All Forum Posts by: James Palassis

Originally posted by @Derrick E.:

Thanks to all of you for the advice and taking time to respond. You have all given me a lot to think about and look in to. 

@James Palassis what do you typically pay or charge for a Competitive Market Analysis? Sounds like something I need to look in to. Thanks

@Sam Shueh what is an RPT?

@Peter M. I had thought about doing a detailed report.  I wasn't sure how the appraiser would take it and didn't want to make him/her mad. Do you provide pictures in your report? Do you provide copies of receipts? Just wondering how detailed I should be I suppose. 

Like most things in real estate, it is all about your network. I think, but don't know for sure, that there are some rules around compensating an agent when they are not part of the transaction. I have some friends that I have referred business to, so they reciprocate by helping me out when I need a favor on a CMA.

For the flooring, big suggestion to find out what is customary in the area. If every other house has tile, I’d recommend tile. For landscaping, I think that is an area that will give you the best bang for the buck. Anything that has a striking visual impact is going to help not only with your appraisal, but also marketing your property, whether to rent or sell. It is also something you can put”sweat equity in that doesn’t take a specialized skill (like electrical or plumbing). I would try to find an agent that might do one off competitive market analysis. That will give you much more reliable intel on what your house will appraise for. Go to a local REIA meeting, you’ll find good agents there that are familiar with what you are trying to do.

Good evening Pros,

I am entering into an agreement with a flipper and I am the lender. I have set up the loan on an escalating interest rate as follows:

Months 1-5 = 8%

Month 6 = 9%

Months 7-9 = 10%

Months 10-12 = 12%

It is a 12 month loan with a balloon at the end for payoff or I get the collateral (with any improvements made at rehabber's expense). 100% of the loan amount is going to the purchase price, flipper is paying rehab costs out of pocket. My question is how do I calculate interest in this arrangement. By my estimation 8% annualized would be $666.67 ($8000/12), then 9% goes up to $750, and so on. Is this a correct calculation for the loan amount? I have JV'd with this flipper on previous deals and we split the profits based on a percentage of how much each of us had in the deal. This is the first one where I have been solely a lender. The property is collateral in the event of default, $100k purchase price, $60K rehab, ARV is $250k.

Is this the correct interest calculation?

Months 1-5 = $666.67/mo interest

Month 6 = $750

Months 7-9 = $833/33 mo

Months 10-12 = $1000/mo

Thank you for your input!

Come to the next UCREIA meeting in February. It is February 19. Wish you had posted this yesterday, we just had our January meeting tonight. Lots of helpful investors and private money.

In the process of rehabbing a flip, going from a 2/2 to a 3/2. Wood panelling will be removed, so down to the studs. Question is, it is worth the additional expense to run Cat 5 to every room? This is a single story, almost 1500 sq. ft. SFH, so I feel like a centrally located router will provide coverage for the entire structure. The last post I could find on this was from 2012, and wifi has come so far since then. We will be rewiring the house, removing the knob and tube system. So we will have access to run the wiring, but wanted to get input on whether it is worth the expense/time. Thanks!

I've learned a lot about the BRRR stategy, and I have a question about the refinance part of it. My primary residence is paid off, and I have an open HELOC on it. Sometimes I come across deals on MLS (through my realtor) that, when I run them through the BP calculator, will cashflow. Sometimes there are very minor needs to make them rentable (mostly just paint).

My goal is to use my HELOC to appear as a cash buyer offering quick closing in hopes of additional flexibility on price from the seller. Then once the property is rented and generating cash flow, I'd like to refinance using traditional 20% down 30 year term. So I guess it's a BRRR without the repair component.

A couple of questions regarding this:

1. Is there a "seasoning period" on this strategy. Will a lender make me wait a period of time between closing using my HELOC and refinancing?

2. Any flaws in this strategy (other than buying off MLS doesn't get me the most bang for my buck)?

Has anyone had success using a HELOC on primary to pay cash, then refi'ing into traditional financing?

Just saw you’re from Clinton. If you’re talking about UCREIA in Greenville, I’ll see you there!

It is amazing how quickly you will be welcomed into the group. My experience went like this: 1st meeting: total wallflower to the point of extreme awkwardness. 2nd meeting: seeing some of the same faces gives you the confidence to introduce yourself. Be upfront about being a newbie, they can smell a BS’r a mile away. 3rd meeting: more integration. Prepare some specific questions for those you have discovered are playing in the space you want to play in. 4th meeting: prepare some business cards with your contact info, and what you’re interested. You’re ready to market yourself and find partners and mentors. Good luck! Make sure to go back for a second meeting even if the first one is a disaster.

Thank you for the respones @Tom Gimer. Neighbor has now floated the idea of trading that strip of property for a corner of our property located further away from the house. He says he can't just give us the property, which I don't blame him.

So still looking at survey cost and drawing up the deed. Looking into it further. I really appreciate your suggestions! Also, we are paying cash... I was concerned about the end purchaser after we rehab and the lender's requirements for a survey. Every primary residence I have purchased, I have required a survey.

Going forward, would you recommend surveying future properties? This has me a little gunshy.

My partner and I are trying to get into our first fix & flip project. While we were at the property last week, a neighbor came over and said his property line runs right up next to the house. Exact words: "Right now you're standing on my property." There is a fence running adjacent to the property, which we assumed was the property line. Upon inspection of the plat map, the property line is significantly closer to the house than the fence.

Question: my partner is pushing to continue with the project dispite the property dispute. We have it under contract, contingient on structural inspection and survey. His reasoning is that at this price point ($125k ARV), the property will be purchased as a starter home by someone not concerned with the property lines. I'm pulling back the reigns. My reasoning is that there are now too many variables we cannot control. Apparently there was a problem with the septic system on our proposed property polluting his property when the house was occupied (it's been a while). He stated that if we get the septic system issue resolved, he will not tamper with the fence or the land on the other side of it. My concern is that if we do anything in the slightest that the neighbor doesn't agree with, his "word" goes out the window and we have a fence running through the side and back yard. Also, does a lender require a survey before funding a loan?

I've tried to present this as unbiased as possible. Since this is our first, I don't have the experience to rely on to tell me whether this is a deal breaker. Looking for some experienced opinions, should I cut and run or stick it out. Any other possible solutions? (I was thinking something in writing signed by the neighbor and notarized stating he would not tamper with the property outside of his fence. But don't know how that would hold up).

Thanks! - Jay