All Forum Posts by: Jaclyn McClellan

You would use a hard money lender. and they will require roughly 15% down, reserves equal to at least 6 months of monthly interest payments and roughly 10% of your rehab budget. Whatever they say you need minimum, assume you have to add at least $20k-$30k because they also usually require you to pay for parts of the rehab first, then you are reimbursed in "draws" so if you have to redo the plumbing for $15k, that's coming out of your pocket first. Then they charge you for the draws. The closing costs are insane and they usually have origination points from 2% to 3% (2% to 3% of the loan as a fee upfront.. just because). 

I think step 1 is hook up with a realtor that works in the area you're looking in and get an idea of how quickly things are selling. The key with any place is ... will it sell when you're finished. If properties are taking 6-7 months to sell.. it's probably best to stay away.

In regards to square foot for construction, it's really difficult to estimate. I would say for higher-end, expect to pay $200k or more. I am working on a project now that's not even a full "gut rehab" and it's going to cost us about $100k for a single family home (ARV of $370).

If you don't have the money for the stuff I mentioned in the first paragraph, start working on finding it! 

Property is near Chicago by the way!

We are closing on a property May 31. The way the Hard Money Lender works is we have to pay for the construction up front, then they reimburse us. While we have enough liquidity to receive the loan, we are interested in having more in case something comes up that we need the extra cash to pay upfront.

I would be willing to disclose information regarding the property, the architectural plans, the construction budget, etc. 

We are looking for roughly $20,000 and would need it for probably 6 months max. 

Please contact me if you'd be interested!

Is anyone or does anyone know a GC already licensed with Elmwood Park? It is near Chicago, but they require contractors to be licensed with the village.

Thank you!

Maybe find a couple of the investors that you talk to that would be willing to give you feedback. Ask them what you're doing that they don't like or if they need more information, or if they are focusing in different areas, etc.

What's considered expensive for the suburb areas you're looking in Denver? Chicago suburbs can be very expensive as well.

I would think there may be an alternative where you wouldn't be over a grand in negative cash flow per month? But either way, you would still be paying a mortgage if you bought just one unit, so I guess technically it's not too different than buying just a condo.

Do you have the money to make the repairs you mentioned? If you want good quality tenants you should have a good quality place (generally speaking).

Also - if this first floor tenant is a hoarder, it speaks a little to their personality ... they may be difficult to get out. Just consider that you may have to evict. I would also consider offering "cash for keys" - just give them a lump sum to leave if you start to have issues.

Thank you so much! Great insight.

Our lawyer had recommended going forward but said similar things regarding cost-benefit. The goal is of course to keep costs down but also get our money back. It's really unfortunate that things have to go this way, I'm really one that would prefer to settle things outside of the courtroom. 

I might be able to help you!