All Forum Posts by: Jason Roberts

@Jason Roberts  you have the benefit of multi million dollar national add campaigns from the companies that sell training.. the focus of said training these days IS fix and flip

I have been invited to 3 different national training company events in the last year I was over whelmed with folks who want to do JV deals... now its culling them out to pick the one's you want to work with. of the 38 that responded on BP I bet if you get one or 2 you like then that will be about average.. BP as a place to advertise for this is not that great.. you have two things going on here.. RAW rookies, and who wants to go through their learning curve.. and those that are DIY and or experienced and doing deals who have their funding partners or HML in place.. 3 to 4 years ago the JV model would have been more acceptable to experienced flippers because HML was still re tooling it self.. But not now for very experienced players who have some cash there is funding.. Heck out here in the West once you have a lot of experience you can get NO money down deals.. and you can get rates at about 10... and one company now is only charging interest on drawn funds.. So its very competitive on the loan side..

So the trick is finding that middle ground.

And or focus on continuing to do what you do which is rehabbing for your own account. That's the trend these days and what I am personally doing in my home market.

Speaking of Huds.. Lending home has a unique way of verifying that.. they just use public records you supply them with your LLC names that you have taken title in .. they do a national data base search.. and can see if your doing volume.. I think they also figure that if you have done 200 deals in the last few years that your doing something right and they have no need to go into the tules and look at huds... for me it was a pretty easy experience really... easier than when I owned my HML company and I was loaning the money I did far more due diligence and underwriting than these guys did to me.

@Jason Roberts  I find trying to find rehab partners out in the open market is pretty tough you have to wade through a lot of white noise to find the company your comfortable funding.

And it really depends on the scope of the work.. big pop tops or additions etc require pretty experienced folks.. basic cosmetic rehab's you can take more risk with your JV partner.

And its somewhat market driven.. like @Christopher Brainard was talking about I suspect he did a flip that was north of 1 million or more retail.. and you would expect that kind of return.. And those have their own risk profiles for sure.

If your looking to fund for the starter housing market those usually need to be done in volume.. and were a JV partner can help a flipper is to do volume if its just one at a time no one really gets anywhere as the profits are not enough for anyone.

Key is finding that person and or company that wants a capital partner and does not want to go into debt.. big difference.

There is a successful flipper here in PDX.. who has about 30 or 40 projects going all hardmoney and he was having some issues. I got a look at one of his lenders book his payments were 104k a month.. on the HML vig... that puts a lot of pressure on a person.

If he had a capital partner fund it all he would have NO payments and no cash flow issues.

So in my mind if your just doing a few a year HML is probably the way to go if you want to scale a business you bring on a money partner like most of us have done ... I know I did it that way and continue to do it that way.. I like having no payments and no stress.

Although I did just drop a lendinghome loan to see how it would go.. its the first loan I have ever taken from a institution other than my commercial bank.. and I would say other than some normal red tape they funded pretty fast.. And of course I qualified for the lowest rates but I still had to put significant cash into the deal.. still had to pay the points up front Still have to pay monthly payments. And because its in another state contractors need draws to start which I had to front then get back... So its a cash flow issue for most from what I can see by the time I got my great loan from them I probably had to put out 100k in cash for one deal so that will limit most folks growth.

A 200k profit on 1 deal is tad scary, even on my books. It will be worth it on a JV split, but the OP is looking for 1 a year, and the fact that he is willing to risk with someone inexperienced makes me think the deals will be somewhere around 200k-300k to start with that, 20-40k is doable, 50%, 10-20k for 6-8 months of work is not really worth it. Now if the numbers multiply, 3-6 at any given time, maybe some average rehabber will consider it. That is still a lot of work for some who doesn't really have a structure.

@Andrew Katzman is that something you offer on a regular basis? I need some new construction money every now and then. 

Not to burst your bubble, but quantity isn't everything. I only did one flip last year and netted over $200k. I'm reasonably sure the majority of members here would be satisfied with those type of results. I used to work in the corporate world and was putting in 60+ hours a week managing 300+ people - real estate was my vehicle out of that life. I earn a very comfortable living and I work on my schedule - when I want to and where I want to. Trying to juggle 10 flips at once has no appeal to me, when I can just do one at a time and do it right. I earned enough money by 35 to 'retire' and have enough money to self finance just about anything I want to do in the future. 

Maybe you can look at it this way, if a newbie like me has no need for your funds, you may need to rethink how critical lending is to your average newbie real estate investor :)

-Christopher

1) You will find many people willing to do a 50/50 split that are just starting out, however, I don't know how many people who are qualified (even without experience) to flip homes that would be willing to settle for less than that. If you are willing to accept less than qualified people with little to no experience, I'm sure you can do 40/60 or better.

2) While I have only done a half dozen flips, I feel like I fall into this category given my overall expertise in real estate. I would not do an equity share with any investor, as I can personally finance my own flips or obtain financing with very favorable terms (5% to 6%). If for some reason I couldn't come up with any cash, the most I would probably consider would be a 70/30 split, with the 30% going to the financier. I think most experienced investors will be of a similar mindset.

3) This makes no difference to me and I would not see this having any impact on the split.

4) This also makes no difference to me, as deals are the gating factor for me, not money.

I think the biggest problem you are going to have is finding people who have a deal, have experience, have contacts, yet lack capital. I've found that finding money is probably the least difficult part of real estate. 

-Christopher

Jason, I've averaged half a dozen a year for the last several years. Not a rock star but I'm doing ok.. I have a full time day job in the corporate world as well, which is easy money but gets in the way sometimes. I'm trying to grow my biz so I can comfortably walk away from a 25 year career making six figues.. Don't ever tell yourself money isn't out there. It is. My first private lender came thru a chance meeting at a REIA meeting. This guy was walking around not really talking to anybody so I went up and introduced myself. The next day he called me and said he had money to invest and wanted to get in the game. I had absolutely no idea the guy was loaded. We been doing deals together ever since.

@Jason Roberts,

I agree with the numbers quoted by David Roque earlier are pretty consistent as what is applied here in Central Florida. As a full time renovator/rehabber here in Orlando (and Realtor as well), I currently offer investors 40-50% profit, or 8% interest (six months minimum) for SFHs. The investor's appetite for risk will determine which route they choose.