All Forum Posts by: Edwin Epperson

@Michelle Reid I publish a quarterly market report called the BBC Dispatch and I go over most of the markets here in FL.  From a Fix and Flip perspective as well as from a rental perspective.  You can find out more about it on my website by navigating to the BBC Dispatch page.  Best wishes and the rental market in FL is ripe for the picking!

Investment Info:

Single-family residence private money loan investment.

Purchase price: $40,000
Cash invested: $15,000
Sale price: $159,000

We partnered with an experienced real estate investor (they had completed over 10 projects with us personally) and we offered a JV option. I call this my VEST'd Member program. We provided a 1st position loan, and I arranged JV capital from my consulting company. The JV capital provided 20% of the downpayment plus 6 months' worth of prepaid interest and all closing costs. The investor brought 10% of the total project costs to the table and they earned 10% annual on that!

What made you interested in investing in this type of deal?

The experience of the real estate investor was the key to this type of structure. Their overall experience but also the personal experience I had with the investor. So many real estate investors are too focused on the current deal and making sure the numbers are in their favor, but not really focused on the relational lending that private lenders look for. Building a meaningful borrower/ lender relationship can help prevent investors from stepping over dollars to pick up pennies.

How did you find this deal and how did you negotiate it?

The investor brought the deal to us as soon as they locked the property up under contract. They bought the property off-market, meaning it was not listed on the MLS. They were a wholesaler that built their team and had successfully moved into the fix and flip space. I had been working with them for many years and I was excited to offer them a unique capital structure that not only allowed them to bring a lot less to the table but also earn more profits than a traditional JV.

How did you finance this deal?

I financed this deal using two structures. For the 1st position loan, I structured the deal as a traditional 1st position loan. We used our Turn-Key Private Lending solution with participation from our capital partners and allowed multiple passive investors to take part in the 1st position. My consulting company provided all the soft costs for closing as well as 6 months of pre-paid interest to the 1st position loan. This allowed the real estate investor to only bring $15K to the table!

How did you add value to the deal?

By lining up JV capital from my consulting company, we were able to allow the real estate investor to bring less money to the table than if they have tied up their capital handling the 1st position loan all them-self. What this allowed them to do is earn much higher cash on cash return than if they had simply done a 1st position loan.

What was the outcome?

The investor accomplished the goal of a quick rehab and had the property sold in just over 5 months! My lending company made their return, my passive investors made hassle-free monthly income, and my consulting company earned a healthy return for taking on the risks of a fully funded project. The Real Estate Investor not only made 60% of the profit but they also earned 10% monthly income as well!

Lessons learned? Challenges?

This was one of those easy, in and out deals that we wish we could replicate every month. There were no struggles or un-expected issues.

@Micah Lynell Mortag I LOVE the panhandle!  Definitely looking to expand my lending operations in the area, ESPECIALLY towards the Destin, and 30A area down to Port St. Joe, just South of Mexico Beach and PCB.  If you're working with RE Investors I'd very much appreciate being able to connect with you and be considered a resource for your investing clients.  I'm happy to help them run numbers and look at deals to see if they make sense from a lender's perspective, even if they do not use me.  Best wishes and much success!

@Seb Ko where is your 3 unit located at?  Considering various factors, getting a cash-out refi is not hard at all.  I have gotten them done for my investors throughout FL.

@Rudy Sant maybe working with a local (Florida) private lender could help?  I regularly help investors in the smaller range, but only for a short-term loan.  After the property has been renovated it should definitely come in for above $75,000 which is the typical minimum requirement for long-term financing.  Happy to discuss this with you if you ever want to chat.  Best wishes and much success!

