All Forum Posts by: Jamie Parker

Well the drafts are in! It has been a whole deal working on this property but things are beginning to make a little bit of sense. First it was a prayer to God for what to do. Now I can see the plan starting to come together at least for the property.  

At this part of the process, understanding what will be put back in its place. First estimate was (without drawings) 150,000 for a full rehab @ 115/sqft. Spending that much money and not having an ideal about whats gonna be put in place is not how I do business.

If you notice on this draft from the architect. The lot shows the existing building envelope next to the proposed renovated floor plan and square foot addition. 

According to planning, only 1 and 1/2 story is permitted in this neighborhood.

There are some consideration yet to be taken at this point. Due to the fact that this neighborhood is lacking comps and a severe lack of development, Being conservative on size and cost there is more planning to be done. 2130 sqft down with an additional 565 sqft up. That is a lot of house and a big risk for the area. 2130+565= 2695 sqft @ 120(estimated)/sqft to build= 323,400 to build. Meaning that layout would need to sell for at or around 400K to break even. I think this neighborhood would support that price on new construction at some point in the future. But first let's find the sweet spot! 320K is a bit more conservative in my opinion. There is a 2 new builds in the last 12 months; 1 for 173k and another for 200K. Smaller single story property at around 1000 sqft. 

My architech is amazing at what she does and have high hopes that we will be able to have something that can fit into the box. 

Ok so the next update on the 1522 Latham 38106 project.

After a series of storms rolled through the area, the grass was not cut in a timely fashion. Landed myself back in environmental court. Because of this, retriggering of the 1 year time table to complete the property to 75% of the value. Basically means  that I will have to get the property to a condition that is acceptable for code enforcement during this period. 

I sure many would ask, Why would this take so long? 

1st lenders in the area will not lend on a burn out. 2nd I am doing this project out of pocket essentially. Because I have no cash reserves to start something like this, this would a way to get my self in the game with buying property. Pretty much a boneheaded undertaking, I see a few things coming to fruition out of just diving in.  Doing a Seller Financing deal. Meeting and working with an architect, building a team (GCs, Subs, Title, Lenders). 

Since January after going under contract, I have been to a couple RE meetups and begun listening to podcast again. I was burnt out on the business 4-5 years ago. The itch has returned. The drive has been restored. I thank God in the name of Jesus Christ for returning to the industry. I see the value in not being overwhelmed because of a failure to properly build a situation with systems and organization. The focus now is on problem solving and not revenue. LETS GOOOO!!! 

This is not intended to be a rant of the complaining sorts. However, from the this post I hope that someone may gain some value out of my situation. 

Short story long....

In the process of completing the process to get funded from a private lender. To be honest, it's not that the it sounds too good to be true, it's more of the; lets see how this process works variety. Because my real estate journey started from wholesaling, can't say that going in to this situation i was fully aware of the fees associated with getting funded. Origination sure. Points yea. I/O hard money with up to 12 months or 18 months terms definitely. Different products required different fees to fund the borrower. As wells as these requirements may vary by lender's state requirement and lender's source fund type, not quite sure of the vernacular, but i think you get the I deal if you have read this far.

In the private lending world, funding can be originated from various places. Not to get to far into the weeds about "where the money comes from", to name a few, Capital funds where investors (accredited and/or non accredited) fund a bucket for investment purposes. First thing comes to mind for me are Private Placement Memorandums, 506 b and/or 506 c. Whatever you organizational structure is S-Corp -C corp, LLC, GP, or LP, the fees for lending can look different.

I have had the pleasure of finding a lending source backed by Insurance policies. Either im in left field or I have stumbled into "big league" territory. Either way walking into the area I the selling point appeared the same however, going thru the process myself sounds a lot different. 

Mind you I have only heard about the Hard money, and private money fees schedules at real estate meetups (REIA/REIN) and speaking with various lenders in the last year in my town.

5 point origination 

I/O 1 point,

up to 12 month terms. 6/6

after the first 6 months payment goes to 2 points. 

With this different product, again not complaining, fees are different totally also not a real estate loan w/o collateral. 

1 point origination 

1.5 point insurance bond (protect against personal injury/loss of life)

9 point non collateral document. 

my loan is I/O over 100 months. (there is a non interest only option as well. I made the choice for Interest only)

no prepayment penalty.

Im must say I was very excited to get things moving forward on this loan. Oh 1 pt origination, that's doable. then 1.5 insurance bond, thats gonna takes some work. But today when the non collateral fee was announced, my excitement became frustration quickly. Why didn't you..... I immediately had to take a sec and realize, "bro this your first go at it." Wholesaling only and buying property are totally different frames of reference. Also buying a "bando" with high hopes for a majestic "rise of the phoenix"rehab project, not impossible. But the phoenix literally burned to ashes. So when it gets gritty, when the rubber meets the road. That's a brand new tire you got about 20-30 thousand miles to go on them bad boys. 

I hope there is someone can get something for this post or share your thoughts. 

 How are things going so far. If I understanding the situation, 800k for all the mobile homes and the land? What does the deed look like (my own curiosity). Sometimes private lenders, not hard money, or banks. They kinda sit right in between the two. That may be a resource to pursue. Private lenders may have different stipulations like credit checks or no credit checks, prepayment or no prepayment penalty. If you like, send a PM and i could get you some information about it. 

Where you able to secure funding? Are you still doing deals. There are private lenders doing purchase and rehab loans. The leverage is there your numbers have to be good/. 

How did it got @Joyce D Raphael?

HOw did it go? 

Hello HOw are you doing in Birmingham? What type of properties are you targeting? Are you familiar with Oporto Madrid Area?