All Forum Posts by: Eric Knittel

@Jerel Ehlert thank you. I’m still securing the investor(s) but will contact you when I am ready.

@Jerel Ehlert thank you for the information. In your experience what does executing an agreement like you described normally cost? And since I would still be using a title company I assume I can count on normal closing costs on top of it?

Thank you @Arlen Chou. 75% of ARV for the refi is common in Texas (I've done up to 80% with a commercial loan) but that's one thing I noticed as I was writing you. Normally a HM lender will only lend up to 70% for the purchase and rehab. In that case I need to account for the extra 5% to come out of my pocket.

I am talking to two or three people about this scenario now. No one has committed yet. I've thought about points but some other investors don't feel like it's necessary to offer that yet as a 10% return seemed attractive enough to them. If the investor asks for it I can surely consider it. I plan to secure the loan with a first lien mortgage. Which I THINK is where a lawyer will come in? Not sure how much that costs and if it will nullify any savings I was hoping to get by avoiding hard money. Plus it will offer the investor recourse should I default.

I already have a few wins under my belt. I've successfully completed six deals and am currently managing five of them (with one under contract to sell next month). I used hard money in each of these cases. Now I'm exploring "cheaper" money. Trying to scale better, faster, bigger. 

My thought is, test this method, make sure I pay my lender back (even if it comes out of my pocket) and see how cheap I can buy. Maybe instead of coming $15k - $25k out of pocket I can get it down to only $5k or $10k.

@Arlen Chou thank you. I’m specifically thinking of this kind of scenario: Investor loans me $100,000 to buy and rehab a home (ARV $132,000). I pay them a 10% annualized return. Once the rehab is complete I execute a cash-out-refi (75% of ARV = $99,000) and return their initial investment. $100,000 X 10% ----------- $10,000 /12 months ----------- Investor makes $834/month. I should be refied In 2 months. Then I do it again and again? Am I missing anything? Eric

Hi everyone,

I am interested in borrowing money from friends and family to buy more real estate. I have used hard money in the past and I am trying to see if I can eliminate some of the costs associated with the HM lenders.

• How would you structure a deal with a friend/family?

• What percent return do you offer?

• What kind of lawyer do you contact to draw up the paperwork?

Thank you,

Eric

Thanks Jack B. I’ll look into collections too.

Thanks Greg. Makes sense.

Thanks everyone. I think I’ll probably just move on. I’ve been through this before and simply took back the property and went on my way. I was mulling over the idea of legal eviction in this case to place a lien on the tenant. So in the future, I might recover rent due (6 months at $7500) when they went to get a loan or rent from someone else. However, I hear you rarely recover a judgement. It would also be nice to have this on their record so other landlords would have a heads up that these are not folks to rent to.

Hey everyone, I have a home in San Antonio that tenants have abandoned and not paid this months rent (there are 6 months left on the lease). I’m curious to hear from those who would consider legally evicting the tenants vs. those who would simply keep their deposit and move on. And why. FYI - most of their stuff has been moved out. Thanks, Eric

Agree with Alex. I’ve not found a deal here in five years. I started buying in San Antonio. Still plenty of deals down there. 15 - 25% cash on cash returns plus 50 - 100% equity capture. However even SATX has gotten more expensive over the last two years. In 2013 I was using hard money (in SATX) and buying properties for $15k out of pocket (sometimes a little less). Today it’s more like $25k OOP. Best of luck.