All Forum Posts by: Eric Telese

@Daryle Smith so far one duplex in GA. But I am also looking to start some flipping here on the island.

@Daryle Smith 1 point is equivalent to 1% of the loan amount. It is an upfront fee. The 10% is the interest in the loan amount. Down payments vary by hard money lender but figure 10-20%.

So 164k + 50k is a $214k total project. Lets say they require you to bring 10% down. Total loan would be $192k. On that $192k you would pay 2 origination points = $3840 at closing plus other closing costs. 10% interest only payments would be $1600/month. (($192,000*.10) / 12months)

@Daryle Smith gotcha. I am also in the midst of getting hard money rates. 2 points and 10% is mostly what I am seeing. You will want to figure out those interest holding costs and add them to any insurance/tax and other costs you have already calculated.

What are your holding costs? Do you have a budget breakdown with line items?

Hi all. I have access to a great off-market single family where I live in Long Island, New York. My neighbors are living in a nursing home now and their relatives have been dealing with cleaning it out and selling it. They know I want it and have said they want me to get it for a good price. 

I have offered to purchase it as is and deal with cleaning the entire place out to take that off of their hands but they want to get it emptied out themselves. They don’t know what the property is worth and have mentioned numbers varying from 200k-400k. Therefore, they want to get the property appraised so that both parties are getting a fair price. 

That being said, I want to get this under contract so i can be sure I will truly get the first option. I think that someone could come along and offer more than I would be willing to pay for it. 

My question is this- how do I put this under contract without an agreed upon purchase price? Can we say price is TBD contingent on future appraisal? At that point price would be discussed and buyer could back out but seller would not be able to entertain any offers up until then or a different stated date?

I could also do a 203k loan at 3.5% down and just have the one closing cost. This would be similar to the reno to permanent loan but lower down payment allowances. Again I’ve heard many hoops to jump through along the way.

My goal is to sell this property after living in it for 3 years or so. I want to recapture as much as the forced appreciation I can at that point.

@Adekunle Ilori

@Adekunle Ilori I don’t believe they will seller finance. Relatives of my elderly neighbors are taking care of emptying the house and selling it now that they are in nursing home.

@Nicholas Covington I do plan on occupying the home so I will be okay for owner occupied loans. The home is habitable and has plumbing/electric, etc, just needs major improvements in every aspect.

@Account Closed Awesome feedback! I may have a few true private lending options to be second to the conventional for my first option. I will definitely PM you for your referrals. 100% financing for the rehab would be great. So you are saying that if I do a cash-out refi, rates are going to be higher? That is what I gathered from the construction to perm that their are many hoops to jump through. Your last option is interesting and I will have to run seller financing by them but I really don’t think it will be an option. 

Hi all,

I am hoping to be purchasing a neighbor's house within the next 2-4 months or so. I should be able to get a very good price for the area because of the relationship with the seller. I hope to get the house for $300k. This property is a complete gut-job and will require ~$150k rehab for a total project cost of $450k. The ARV will be $550k at the minimum. I am hoping $600k but am using $550k as the conservative number for my analysis. The property is in NY.

I originally was just going to flip the property and dump the proceeds into more buy & hold where we currently invest in the Atlanta area. I don't currently own a primary up here so I changed my plan to flip and to make this my primary/starter home.

My goal is to stay as liquid as possible and use mostly outside funding for the project. I have a few options here and not sure which I should chose:

1- Purchase the property with conventional funding- 30 yr fixed. I can put as little as 3.5% down at the cost of a small $110/month PMI payment. The monthly payments would be low. Use private money for the rehab and then refinance into a new 30 yr fixed. I would pay off the private lender and pull most of my money out and have a higher mortgage payment but at the cost of minimal money down. I would also have two closings here.

2- Purchase and fund the rehab with hard money, then refi into a 30 yr fixed. Most of the lenders I am talking to are 12% with 2-3 points. Most of them also want at least 15% of total project cost so I would need to use more of my own money on the front end, but then pull it back out after the refi. There would still be two closings here as well so I think the total costs here would outweigh option 1.

3- I have just started looking into construction/rehab to permanent loans. One of the lenders I am talking to will lend up to 80% of the total project cost so I would again need to put up a lot of my own money here. It would be interest only during the rehab period, and then convert into a 30 yr fixed at a low interest rate. I like the idea of this loan but I  would need to leave most of my own money tied up in this deal until refinancing with someone else. This loan type seems like it would be a pain to go through with all the different requirements.

4- I don't believe seller financing will be a possibility at all.

I would love to hear any other creative financing ideas that I am sure you guys have! Thanks in advance for any advice here.

Eric

What Tim is saying is that most banks require you to own the property for 6 months or some other set time before you can refinance. This is called the seasoning period. 

Fidelity bank in atlanta has told me they have no seasoning period for refi. If you want a contact there shoot me a PM. 

Hello everyone,

I am going to be purchasing a very distressed home in my area- Nassau County, Long Island in the next few months. Family of the neighbors’ are taking their time cleaning it out, so I have a few months (and acces inside) to get everything together. My plan is to rehab it to be a starter home for 3-5 years or so, then rent it out or sell it down the road, whichever is the better exit strategy at that time.

I will be able to do a lot of the work myself because I live next door, have the time to do so, and would like to learn as much as possible on this first rehab investment. Though I will still run all my numbers using subcontractor bids because the plan is to scale to a point where I can build a flipping business. I am going to start getting quotes in the next few weeks. Wondering what kinds of windows and doors you all recommend for this type of property. My market is pretty expensive and the ARV will be at LEAST 500k, hopefully closer to 600, but I will run very numbers conservatively.

How much do we think good brand names for windows and doors improve the ARV? Is it crazy to be looking at Andersen windows? Should I get the Home Depot stuff or is that too low-end? Do you use hollow or solid doors for your rehabs?