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All Forum Posts by: Mary Ann Casey

Mary Ann Casey has started 7 posts and replied 90 times.

Thank you so much for your input @Jeff S.  and @Jo-Ann Lapin!

@Account Closed

As a result of all the input received on this post, I have decided not to pursue or counteroffer on this private money request. I agree with everything each of you contributed. THANK You!

Thank you so much, @Adam Schneider!

GREAT INPUT,  @Account Closed!  Thank you!

Sorry! I'm not sure why the formatting was lost when I posted my question the first time (used a cell phone)...so here it is again:

I have an RE Investor friend who has 30 years successful experience in Fix & Flips. She needs some additional rehab funding to finish a project. Details are below. She's waiting on my response or counteroffer. If I do this, it will be my first private money lending experience. 

*NOTE: This is a 2nd-position funding request that can only be changed to the 1st position if I can fully pay off the outstanding first loan in addition to providing the additional rehab funding needed, which I can't do. 

So...What would you do, or counteroffer, on this scenario: 

  • $1,050,000 ARV 

                             Broker indicates the property is worth $1,150,000 to $1,250,000, 

                             but expects offers to be no lower than $1,050,000. 

  •    $540K Purchase 
  • + $145K Fixes/Updates completed thus far
  • = $685K Invested so far 
  •  -  $  50K Loan paid off so far
  • = $635K Current Loan Balance. Loan is at 9%, LLC owned, 1st deed of trust

To finish the project: 

  • + $140K  Additional Rehab Funding Needed/Requested: 

                    - She's asking for $60k to $140k - 1 year term, 12% - No pre-payment penalty

                           (if less than $140K, other sources of funding would be sought to reach $140K)

                    - 2nd on the loan* 

                     - Interest only payments until sold, or balloon in 12 months, whichever comes first 

  •  = $775K  Total Loan 
  •  + $100K  My own high estimate of costs for broker fees, closing costs, 

                          interest payments until sold (based on her input/estimates), 

                          plus I'm adding some Contingency, if needed. 

  • = $875K  Total due at closing 

After loan payoffs, whatever profits remain from the sale of the house will be split 50/50 with my RE friend and her partner who are the 2 members of the LLC on the first position of the loan.

Your Thoughts? Advise?

What would you do?

I have an RE Investor friend who has 30 years successful experience in Fix & Flips. She needs some additional rehab funding to finish a project. Details are below. She's waiting on my response or counteroffer. If I do this, it will be my first private money lending experience. *PLEASE NOTE: This is a 2nd-position funding request that can only be changed to the 1st position if I can fully pay off the outstanding first loan in addition to providing the additional rehab funding needed, which I can't do. So...What would you do, or counteroffer, on this scenario: $1,050,000 ARV Broker indicates the property at $1,150,000 to $1,250,000, but expects offers to be no lower than $1,050,000. $540K Purchase Price + $145K Fixes/Updates completed so far -------------- = $685K Invested So Far - $ 50K Portion of the loan paid off so far ------------- = $635K Current Loan Balance at 9% LLC owned, 1st deed of trust To finish the project: + $140K Additional Rehab Funding Request: - Can Invest $60k to $140k - 1 year term, 12% - No pre-payment penalty - 2nd on the loan* - Interest only payments until sold, or balloon in 12 months, whichever comes first -------------- = $775K Total Loan + $100K My own high estimate of costs for broker fees, closing costs, interest payments until sold (based on her input/estimates), plus I'm adding some Contingency, if needed. --------------- = $875k Total due at closing After loan payoffs, whatever profits remain from the sale of the house will be split 50/50 with my RE friend and her partner who are the 2 members of the LLC on the first position of the loan. Thoughts? Advise?

Post: QUAD IN ORANGE PARK FL W/ 9.88% RETURN FOR ONLY $239,900!

Mary Ann CaseyPosted
  • Lafayette, CA
  • Posts 91
  • Votes 45
would you please send me more details on this (address, photos, disclosures)?

 @Jay Hinrichs @Daniel F. Harb   @JingJing He @Tom Gimer  @Chuck Low  @Account Closed 

Thank you for your continued advice! I'm putting it all to good use.Here's an update...not good...

INSURANCE:

I took your suggestions and filed an insurance claim this week. It was denied. Turns out, there's a clause in the fine print that says vandalism by the tenant is not covered. What the...!!! Can't believe I didn't catch this when I read the policy!  So, now I'm looking for new rental property insurance for the 8 Indianapolis rentals. 

Any rental insurance company recommendations? Any key coverage questions I should ask?

TENANT SCREENING:

I talked to the PM. He said he checks the following when screening tenants: Credit, sex preditor, criminal background, rental background, vehicle background, judgements, pay stubs, and verifies rent from the prior place. Then he went on to say they don’t have a minimum credit score standard since most tenants that apply in the lower-cost areaa have bad credit. So, their priority in selecting a tenant is a steady income, time in job, and rental history.

What do you think about this? 

