All Forum Posts by: Jamie Parker

I have done much bigger deals without a realtor (19k-3m) in various roles. There’s no need for a realtor when talking directly to the seller. It’s paperwork, easy peasy. The problems I had would have been there with or without a realtor. Call it rusty sloppy or something but got it done. First closing since 2019 so I take it as getting back in shape. 
 To your point, I will use a realtor for the listings when the projects is finished. I believe the sweet spot between 220k-280k. 

Well for the next installment of "here we go"

Construction documents are moving along quite well. Environmental court has become a different thing. The prosecuting attorney seem to be more in favor of tearing the property down possibly at the cost of 6500$. To be honest for a full demo, that is not bad a bad deal. If I purchase another property from the city that would require a full demo, I may let the city do it at that price. This property is different, so I opted to go with receivership on the property. Hearing later on in March. 

This is gonna get interesting. Because with a note on the property, roughly 26K remaining on a seller financing note, If a receiver decides to go forward with in a similar path to rehab, how does the city create allowances for notes on the property. 

Before I got into this situation, I was in a position to know that it existed.  Seeing properties on Zillow being offered as with questionable title or quit claim deed upon sale. This is gonna be an eye opener for sure. 

@Account Closed

Thanks for your encouraging words. There is still some work to be done. And you said it right I learned and I won. To God be the Glory. I am remaining diligent with this project because I am rusted around the joints. This project is giving me that taste of doing deals again. It has been a long time but if it had not been for taking action, as you put it, I would not be in the place I am in now. Signed up for PassiveGrowth.com. Very Interested to see what is ahead 

Just as I was thinking that I was rounding the corner. Often times moving too fast with a limited margin for error can be a breeding ground for bad days ahead. With that being said, asking for advice and following the counsel of more seasoned individuals should not be overlooked.

After walking the property with local well seasoned contractor, with plans in hand I had to swallow my pride and fixation on what I am hoping to accomplish and start with the basics. My last post showed my ambition to bring to market an overbuilt, high risk and literally terrible ideal. In my haste there were some steps that I did not consider. How did I leave out Profit? WOW. The things that happen when moving to fast. 

Target Number:                                                                                                                    320,000                                                                                                                                    -64,000 or 20% (agent fee 6% 19,200, GC Fee ~ 25,000, Title/ Closing/Funding 19,800)             256,000 all in                                                                                                                        ~40,000 Profit                                                                                                                      216,000                                                                                                                                       -5% Buffer 205,200
So what can be built for 200,000

This puts the build size at 200k/120sqft or 1666.67 sqft

In my gut this still appears to be to much house even with 40k in projected profit. 

Enter Comparables: Breaking into a new market within a city is hard enough. So proceed with caution and diligence.;

I am having a tough time figuring the sweet spot on SQFT. Many Of these properties are in the 1000-1400 Sqft range. That puts build cost between 120,000-170,000 respectively. Exit price should hit 250,000-275,000.
Given these comps:

NEW CONSTRUCTION

1 being new construction For sale                                                                                             256 Lucerne Pl, Memphis, TN 38126
https://www.realtor.com/realestateandhomes-detail/256-Lucerne-Pl_Memphis_TN_38126_M75318-15423?from=srp-map-list
4bed 2bath                                                                                                                               1200-1399 sqft
Lot Size 6,250 SqftListed @ $315,000
                                                                                                                                                  1 being new construction Sold 2022                                                                                         365 Edith Ave 38126                                                              https://www.redfin.com/TN/Memphis/365-Edith-Ave-38126/home/163262892#property-details     3 Bed 2 Bath                                                                                                                           Lot Size 6,969                                                                                                                   Sqft1200-1399 sqft                                                                                                                   Sold @ $173,000
Rehabs/Renovation

470 Walker Ave Unit 3, 38126                                        https://www.realtor.com/realestateandhomes-detail/470-Walker-Ave-3_Memphis_TN_38126_M97102-59559?from=srp-map-list
Triplex(2) 1 Bed 1 Bath(1) 2 Bed 1 BathLot                                                                                 Size 5,800                                                                                                   SqftBuilt 1920  Listed @ $299,000

Nearer to subject property These properties are also rehabs and not new construction.             1654 Cameron St, 38106                                                  https://www.redfin.com/TN/Memphis/1654-Cameron-St-38106/home/87657066#property-details
1 bed 1 Bath                                                                                                                      Built 1922                                                                                                                                Lot Size 7405 Sold @ $138,000

1660 Shadowlawn Blvd, 38106
https://www.redfin.com/TN/Memphis/1660-Shadowlawn-Blvd-38106/home/87657026
4 Bed 2 Bath  1454 Sqft Built 1941                                                                                             Lot Size 7250    Sold @ $133,000

661 E Trigg Ave, 38106https://www.redfin.com/TN/Memphis/661-E-Trigg-Ave-38106/home/60783819#property-details
3 Bed 2 Bath   1000 Sqft                                                                                                          Built 2002    Lot Size 6,534   Sold @ 110,000

Rentals
735 Roanoke Ave, 38106https://www.redfin.com/TN/Memphis/735-Roanoke-Ave-38106/home/60745881#property-details                                                                                      3 Bed 2 Bath    1000-1199 Sqft   Built 1923   Lot Size 6,534                                                      Sold @100,000                                                                                                                  Rented $1350/month till April 2024

1549 Patton St, 38106https://www.redfin.com/TN/Memphis/1549-Patton-St-38106/home/87658319
3 Bed 2 Baths
1000-1199 Sqft   Lot Size 3,049    Built 1953   Sold @ $125,000
Rented $1195/month till February 2024

It is not as much of a long shot as it sounds. However as with any investment there is risk involved the investor is responsible to conduct their own due diligence.
There is an existing property and a lot next door that is a blank slate. Starting on the blank slate may be the best option. And this is where the sqft of the
build is important to hit the sweet spot. A remove some of the limitation that the existing property has structurally. Get a new design and a lowering barrier to entry. And see what become of this as we move foward. 

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?