All Forum Posts by: Ethan Gidcumb

Hey @Gabrielle Gardiner
While there can be more fees associated with HML, you should make your decision based on what's most important to your team. For instance, if your group is focused on doing numerous flips per month/year, you might opt into using a fund over a private individual because they are less likely to run out of funds to distribute to borrowers. But on that note, it would be a good idea to be cautious with who you are working with for HML because, historically, there have been some funds who actually stretch themselves too thin, and run out of financing.

 I can understand that. Afterall, the midwest states are known for their cashflow but also the potential for slower appreciation. Overall, if that fits your desired situation, Toledo could be a great place to reinvest!

That's a nice return! Have you done any other investments and do you have any strategies you plan to follow when it comes to investing in the future? 

Hey Myer! 
Congratulations on finishing your first fix and flip, it sounds like you have big goals. What was the biggest lesson you learned through your first investment?

Hey Chase, 
As you can tell by the responses on this post alone, you will have a lot of different options for lenders. To filter out the noise, you should ask yourself, what is important to you and your partner when starting your investment business?

Some lenders will be good for high leverage, whereas others will be good for low rates. Knowing what your criteria is will save you guys many unneeded conversations and possibly even some money.

I hope this helps!

Hey Abe, one thing I would mention is to consider what down payment would be required with the lender you work with. It is not common that a lender will issue a cashiers check but you also mentioned that you don't want to dip into your emergency fund, so you'll need your "skin in the game" somehow. 

I hope this helps you find what people/companies you need as you put all the pieces together.

 Hey Nick, you're right; I should've proofread my post. Bringing up the NPV is a good point. 

Hey Nick,

When you're considering if it would be better to invest in a larger asset, I think it would be smart to consider the NOI of both assets and what kind of overhead is involved. Additionally, in terms of leverage, how much does the 16-unit cost?

Does the borrower have any experience?

I hope this post helps pose some new questions and inspire thought!

Hey Bhrgu, are you familiar with DSCR loans? This could be an alternative method you use if you have trouble getting a HELOC on your property that a lot of investors who use the BRRRR method use. Good luck with your investments!

"Alternatively I could go learn the typical way and deal with HML, build a network. And learn how to stomach the fees. Does the HML route gets easier when you do it a couple times? We do intend to scale out and do more in the future. Is this the best route?"

Hey Zhijie, from the perspective of a HML, yes, the HML route can get easier when you do it a couple of times. I believe it can get easier because it sounds like you are most concerned about the fee among any other factors, and, it is possible to lower the fees you pay. After working with other full-time investors, I have noticed that they either negotiate lower rates after having a history of business with a lender or they borrow a lower amount of funds so they retain more equity in the deal and the 2-2.5% fee is not as expensive as the amount charged for maximum leverage. On this note, lenders are more inclined to offer better rates/points for a low-risk investment, the lowest rate and fee I've seen is 9.5% and 1.5% for origination for experienced investors on good investments. I usually navigate this topic by asking the client what is important to them. For instance, it could be the lowest rates, maximum leverage, or closing times, etc.

Typically, the origination fee will be the most expensive cost on a project, but it is smart to keep in mind any doc fees, costs of appraisals, and costs for inspections. 

I hope this helps provoke some thought for your up-and-coming project. Good luck with your investments!