All Forum Posts by: Edwin Epperson

Great question and would be interested in hearing opinions on this.

@Sam Mathew Glad to hear you stuck to your guns on your original offer.  Too many times I have seen investors make rash decisions based on FOMO, and up their offers.  Sound like you have a solid deal.  I know you mentioned not wanting to take out an investment loan, but there are unforeseen costs by not starting and completing the project sooner than late.  The economy may be in a slump or worse in 6 more months, which could affect your exit strategy.  If you're going to be holding for a rental, every week you sit on the project is an extra week of lost income.  Lastly, when a property sits vacant it's as if the "soul" of the property deteriorated more rapidly.  No, I do not believe houses have souls, but there is something unique that happens to the speed of deterioration in a property that sits vacant.  This only translates to one thing for you... higher costs to address unforeseen or new issues due to stagnation.

I'm a PL in Tampa, FL and I invest all over the state of FL.  I normally offer 1st position loans, and can think outside the proverbial box due to the fact its my capital, I'm lending.  If you want to get started sooner than later let me know and maybe we can find a way to work together.  I would be interested in how the project progresses regardless of how you tackle the financial topic.  Please keep it posted here, or lets connect.

Investment Info:

Single-family residence private money loan investment.

Purchase price: $125,000
Cash invested: $25,000
Sale price: $440,000

Blue Bay Capital made this purchase and renovation loan to a seasoned and experienced investor in Tampa, FL. I provided 80% of the purchase price and 100% of the renovation. I also ended up providing a 2nd position JV agreement to help the investor complete the project without incurring additional delays or extensions. This is explained later. The property was sold in 2020 for $440K and was just RESOLD in 2022 for over $630K!!

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

This was a repeat and proven real estate investor that I have loaned to on multiple occasions. They have an excellent track record and are consistent and timely with their rehabs. This comes into play later. More so, this property is located in one of the most up and coming areas just North of downtown Tampa, called Tampa Heights.

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

The client approached us for the loan. Because we already had an existing relationship the underwriting process was extremely quick and easy. Due to the age of the property, we did require a foundation inspection, and we always require a line-item breakdown of the scope of work, and feasibility study. After making some adjustments we agreed on the budget and closed the loan within 15 business days!

How did you finance this deal?

I provided a 1st position loan to the client. Later on, we also provided a JV loan recorded in 2nd position to help cover unforeseen costs, as well the extension delays and city ordinance requirements due to the location and the "historical" setting the city wanted to keep.

How did you add value to the deal?

We added value by providing a 2nd position loan around the 12 month mark. The client was in a financial pinch, due to other projects going South, primarily due to a bad GC and bad architect on those other projects. His funding was stretched and I offered to provide the additional capital to upgrade the fixtures and finishings as well cover the cost of the extension of the 1st position loan and the holding costs of that 1st position for 6 more months.

What was the outcome?

The Client sold the project for approximately 40K more than we thought due to the market, and I was paid back my 1st position as well as the JV amount and a portion of the profits, but it was not a 50/50 split. The Client was able to keep their head above water, and walk away from this deal with a sizeable chunk of change in their pocket. I love working together with my real estate investing clients to structure win-win scenarios!

Lessons learned? Challenges?

Be sure to check your local permitting office for delays and specific areas of genitrification to see if the city has requirements such as sidewalk additions or aesthetic requirements due to a "historic" context they want to keep. If your area is prone to flooding, or Hurricanes please confirm with FEMA and the local zoning department to ensure there are no new requirements on renovations affected by updated FEMA maps.

@Kyle Smith the EASIEST and most surefire way to know if you're dealing with a TRUE private lender, ask how they recorded their name in the mortgage or Deed of Trust? Ask them what county and state that MTG/ DOT was recorded, and get several. Then simply go to that county's online records website and do a quick search. Also, I would caution you about getting wrapped around the axel of the often misused term "Private Lender" There are THREE types of lenders that investors need to be aware exists, Hard Money, Private Lenders, and Private Money. Most courses and RE Investment seminars teach RE Investors to go after "Private Lenders" and so that is what you do. The problem is that Hard Money lenders are now calling themselves "private Lenders" (I don't know how they justify that), and Private Lenders "PL" along with Hard Money lenders "HML" are running businesses. We have profit goals, and marketing budgets and are running businesses. What the courses and Gurus tell you are "Private Lenders' are in fact called "Private Money". I've done a video series covering the differences so I won't dive into it here, but the fact remains, you are more than likely trying to find "Private Money" but your asking for "Private Lenders". You will not find "Private Money on any social media platform. These are relational investors. They will only work with those they know, like, and trust. When you make a post asking for "PL" you will only find businesses offering loans, which will be vastly different in terms and rates than what you were taught, or you will run into scams. If you are borrowing funds for RE investments, then the bottom going rate for new investors (which I assume you are due to the question) should be expected to start at 10% annually and go up from there. 3% screams red flags and scammer alert. Also, look for their loan limits. If the advertiser is advertising $50K - $50M ... beware. They are not private and more than likely just a scam. Also, look for email addresses and websites. Find out if you can see what state the business is located in. Do a quick search on that state's corp division website to confirm they are operating a business. Again you WILL NOT find "Private Money" advertising on FB or any other social media, so that type of money will not throw itself out there. Private Lenders (owning and running a business) do exist but they are running a business to make a profit. If your doing deals in FL, let me know. I'm a PL, but I run my business and I only work with investors.

