All Forum Posts by: Celia Lumbroso

@Collin Mitchell

Hi Collin, 

This is a great question.  Given, you will be incorporating construction funds into your projects you want to choose a lender that is efficient with their draw request process.  A lender should be able to initiate a draw 48 hours of receiving the request.   

Draw request is sent to lender, lender taps inspection agent to inspect property, and a inspection report is delivered within 48 hours to determine how much rehab is eligible to fund. Please note all lenders have a different process for their draws. 

Yes- given I work for a direct lender I have first hand experience of being involved with setting up a fund.  Strongly suggest contacting a lawyer and setting up a Cayman Island feeder fund.  The benefits with this include flexibility and tax exemptions on income.  If you would like to discuss further in-depth please contact me.  Thank you. 

@Fabian Wizenfeld if you need assistance on finding a trusted attorney for this process.  Please let me know.  Thanks. 

@Susan Tan Hi Susan- I know a lot of title companies and lenders that can close virtually for American buyers living outside of the USA.  Ping me if you are interested in learning more. Thanks. 

@Brandon Becsi I recommend raising capital in a private fund or look at opening a line of credit with a bank. 

@Rena Figures if you only want to put down 3.5% down payment, then I strongly advise setting up an LLC and incorporating 4-5 other like minded individuals that have the same goal. At 3.5% down payment you would most likely be a passive investor with the other members having majority ownership of the LLC.

As others have stated, need at least 30% in reserves.

@Scott Guendert if you need recommendations for the future please let me know.  I have many connections in the San Diego area for both trusted brokers and lenders. 

@Anique Akhtar

They should go with the 6.25% as costs will be lower in the long term but likely will have to need more reserves day 1. 

The downsides of the CALFHA program:

-Efficiency: There tends to be a lot of delays in the closings of FHA and require numerous forms of documentation which can take weeks to fund.

-PMI requirement: CALFHA require this expensive insurance requirement until you reach 20% equity in your home.

These are things to keep in mind when dealing with a FHA loan.

Great question. 

We have closed numerous deals in Florida and are very familiar with lending in this state. 

If you have no prior experience in fix & flips- this is a huge factor.  If you have flipped 5 properties within the last 3 years then you will get a better rate. 

Based on the numbers above, current market trends and if you have no prior experience in fix & flip: You will likely be able to qualify for a loan amount at max 168,000. 

Title, closing costs, and origination fees will likely total 10,000 at closing. 

At the end of the day you would walk away with 158,000. 

Monthly payment- $1,680. 

Thus, you would want to have more in reserves- especially if anything goes wrong in the project.   My advice is to have two of everything to get the best possible quotes- 2 contractors, 2 painters, 2 electricians, this will help you get the best pricing by comparing in the market. 

*Please note- This is super important.  Most lenders will only give you the cash day 1 for the acquisition of the property only and hold back the rehab funds.  The lender will reimburse you in arrears AFTER you have spent the costs for rehab. 

Day 1 loan amount: $134,250

Rehab holdback: $33,750

Total loan amount: $168,000

If you would like to discuss in further detail please let me know. 

@Andrew Postell- curious to understand your point on a hard money lender allowing $0 out of pocket?  Did not know this exists.