immediate problem might be missing numbers, and missing observation regarding the HML potential.

Bigger Problem:

AP = $750k ($650k balance after $100k cash)
Rehab = $100k
Total HML needed = $750k

Potential ARV = $1.2M
70% ARV (HML could be less) = $840k
Money left for HML fees & Overruns = $90k (and other misc. costs)

Don't give the seller $100k

Solution: Simple. Leave the current seller in place...temporarily.

1 - Don't buy the property from the seller straight up...buy it as a Land Contract.  Term equals 1.5 times the estimated rehab time.

2 - DON'T give the seller $100k towards LC in Cash, give it to the Seller in the form of that $100k in rehab that's needed

3 - Make sure the LC states the agreed price is the same $750k with NO Payments for <fill in number of months here>

4 - Payments are made on the LC using the rent money.

5 - When the rehab is completed, you have a $1.2M property, and execute the LC based on that.

Joe thanks for responding. So I’m not to familiar with a land contract but seems like an option. 

What intrigued the seller to sell to us was his relationship with my in laws and the idea of getting $100K cash. The property right now would appraise in the neighborhood of $900-950K. My father in law has a small piece of property that is paid off that he will be pulling $100K out of to give to the seller. The seller wants to close the deal quick because of his current situation. If he were to list this on MLS he would have multiple offers the next day...there is no way would could compete with that.

Part of me also thinks to try and just go after traditional funding probably an FHA loan just to get the deal done. The house needs work but it would have no problem passing the FHA requirements. I just need to make sure the seller is willing to wait for an FHA loan to fund.

Post: Help with being creative with a deal?

Danny CerecedesPosted
  • Investor
  • Glendale, CA
  • Posts 94
  • Votes 20

Brent thanks for the reply. My father in law has a small piece of property that is paid off and he is going to pull money out on it to pay the seller the $100K.

We are getting the house for $650,000. The seller knows it’s worth much more but he wants my in laws to have the house thus the sales price. To me it’s better to get it at that price then the true value it it we’re to hit the market (probably $900K plus). There would be instant equity in the property at a purchase price of $650,000. The reason for me thinking Hard Money is because the seller wants a quick close because of his current situation otherwise he will try and find a cash buyer.

Not trying to do anything shady and business is conducted legitimately. I’m just trying to get the deal done with the current seller and then we can worry about getting proper financing on it.

Hopefully that makes more sense. Don’t think I explained well.

Post: Help with being creative with a deal?

Danny CerecedesPosted
  • Investor
  • Glendale, CA
  • Posts 94
  • Votes 20

Hi BP!

So I need some help or advice with a deal. My in laws are renting a house that they used to own 20 years ago. My father in law built the house and hit some hard financial times years ago with his plumbing business when the market went south. The person who bought the house from them became a good family friend and has charged my in laws a well below market rent all these years. He now wants to sell the property and I was able to negotiate with him to sell it to us. He is giving us a tremendous deal and opportunity. I’m saying we since I will have to be a part of the deal to help my in laws get the house back. So here’s the deal in a nutshell.

Agreed Sale Price- $750,000 ( we will be giving the seller $100K cash to sweeten the deal for him for tax purposes. So on paper the sale Price will be $650,000. 

I ran comps and in its current condition the house would easily appraise for $900,000-$950,000. With $75,000-$100K worth of work the house could easily sell for $1,200,000 plus.

This house is in a very desirable part of Glendale Ca.

The problem is the seller would like the deal done quick. I was thinking of trying to get a short term Hard Money loan that would cover the purchase and rehab. By doing this we pay off the current owner plus add value and then have the property refinanced into a 30 year fixed. I'm conservatively thinking post rehab we would have $350,000 plus of equity. The problem is that I only have experience doing 1 Flip so I'm not a desirable client to a Hard Money lender that would possibly lend at an ARV.

I’ve been wrapping my head around this trying to figure out how I can make it work. My father in law doesn’t have a lot of W2 income that’s why I and possibly 1 other person may need to be on the loan.

Any suggestions or advice would be greatly appreciated. 

Thanks in advance....hopefully I explained it clearly.

Post: Needing Advice on a 1st investment

Danny CerecedesPosted
  • Investor
  • Glendale, CA
  • Posts 94
  • Votes 20

Hey Justin,

I would first decide in what your investing goal is. Do you want to be a buy and hold investor, fix and flip investor or both. There are different ways to go about investing. 

In regards to the deal you mentioned I would do a little homework on the deal and what you want to accomplish?

Fix and Flip- is this is what you want to do then you first need to see if what you are buying it for will allow you to make a profit on the back end. Look at supporting comps and come up with an ARV (after repair value). After you have come up with that then you need to see what works needs to be done and subtract that as well as holding cost if you borrow money as well as closing cost. The goal is to be profitable at the end. I would be conservative with your numbers.

Buy and hold- if this is your option then see what the rental market is telling you? The goal would be to have positive cash flow at the end of the month after you have paid your mortgage, cap expenditures, property Mgt ect. You may also have the opportunity to add some of your own value to the house buy fixing it up and possibly having it reappraised and the refinance and pull out that money and reinvest.

I love the fix and flip and buy and hold strategies. For me personally is to use the capital from my fix and flips and purchase buy and holds and build my protfolio. 

Hope this helps...just my opinion and ideas.

Good luck!!!!!

Post: What Contract to use to make offers in Ca?

Danny CerecedesPosted
  • Investor
  • Glendale, CA
  • Posts 94
  • Votes 20
Originally posted by @Aaron K.:

You could leave the agent and broker information blank, because you are not using it, you may have to disclose that you are a licensed agent but the rest you would just leave blank as it does not apply.

Thanks so much for the advice Aaron!

Post: What Contract to use to make offers in Ca?

Danny CerecedesPosted
  • Investor
  • Glendale, CA
  • Posts 94
  • Votes 20
Originally posted by @Tori Manuel:

Yes, I highly suggest running the CAR form with a real estate attorney. They will tailor an addendum specifically to your real estate investing goals (wholesaler, flipper, non-licensed vs. licensed)...a CAR contract you use with the addendum, which over-writes certain provisions of it. 


I did this when I first started investing in California and helped me sleep better at night knowing I had my *** covered legally if anyone tried to get trigger happy with suing my LLC.

Thanks Tori for the advice. If you don’t mind me asking what does an attorney charge to tailor an addendum to my offers and would you recommend anyone specific....thank you so much!

Post: What Contract to use to make offers in Ca?

Danny CerecedesPosted
  • Investor
  • Glendale, CA
  • Posts 94
  • Votes 20
Originally posted by @Jo-Ann Lapin:

Lloyd segal is a great contact just to run this by him. 

Thanks Jo-Ann I was actually gonna attend one of Lloyd’s workshops. Would you recommend that? 

Post: What Contract to use to make offers in Ca?

Danny CerecedesPosted
  • Investor
  • Glendale, CA
  • Posts 94
  • Votes 20

Thanks so much guys! I was just a bit confused since the CAR contract has all the commissions and broker information and what I would be using it for is to purchase straight from the seller with no commissions being paid out or brokerages being used. Hopefully that makes sense?

Post: What Contract to use to make offers in Ca?

Danny CerecedesPosted
  • Investor
  • Glendale, CA
  • Posts 94
  • Votes 20

Quick question and maybe some direction? So I'm a licensed realtor in Ca and have used the CAR purchase agreement for making offers on the MLS but wanted to get some insite and suggestions for what contracts are being used to purchase non listed properties directly from a homeowner. My wife and I want to make offers on fix and flip properties and just not sure what type of contract to go with? This would be for properties in Ca. Thank you so much for any help!!!