All Forum Posts by: Account Closed

...My question is what sort of rate of return will be attractive to an experienced metro investor? I feel that my current offering is very competitive, but I also understand that Private Investors get a lot of deals presented to them...

So how would you define 'very competitive'? What rate are you offering investors? What amount are you trying to raise?

0 Votes

Originally posted by @Akil Simmons:

I purchased a investment home cash last month for $60,000 (it appraised for $110,000 as is). I wanted to home equity loan for $70,000 so I have my cash reserve back, but 2 banks so far say I haven't owned the house long enough. A third bank said they will do 80% of the purchase price. looking for some suggestions.

You may have to talk to other banks regarding the seasoning requirements. It may not necessarily be the bank 'around the corner' -- if they lend where the property is located at of course.

0 Votes

Originally posted by @Kevin Raye:

I have someone that wants to invest their money privately with me in real estate. I've never used this type of funding before and was wondering what type of documents should I have when securing the funds. This is my close buddy but I want to make sure that I'm professional when going about this. Any info. Is appreciated. Thanks!

You don't approach it any differently than you would if the lender wasn't a 'buddy'. Business dealings with 'buddies' could often be risky regardless of how close. You limit such risk by having something more than a 'verbal contract' regarding any term.

0 Votes

Originally posted by @Kevin Dee:

Hello All!!! In New York, I went to my Chase banker and they said it's impossible for them to give me a home equity line of credit on my free and clear condo investment apartment that I rent out. I guess this is true with their bank, but has anyone done this with another bank? Thanks!

Different financial institutions are likely to have a lending criteria that vary.

0 Votes

Originally posted by @Marcia Maynard:

My understanding is that hard money loans are secured loans and are more expensive because of risk factors and the short term nature of the loan. They are often used for flips, but not as suited for buy-and-hold. @Jay Hinrichs may have some insight on that.

We maintain a $100K HELOC at our local credit union, secured by our primary residence. The annual fee is $25. Our terms are 3.25% (adjustable, but it has stayed at the same rate since we opened it over 10 years ago). We can borrow on it, at will, for any reason. When we draw on it, we pay interest only. We use it for short-term needs only.

In March of this year we pulled $100K from our HELOC to make an all cash purchase on a SFR. After we finish the rehab, we will seek financing on the ARV of the property, probably via a conventional loan. Then we will pay off the HELOC loan. Rinse and repeat.

You can find general information on line about HELOCs and HMLs that may be helpful. [My previous post was removed, perhaps because I included links to wikipedia about those. Sorry.]

Regarding HMLs being secured loans (and they typically are), the HELOC is still technically 'secured' by the home -- your primary residence. Most banks do however offer other types of lines of credit that may be unsecured -- such a business line of credit. The exact features and terms may vary based on the type of line and from bank to bank.

1 Vote

Originally posted by @Tim Ball:

I am very familiar with hard money but I am not certain exactly how lines of credit are set up. If you are able to secure a line of credit, and you are looking to purchase buy-and-hold properties, would that be a better route than using hard money? I know hard money is more expensive but how do credit lines work? If I bought a house on a line of credit, how long is the life of the loan? Can I pay it off early? Can I refi out of a line of credit purchase to a conventional mortgage on the house? I am looking to start buying rentals and was wondering what would be the better route and why? Let me know please. Thank you.

You want to talk to a bank regarding what line of credit products they have, the limit and your intentions (how you plan to use the line). You don't want to have the line tampered with in the middle of a rehab project.

0 Votes

Originally posted by @Stacy E.:

...I made lots of mistakes with the rehab and chalked it up to a learning experience i.e. paying for pipes to be fixed that I decided to scrap after plans changed, following a relators recommendation for contractors without seeking out multiple bids + many more... I should have already completed the rehab and have the lower unit rented but that is not the case and my holding costs continue to rise. I suppose I didn't take into account the larger the house the more EVERYTHING costs. So my question is now what do you do when you know you are going to go over budget?

Sounds really like a real list of what not to do when rehabbing. How was the project financed?

What you do is based on what the real numbers are... which if terribly severe from a monetary loss perspective, may mean a complete halt.

Throwing more money into the project may be just as bad a decision based on what the ARV may be relative to what is being spent.

You often want to be disconnected from just about anything emotional when making decisions of this sort.

0 Votes

lol... so you have a 70 to 80 year old running a meth lab or does he claim he knew nothing about it? He sounds somewhat motivated to sell.. any details on what the numbers are? Cost to correct any contamination or other issues, what seller wants etc.? It's also interesting that there would be a reverse mortgage on the property if it isn't habitable and probably why they may have initiated an action against the owner.

0 Votes

Originally posted by @Lee S.:

I should have been more specific, I would go to a hard money lender or some personal friends for private investing for the rest of the funds.

Regretting asking for help at this point. Thought this was a place to get help, apparently it's also a place to just hammer people. Never mind.

@Patrick Connell

lol... feeling hammered?

You definitely want to have the financing figured out and have a very clear exit strategy. More information always help.

Based also what sort of cash you have on hand and what the seller is asking for, there may be some routes to utilize.

The cost of funds going the 'Hard money' route usually hits the profit quite a bit especially if the property doesn't sell as quick as you initially thought.

0 Votes

Originally posted by @John Hixon:

Got a call off my direct mail campaign from a lady who is thinking about selling her rental and wants me to make an offer but she said I cannot see the house. She is renting it to a family member and does not want them thinking she is kicking them out.

The house is 1,500 sq.ft. 4 bed, 2 bath, built in 1974. To my knowledge she has not done any updates other than paint, carpet and tile. She said the roof is 9-10 years old. So, I would assume it is going to need a full cosmetic update. I estimate the ARV at $136,000 and she said that they have $30,000 left on the mortgage.

One GC I spoke with said that on a 1,500 sq.ft. house for paint inside and out, new flooring and fixtures it would be $12,000 - $15,000, if you went with granite and stainless steel appliances that would go up to $16,000 - $20,000.

My question is, how would you make the offer or estimate rehab costs on a house you cannot see?

Thanks.

It is very risky to make a serious investment decision without seeing the property. You aren't sure if the seller is trying to mask some issue with the property. The tenant also may have some legitimate privacy concerns and rights in the matter. If you absolutely just have to make an offer, it has to be a conditional offer contingent on any array of surprises that may spring at you sometime later. Getting a recent inspection report from the seller may help with some sort of ballpark estimate of repair cost.

1 Vote

All Forum Posts by: Account Closed

Account Closed has started 1 posts and replied 380 times.

Post: What kind of returns are Private Lenders looking for?

Post: Home Equity for new purchase issues

Post: paperwork

Post: Home Equity Line on a Rental / Investment

Post: Line of credit vs. hard money: which is better?

Post: Line of credit vs. hard money: which is better?

Post: Over Budget and not completed...now what?

Post: Can anyone give me meth house advice?

Post: Offer structure on potential rehab.

Post: Seller will not let me see the house before offer