All Forum Posts by: Jeremy England

 Most investors would be pretty happy with only a few grand stuck in the death and cash flowing.

The 100k at 5.50% on 30 year AM/Term (Aka a fannie mae loan) would be around 550 per month and I'd guess your taxes and insurance are around 150 per month maybe?

This should leave you with a margin of 300 or so for repairs, cash flow, and misc.

Every 10k at 5.5% on 30 yr AM/Term is roughly 55 bucks a month so if you reduce your loan by this amount (aka keeping your money in the deal or refinancing with a smaller loan than 100k) will improve your cashflow by 55 but lowers your cash on cash return since you have 10k more stuck in the deal and cash flow / cash in the deal will result in a lower %.

Looks like you're doing well with only a few grand, overall yeah?

@Jeremy England

I'm having a hard time figuring out what the problem is with this deal. All of us would love to not have a dime in all of our projects and cash flow $1,000 per month on every property. But it looks like you have a house that is worth about $100,000, bringing in 1% gross per month and you will only have 7k in the deal. So, cash on cash looks like 58.3% if I calculated correctly. What more could you ask for? Remember the tenant is paying the interest and points on the loan, not you. Get your money out of the deal and move on to the next one. 

My biggest issue in lending out construction money comes up when establishing my lien position. A higher interest rate compensates for the risk of being far down the line. How much interest is enough to make you comfortable with the loan? An important question would be, how much interest will you get paid, and how much return does that translate to over a given time period? If the numbers aren’t enough to justify the weak lien position, @Levi Rudder offered up a pretty decent solution with his notes investing strategy. Perhaps he is taking on new investors as clients.

Lending is ok, but requires a decent amount of legwork per transaction especially if the collateral is only the RE being rehabbed as in your describe transaction. In my opinion it would be better suited invested in something that will get you good returns without having to continually work to put your money out. With my smaller IRA accounts I will put them into residential notes that I get cashed out between 12-36 months and just rinse and repeat. That is also what we do with our non IRA money as well and we do it full time.

@Jeremy England - Congratulations on your deal. Going forward, is this the best you can expect to do in your market? If you can get a 100,000 Sofi loan, you must be doing very well personally. Try thinking outside the box in RE. My friend bought a 2000sf house in NJ for about 200k all-in near a college and gets $5000/mo (owner pays utilities) renting by the furnished bedroom to working professionals. borrowed 100% of the money at 7% from friends and family. So after taxes (600), utilities (900), and interest (1200), there’s still $2300/mo of cash to pay towards additional rehab / beautification and/or paying down the loan. Now this is more management (higher turnover) than a tenant who might stay in your house for the next 6 years, but could the cash flow be worth it?

@Jeremy England I just refinanced my rental. I also wanted to go with a local broker but their fees were high. I ended up going with Better.com, which partners with BP. Their fees are low and I believe you get a $500 credit through BP. The entire paperwork process was done online and was very smooth.