All Forum Posts by: Edwin Epperson

@Alon A., If your considering Tampa/ St. Pete/ Clearwater MSA, I provide a quarterly report over all 24 MSAs throughout FL.  Q4 22 will be released in the next week or so (data trails by about two months) let me know if youd like to recieve it.  Its free and you will get 4 reports called The BBC Dispatch throuout the year.  Best wishes

I appreciate that Chris, but I don't sell my notes to retail buyers.  I'm looking for individuals who want to purchase a note, thank you though for the recommendation.

I have performing notes, short term, < 12 months, interest only.  Willing to sell the note but I keep the servicing in-house, so less work for you.  I issue 1099-INT's at the end of every year.  All my notes are secured to FL properties, most are either new construction or Fix and Flip.  Dutch interest is charged, so you earn interest even on your capital sitting in construction escrow.  Happy to walk through my vetting procedures of borrowers, property and projects.

I am looking for a broker that lives and brokers private loans in FL. I have capital and I'm looking to deploy it into FL projects only. Please do not contact me if you are a broker living in a different state or trying to peddle me loans in a different state. I am direct, this is my capital, I'm the decision maker. Happy to discuss my lending parameters and guidelines with experienced and well-qualified brokers.

I am looking for a broker that lives and brokers private loans in FL.  I have capital and I'm looking to deploy it into FL projects only.  Please do not contact me if you are a broker living in a different state or trying to peddle me loans in a different state.  I am direct, this is my capital, I'm the decision maker.  Happy to discuss my lending parameters and guidelines with experienced and well-qualified brokers.  

Investment Info:

Single-family residence private money loan investment.

Purchase price: $35,000
Cash invested: $135,000
Sale price: $375,000

These are the types of projects we love to fund. The investor was a new investor for use yet they had plenty of building experience. They also had a great vision for the potential of this property and planned on using a modern and eco-friendly renovation. We structured a JV with them on this project and they walked away with a great amount of profit. The project did go longer than expected, and we did have to provide an extension, yet the final project was beautiful.

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

The borrower was someone we have worked with on prior projects and approached us about doing a JV together. Because of our relationship, and the investor's proven track record using our capital, we were able to structure a win-win solution where the Investor walked away with 60% of the profits and we only requested 40%. We love creating winning strategies like this and look forward to more projects with them in the future!

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

The investor submitted their loan request on our website and within an hour or so we let them know we would be willing to fund this project and structure a JV option with them. They uploaded project-related documents (no credit score, no proof of income, and no tax returns) and we underwrote and vetted the property and the proposed project. We jumped on phone calls and our manager, Edwin Epperson even met the investor on sight to walk through their plan together.

How did you finance this deal?

We funded this loan using our proprietary method called Turn-Key Private Lending. We had multiple fractional capital investors take portions of this loan while we managed the renovation and ultimate sale of this property. The entire time they received money interest payments, and the borrower and Blue Bay Capital worked to get the project across the finish line.

How did you add value to the deal?

By structuring a JV option we allowed the investor to also put money into the deal that they earned interest on! We lined up capital partners that were willing to take the risk on a JV project all within a matter of days. We even helped the investor identify a new contractor when the original could no longer finish the project. While the end result was a slightly lower profit output due to a longer hold time, all parties walked away with a generous return.

What was the outcome?

We sold the property, albeit later than expected, and our capital partners received their funds back, as well received monthly interest payments. Our investor was extremely grateful for a partnership in the deal, and the ability to think outside the box to get it done.

Lessons learned? Challenges?

Know your local zoning requirements. Do your due diligence with the city/ county to ensure that your proposed plan is feasible and all known variances are accounted for.

@Keith Blakeney, while I am by no means an "industry expert", I do lend out my personal capital as well as broker capital from the secondary markets and other "institutional" lenders. What you have is one of the core heart-aches of the BRRRR strategy. You have two different financing needs. The first is the Buy and Rehab or the "B" and first "R" in BRRRR. The second financing need is the third "R" in BRRRR which is Refinance. There is no capital available right now (from businesses anyway) that answers both these financing need with one loan product. You will have to borrow Purchase and Renovation capital and then get a new loan for the 30yr fixed rate loan also called a "DSCR Loan". Just know that the DSCR Loan is a "wallstreet" product, and wallstreet is very adverse to risks, especially in the mortgage space (laughable considering what happened in 08', yet I digress). As the economy capitulates and inflation continues to erode the power of the dollar, Wallstreet will become more bearish on "high risk" loans. They consider loans to investors as "high risk", though in my opinion, they are safer than owner-occupied loans, which are the holy grail of so many funds, and the undergirding support for the bond market.

My humble recommendation is to be UBER conservative on your projections for your ARV #'s and realize that the ARV's (future value) in today's market will not be the same in the realized future market. My prediction is that values over the next 2 - 3 quarters will generally see a 10 - 15% correction on avg. Though in some parts of the country that correction could very well mimic 08" price corrections. Also keep this in the back of your mind, that the lenders today, offering DSCR products have already changed their underwriting, and guidelines for these products starting Feb of 22', and they seem to constantly be changing (for the worse). High cash reserve requirements, lower LTV allowances, higher min. DSCR's, higher min. credit score requirements, and even lender adjusted valautions. This simply means that the lender is taking mitigation measures by TODAY adjusting for the presumed price correction expected on the horizon. So if they (Wallstreet Quants) believe that the future ARV in 6 months is going to be 10% less they may factor that in for today's prices. Example You believe that the property ARV will be $300K, and the Appraisal you receive states it will be $300K, yet the lender will apply a "discount" to the value of 5 - 10% today, and then base their max LTV's on the adjusted valuation. Now their ARV that THEY will use is $270K and their LTVs are going to be based on that $270K. It's already happening. As @Gene Hacker mentioned you MUST become ultra conservative in your offer prices.  If you cannot buy a property for 50% OR LESS of ARV, and if your purchase price is not less than 70% of As-Is value then its not a deal to have on your balance sheet int he coming quarters.

All of this is my humble opinion of course, and I'm glad to be proved wrong.  My gut says though I'm not being conservative enough.  Only time will tell.

Excellent post @Alex Breshears. Personally I have always loaned base don the LTC. For first time borrower (regardless of past experience) I will max do 80% LTC up to 70% ARV. After we have completed a min. of 5 loans together (as long as they have had the experience of 5 completed deals before using me = 10 projected completed total) I will go up to 90% LTC and still 70% ARV. Of course, my rates are going to reflect the higher leverage. Another way I have reduced my exposure to risks is by reducing my loan terms. By default, I only provide 6-month loans now. If the loan request will be longer, I'll charge more in interest as I see that longer-term loan exposing me to more market volatility in the next 2 quarters, therefore increased risk. I also will need a very good explanation as to why they need more time.

@Shawna Fullerton, first off I believe you are speaking of "Live to Lend" by @Alex Breshears and @Beth Johnson, both of whom are here on BP.  Second I personally am a Private Lender here in Tampa, it would be great to connect.  I've been doing private lending since 2014, however, I did not come from a landlord background.  happy to collaborate and answer questions you may have and provide some insight, tips and best practices that I have implemented in my business.  Great to meet you here on BP, best wishes and much success!