@John Bryant if @Daniel D Ryan reaches out and we setup a call, I'll be sure to reach out to you so that you can be included.  Could be some interesting conversation.  And even if he does not reach out, if you thinking of expanding into that area, I'd be happy to have a conversation with you then.  Best wishes and much success

@Daniel D Ryan are you looking for JV capital or are you looking for a loan? Two different strategies. I am very familiar with the Panhandle and the Port St. Joe area, I have felt, is primed for a significant increase in market-ability due to the proximity to Tallahassee and Panama City beach. I would be at least interested in discussing your plans to see what your thoughts were on exit strategy as well as cash-flow/ equity participation.

@Shervin Fakhravar welcome to BP, and even more so the awesome state of FL!  I personally have worked with foreign nationals and may be able to offer some questions, based on my experience.

1. is there anyone whom has a good referal for financing for us?  Are you looking for long-term or short-term funding?  I lend my personal capital for short-term loans typically 6 - 12 months to investors.  If you're looking for long-term funding, I broker out a large investor's capital, and they have different restrictions and policies for foreign nationals but it's all possible.  I would agree with @Kimberly Elson that having a healthy downpayment, or being willing to leave the capital in the deal will be the best path forward.

2. How did other out-of-state investors get in good contact (and good deals!) from contractors?  Contractors typically will not be presenting deals (I assume you mean real estate) to purchase.  Finding deals and finding contractors are two separate issues.  One avenue I am always a good advocate for is partnering up with an experienced RE Investor and bringing something of value to the table to help them do more deals, in this case it would have to be capital. If this is something that you and your partners are willing to offer there are plenty of RE Investors who would appreciate the partnership.  I work with a few throughout the state of FL, so if you know which area of FL you're looking to invest in I could send you some referrals.

3. Does anyone have experience with seller financing (but without a US credit score)?  Again depends on the requested product.  If you're looking for short-term or long-term financing.  If it's short-term (my capital) I don't care about credit, I'm looking at the asset and the team the RE Investor is working with, as well how much capital they have willing to put into the deal.  If it's long-term financing then there are exceptions for foreign nationals as I mentioned above.

If I may also offer some suggestions for setting you and your friends up for success moving forward...
#1:  Create an Entity in the state your going to be investing in to hold your assets.
#2:  Make your friends equal owners in the entity and have the proper entity paperwork in place (this will be a requirement when borrowing capital from a lender)
#3:  Get an EIN number for your entity
#4:  Open a US Domesticated bank account for the entity and fund it, meaning exchange your money into US dollars and deposit it into the bank account
#5:  Begin networking with other RE Investors (such as here on BP) or other networking groups to identify potential partners and contractors.

Hope this helps and if I can be of any further help please reach out.  Best wishes and much success!

@Kenneth Austin BP offers lots of education and material to help a new wholesaler get started.  Another opportunity would be to check out Eventbrite or Meetup websites to find local groups to plug into.  There are A LOT of local real estate investor groups, where you can join and network and get that first deal done, whether by yourself or with a team.

@Ari Rubenstein I would also caution you to not look at a state in general terms. There are many MSA's (Metropolitan Statistical Areas) within a state that have key indicators for growth or compression. I release a quarterly newsletter called the BBC Dispatch, you can signup for it on my website which may give you some guidance on where the markets are heading and where they currently stand. There are good cash-flowing locations within FL though for sure. The Panhandle, Westend, near Pensacola, Navarre, and Fort Walton Beach, are excellent for long-term rentals due to their proximity to two major Airforce bases and the continual overturn of military families. Lakeland FL, smack dab between Orlando, and Tampa, is another stellar spot for buying long-term rentals. Short-term rentals thrive in areas such as Destin, Santa Rosa, and Pensacola, due to their pristine beaches and how near they are for wealthy C-Suite executives living in and around Mobile, Birmingham, AL, as well Atlanta GA. You will find solid short-term rental locations along most of the shores of FL, but county and municipal laws will affect the STR space and its legality in the respective area. If you would like to know more about the major MSA's throughout FL and what data points I track when choosing where to lend and who to partner with, you can signup via our BBC Dispatch form on my website. Best wishes and much success!