@John Underwood I would agree.  The minute that @Sylvana Strawn you mentioned that you have an IRA WITHOUT a custodian.... that's actually not legally possible. Even SD Solo 401Ks (I have one too John) require a "Custodian". I'm not sure what you have Sylvana, and your scenario adds a little bit more confusion than calrity.

@Steven Bolyard I'm in Tampa, FL and I can tell you that you have two options for lending, Conventional or DSCR. Conventional are typically your banks or credit unions. They are going to look at you through a microscope and you will have to meet their personal DTI and proof of income to support their loan. Tax returns etc, as well the ability to hold title to the property in an entity may prove to be difficult. I'm not in that world but I would imagine a 80% LTV for an investment property may be pretty hard to get from a conventional lender. The other option is a DSCR loan from a Private Lender (PL) or a Hard Money Lender (HML). Yet I can tell you that a refinance is Not possible for higher than 75%. You could purchase a property and receive a loan up to 80%, but the asset being purchased, using a DSCR lender, must not have any differed maintenance, and the current rent rates are what will qualify the loan, not future rent rates. Happy to have a conversation if it would help you strategize. Typing is not my forte, and I've only got so many hours in a day ;). Best wishes and much success!

@Nick Coble hello and welcome to investing in FL! The panhandle is an incredible spot to invest especially for rentals (both LTR and STR). I'm a PL based out of FL, but I have done several F&F loans as well DSCR loans in the area. I have several contacts that could help. Happy to have a conversation if you would like. Best wishes and much success!

@Taylor Lyons Welcome to BP and even more so Tampa Bay, FL!  I live in Tampa, FL as well invest here and throughout the state.  Being prior service myself I can say you have some advantages that are unique to vets and you should definitely pursue them.  I have some contacts, but it depends largely on where you're looking to invest.  Let's connect, and maybe grab a drink sometime, happy to send you a list of contacts.

~ DOL/ RLTW

@Fred Buechel as a PL here in Tampa, FL I completely agree with @Drew Sygit question concerning a lender and then the team. I will tell you right now, for Fl properties, if you only have $20K cash that would not be enough to be the 20% Down payment required for FL properties. Not to say that is not enough, its simply that the cost to purchase properties that are cash flowing are well above $100K purchase prices. If the purchase price is more than a $100K then your $20K down is going to be less and less as a percentage of the purchase. Also, most lenders will want to see 6 - 9 months of reserves set aside, in liquid cash, AFTER you pay for the loan and the down payment. Not trying to rain on your parade, but simply being realistic. Another great option (if you are interested in FL) is partnering with other investors and going in with them as a JV to purchase properties. This is a potentially great solution. Best wishes and much success!

@Ihor Kucheynyk, I'm a little confused. Are you looking for a lender, or are you looking for an appraiser? It seems that you already have a lender identified unless that lender cannot accomplish what you need. I'm from Tampa, FL, and I work as a PL. It's my capital but I do not lend on loans longer than 12 months. I do know of some DSCR lenders and I can tell you right now, that you will not find a DSCR lender than can close in less than 30days. I personally know this. They will ALWAYS require a full interior appraisal, and they will not accept an appraisal given to another lender. Then their underwriting will take time, and will not start until AFTER the appraisal is submitted. On average I have seen it take between 30 - 45 days, and most of that is the 4 weeks +/- to get an appraisal completed. It's not the lender's timeframe it's the busy-ness of the appraisers. They are 4 weeks out on average with a rush order. No rush order? Then easily 6 weeks out. This is unique to FL, and specifically the panhandle. I have 10+ loans that were rental purchases and refinace that closed at the beginning of the year and it took an average of 43 days for each of them to close simply due to appraisers. One other option is for you to renegotiate the closing date. Best wishes and much success!