All Forum Posts by: George Krajacic

Hi Jay,

To make any suggestions I would need more information on your 4-plex:

• Size of each unit
• Rent for each unit
• Your expenses
• Average vacancy
• Loan info
• Condition of the property
• Age of the property
• Any recent sales in the neighborhood
• Quality of the area: A,B,C or D
• Terms you are looking for

With above information I might have an idea what you can expect.

Good luck,

George

Hi Max,

To find private money with no down payment requirement one would have to have an extensive experience or willing family member. Since you never flipped a house you would be putting borrowed money at greater risk than necessary, consequently I would suggest different path. From your post I know that you never flipped a house, but you have an eye for a good deal since you have been wholesaling properties to flippers. Assuming that “the deals you can’t pass up” are exceptional it should not be hard to make an arrangement with experienced flipper to share some profits and mentor you while you are helping him to refurbish the property. To make a proposal more attractive to a flipper, offer not to take your wholesale fee up front but to take it upon a sale. This way you have some skin in a game and since you brought exceptional deal you deserve share of the profits. By the time you finish second deal you will gain enough experience and be in position to approach you friends or family members with confidence.

Good luck,

George

Hi Tim,

I would start by checking with state to make sure that company is legitimate and in good standing. Also, I would ask the company for the references. Maybe you can use “Bigger Pockets” to find if other people used them and if they would recommend them. Additionally it is good to remember that “If it is too good to be true it usually is!”

If you are just trying to get prequalify with private lender I would still make sure that lender is legitimate before providing any private information. However, if you trying to get loan on the property you have under contract I would make doubly sure that they can perform as promised. If you do not know the lender and you do not know how they performed on other loans you are running a risk of getting to closing date and the lender does not fund.

What does “I was PMed” means?

Good luck,

George

Hi Spencer,

When I was flipping properties with an investor, the investor would provide all the money and I would do all the work. The net profit was split 50/50. However, I provided additional service by listing the property and not charge listing portion of the commission, this significantly increased investor’s profit. This arrangement worked well for flips that were turned over in less than 6 months.

For long term hold properties it is advisable for you to be on title as partial owner. How you structure the deal depends on how many investors are in the deal. I would recommend having an attorney prepare the agreement so you do not run a chance of breaking any syndication rules. In some instance syndicators provide 1% of equity contribution and get 10% of ownership and still get a share of profits, while investors get 4% to 8% preferred yearly returns and the percentage of the profit. Percentages of the ownership, percentages of profit split and percentages of preferred yearly returns all depends on projected property’s performance and desired return for investors.

Good luck,

George

@Mindy Jensen  Is this a change?  The Free Basic account says it allow basic text based signatures.   It says here on the features list of the Free Basic account that it includes text based signatures:

https://www.biggerpockets.com/pro?up_sell_source=U...

	BiggerPockets Basic Free Always

My text signature has disappeared from my posts and I can't figure out why. I don't see the option except "pro" in profile settings signatures and I have my contact information in my profile.  I dontt know what happened to it.   Any ideas @Joshua Dorkin?   Thanks. 

Hi Japeth,

By looking to eliminate down payment you are trying to eliminate what is most important to equity based hard money lender (HML). Equity is what gives security to HML that if everything goes wrong and they have to foreclose and wholesale the property that they will still get all their money back. HMLs rely on equity and not on your FICO score or your net worth. Many HML do not care where the equity comes from. It can come from a partner, 2nd position loan or additional property with necessary collateral. I am a hard money lender in your area so let me describe the process that average HML would go thru in deciding whether to make a loan on the property you described. First you would have to provide the following: a. a signed purchase contract to buy the property, b. Itemized cost of repairs, c. ARV value of the property, d. Bank statement showing that you have enough money to pay for all loan closing costs including 25% down payment and 2 to 3 loan points and enough of reserve to pay 6 month of payments. As you can see it is starting to be a substantial amount of money. With $900,000 purchase price you would need the following:

$225,000 - down payment

$13,500 - Points

$37,125 - 6 month of payments @ 11% (paid monthly)

$800 - loan docks

$276,425 - Total Funds required (some or all of this funds can come from the partner or the 2nd loan)

Assuming that renovation costs is $127,000 the refurbished property would have to sell for around $1,285,000 price for a flip to be safe and profitable. Since you are new at flipping I would suggest starting with a less expensive property maybe around $300,000 purchase price with $428,000 ARV. This way, if things go wrong the problems are much easier to handle. I would also suggest for you to attend Numerous "Real Estate Investment Club" meetings in your area. It is good place to meet other people with same interests. Also clubs provide very informative educational seminars. If you visit my web site you will find a list of different Investment clubs you could attend.

Good luck,

George

Hi Steve,

In order to make a suggestion I would need following information:

• A.Does property cash flow with given terms and down payment?
• B.If not, what has to be done to create a cash flow?
• C.How much time it will take to get property rehabbed.
• D.How much money.
• E.Who is going to manage the rehab and the property? If it is you, how much experience do you have?

What I am trying to determine is risk factor which also depends on your experience and what are you bringing to the table. With that information I could tell you few ways that the deal could be structured.

As you can see from previous posts other people also think that having a list is good idea but to generate one it would take a lot of time and if you do not have a sense for interior design you might not generate a list of items that are well coordinated. Two month ago I attended "Fortune Builders" 2 days seminar that cost me $100 and I was very impressed. I am HML with broker license and I have flipped number of properties. I am also a licensed general contractor and I have built apartments, condos, and single family homes. So, as you can deduce, I am not new to the business. I knew most of the stuff they were teaching, but the methods and the systems they were using were impressive. They break their renovation into 3 different quality levels: Basic, Midlevel and High End Quality. All the items come from Home Depot so just about everybody has access to it. All the materials are chosen by interior decorators so the final result is very elegant looking even if one is just doing basic remodel. They provide you pictures with recommended items for all the rooms you are remodeling or just painting and carpeting. If you are like me, I never know which wall color or carpet color to choose. The system saves you money, time, headaches, and on top of it all, it makes you look like professional. Your flip will sell faster at the higher price. Their education is expensive and I think is more useful to a flipper as oppose to one that fixes and holds. I would definitely recommend their 2 days introductory seminar, you will learn a lot even if you do not sign up for their program.

Good luck,

George

Assuming that this is best 30 year loan one can get in your area and assuming that you are not going to hold the property as a rental then it strictly depends on what would you plan to do with $42,000 in next 12 months. If you can flip another property and make about $12,000 than it would be worth it because you would be making about 16% return on your money. However if you were asking if it is too expensive for a long term hold the answer is definitely NOT! Young generation thinks that 4% rate is normal because they never have experienced 8%, 9%, 10%, 11%, 12%, 13% and yes 16% rates for conventional loans. So if the duplex makes good cash flow with 5% loan I would keep it.

Good luck,

George