PROPERTY WALKTHROUGHS:

The PM said they have done drive-by's and never noticed anything unusual. He further said they don't normally do interior walkthroughs unless there's a reason or request for it. (I went back and checked our contract—he’s right, it says they have the right of entry & inspections…upon their discretion. Yet again, my fault for not catching this in the contract.)  So, I shared this with him: Do a walkthrough (a) 2 months after move-in, (b) 4 months after that/a 6-month inspection, then (c) every 6 months after that. While there, check for leaks, damages, maintenance needs, change filters, take pictures and send them to me, and notify me of any issues. The PM said he can arrange for that to be done, but he will need to charge for that service.

Your thoughts?

P.S. I also think before and after photos and property-conditions checklists should be done.  I thought this was standard…guess not.

@Jay Hinricks I will be reaching out to the PM company you recommended.

Wow, I didn't expect this much help and advice on this topic from so many people! Thank you soooo much!

@Jay Hinrichs @Steven Gesis @Daniel F. Harb @Tom Gimer @Ryan Mullin @Dominic R. @Diane G. @Ned J. @Matt K. @Mike D'Arrigo @Thomas S. @David Moore @Aron D. @Billy Smith

@JD Martin @Account Closed

I studied each one and made the following notes. I will be sending these notes back to the PM company today and meeting with him via phone call early this week to review them.

DEBRIS REMOVAL AND DISPOSAL:

--> Remove all the debris from the interior and the exterior of the house.
• Estimated cost: $600 (that's what the invoice in the monthly statement says)

FLOORS:

--> Living Rooms and Bedrooms - The carpet has been removed (I don’t have any pictures of the damaged carpet), so we need to recarpet. We can recarpet over the flooring that's there now. Pick a neutral medium-toned carpet that doesn't show the soiling too much and can be steam-cleaned and shampooed with the next turnover. Put the carpet right up to the front door rather than replacing the linoleum that's there now.

  • Estimated cost: $2,500?
  • -->Kitchen Floors - Not sure / don’t have pics.

    -->Bathroom Floors - They appear to be okay.

    INTERIOR WALLS, TRIM, AND CEILINGS:

    --> Wall and ceiling damage – looks like these can be fixed with scraping of any peeling paint and patching the holes and smoothing out or retexturing the patched work.
    • Estimated cost: $500?

    (My reasoning - I've done this work myself, DIY, to large and small holes in the wall, and it's easy to do, doesn’t take that long, and the materials are cheap.)

    --> Missing Baseboard and Door Trim - Replace.

  • Estimated cost: $400?
  • --> Painting - Once the wall damage is fixed and the trim is all there, give the interior walls a nice fresh coat of paint, all one light/bright/neutral color. Paint the ceilings, trim, and doors white.
    • Estimated cost: $1,000?
    (FYI - I recently had the interior walls of a 950 sf home, it's kitchen cabinets, and a 7' high 175' linear fence painted for a combined total of $1,100 in California, and they did a great job.) 

    LIGHTS:

    -->I can see some ceiling lights need new light bulbs and new light coverings (not a whole new light fixture unless absolutely necessary).
    • Estimated cost: $100?

    CABINETS:

    --> All cabinets, in the bathroom and kitchen, can be sanded and painted black.
    • Estimated cost: $750?

    WINDOWS:

    --> I can't tell by the pictures if the windows need to be "replaced" as a result of being completely broken and no longer operable, or if the window glass is broken and a replacement pane is all that's needed.
    • Estimated cost if glass panes only are needed: $______?
    • Estimated cost if 4 window replacements are needed: $800?

    --> Broken blinds need to be replaced, 4 of them.
    • Estimated cost: $200?

    DOORS:

    --> Front Door - I can't tell by the photo if the door is broken or if the window in it needs to be replaced and the door rehung and repainted. Assuming it needs to be replaced.
    • Estimated cost: $400?

    --> Interior Doors - Looks like a 2-3 are broken and need to be replaced.
    • Estimated cost: $300?

    --> Closet Doors - Can't tell if they're damaged or not. They don't look damaged from the photos, so I'm assuming they can be rehung.
    • Estimated Cost: $200?

    BATHTUBS, SINKS, AND FIXTURES:

    --> Tubs & Surrounds and Sinks - These need a deep cleaning. "Scrubbing Bubbles" is a common cleaning solution that works on the level of dirt and grime I see in the pictures. Whatever doesn't clean by using Scrubbing Bubbles, a spray of bleach will solve. (There's no need to reseal the tubs and surrounds unless they are leaking due to cracks.)
    • Estimated cost: See interior cleaning.

    --> Tub and Sunk Fixtures - no need to replace these unless they are broken and no longer operable. Clean them. Recaulk them if needed.
    • Estimated cost for recaulking: $25?

    --> Missing medicine cabinet/mirror - replace.

    Estimated cost: $200

    FINAL INTERIOR CLEANING:

    --> Clean bathrooms (Scrubbing Bubbles and Bleach should be part of this cleaning), sweep and mop floors, vacuum carpets, clean window blinds, damp wipe all molding to remove built-up dust, clean refrigerator and stove and any other appliances. Did I miss anything?
    • Estimated cost - $300?

    EXTERIOR YARDWORK:

    --> Mow and blow to tidy it up (after cleaning out and throwing away all the debris).
    • Estimated cost: $100? 

    PHOTOS attached.