All Forum Posts by: Jeremy James Hartman

In my area the county assessor site has a tab/link to the treasury / tax history.  Pull the property up by address or parcel # on the county site. 

@Jeremy James Hartman yes

@Guy Pierre  First thing is to get your finances in order.  Go to a bank and talk to them about mortgages, so you know what your options are.  You will need more money than just for the down payment.  You will have closing costs and if you are buy a home to use as a rental, you need to have enough reserves to cover repairs and vacancies.

It seems like this is an impossible task with both limited funds and time. I work full time and with a kid in day care, how do you have the time and money to buy, rehab, and rent a multi family building?

What’s the best way to become financially independent?

I’ve been reading books and listening to podcasts and analyzing properties but I feel I should be during more but I don’t know what. I know I need an agent and loan approval just don’t know where to begin.

Are you a first time homebuyer?

@Jeremy James Hartman,

I see that you said you're new to this, so let's walk through your numbers (I'm assuming you are correct for this example)...

Purchase Price is $65k.

Rehab is $10k.

Total investment = $75k.

ARV = $100k.

1. A bank won't likely lend on this because it needs repairs. This means that you're not going to get a home loan (regular home loans are for people who live in them, not people who flip them). So, you'll need to talk to a hard money lender or a private lender to get funded.

2. With an ARV of $100k and you're all in investment of $75k, you're over the 70% rule (75/100 = 75%). It's extremely rare to find anyone willing to go past 70% on a flip. Assuming you can find a lender who is willing to give you the 70%, that means they only gave you $70k. You will need to bring $5k to the table to get the deal done (and that's not taking into account any down payment requirements, closing costs or other fees you will likely need to pay when you buy it; I'm guessing you'll be closer to $10-15k out of pocket).

3. Your math has an error in it. You said that you could pull out $35k after. On the surface, you're looking at a $25k profit. However, this is not a real number. NOTE: This is not a full & complete analysis... If you list the house for sale at $100k, you're going to incur 6% in commissions to the realtor. You need to plan for some concessions (I know it's a hot market and you may not have to conceed anything, but a $10k rehab isn't going to make the house super nice unless it's already super nice; it's not enough money to really make the place pop). I'd plan another 4% for that. Then, you need to plan for closing costs. It depends on what part of the country your in, but let's just say it's 1%. Then you have some carrying costs that you incurred while you held onto the property (taxes, insurance, utilities, etc.). Let's say that's another 1%. Then, you have interest costs from the loan you took out. For sake of simple math, I'm going to assume you got a smoking hot loan at 6%. I'm also going to assume that it took you 6 months to get this project done and off the books. If it takes you 6 months, that's half a year, so you'd pay half of the 6% for a 3% cost to the project. If I stop right now, I'm at 15% in costs. That 15% in costs equates out to $15k in profit you won't get. So, if I deduct the $15k from the $25k I thought I was going to make, I'm down to $10k. That's not a lot of profit at all. As a matter of fact, it's so small, the likelihood of it being real is unfortunately in the toilet. Something will go wrong. Your rehab is likely to go over budget. Every dollar you go over budget, reduces your profit. This is not a good deal. You need to buy it at a much steeper discount than this is you want to make money with little risk of losing any.

This is a very thin deal. If you told me you were buying this at $50k and it needed $20k of rehab, it would start to sound a lot closer to a real deal where the numbers may work (although, in my opinion, a 70% LTV on a low price property like this is very high risk to you as the buyer/borrower). I wouldn't go above 65% if it were me. If I can't get it for the price that I need for it to work, I'd move on.

It's difficult to give you all the details you need to succeed and analyze a deal in a message. But, I would strongly suggest that you use the deal analyzer that is built into BP; it's a great starting place.

You made a comment about how it looks like it's easy to find money. It can be. If/when you have a really good deal, it'll be easy. When you have a deal that you only think is a good deal, it will get turned down (no one ever presents a deal that they think is a bad deal).

Good luck. I truly hope you can find a really good deal.

As a heads up...you don't want to post on a public forum anything that might look like a solicitation for funds for an investment unless you have the proper SEC filings. I've heard of people running into trouble for less. I'm actually surprised BP didn't delete the post. 

You'll also want to brush up on your vernacular before you talk to any lenders. It needs rehab so hard money makes sense, but what do you mean it's a repo? It's been foreclosed and is an REO (owned by the bank)? 10K is a low rehab expectation and many will doubt it will be enough coming from a new investor for a foreclosed home. You say you'd fund it with a "regular home mortgage" but later mention a hard money lender so which is it? You're also talking about a loan of greater than 70% ARV and 10% down which are both stretches for a new investor. I'd say your best bet would be to get on a phone with a lender and talk through the proposed situation so they can give you an idea of what you are looking at and how much it's going to cost.

@Jeremy James Hartman,

I see that you said you're new to this, so let's walk through your numbers (I'm assuming you are correct for this example)...

Purchase Price is $65k.

Rehab is $10k.

Total investment = $75k.

ARV = $100k.

1. A bank won't likely lend on this because it needs repairs. This means that you're not going to get a home loan (regular home loans are for people who live in them, not people who flip them). So, you'll need to talk to a hard money lender or a private lender to get funded.

2. With an ARV of $100k and you're all in investment of $75k, you're over the 70% rule (75/100 = 75%). It's extremely rare to find anyone willing to go past 70% on a flip. Assuming you can find a lender who is willing to give you the 70%, that means they only gave you $70k. You will need to bring $5k to the table to get the deal done (and that's not taking into account any down payment requirements, closing costs or other fees you will likely need to pay when you buy it; I'm guessing you'll be closer to $10-15k out of pocket).

3. Your math has an error in it. You said that you could pull out $35k after. On the surface, you're looking at a $25k profit. However, this is not a real number. NOTE: This is not a full & complete analysis... If you list the house for sale at $100k, you're going to incur 6% in commissions to the realtor. You need to plan for some concessions (I know it's a hot market and you may not have to conceed anything, but a $10k rehab isn't going to make the house super nice unless it's already super nice; it's not enough money to really make the place pop). I'd plan another 4% for that. Then, you need to plan for closing costs. It depends on what part of the country your in, but let's just say it's 1%. Then you have some carrying costs that you incurred while you held onto the property (taxes, insurance, utilities, etc.). Let's say that's another 1%. Then, you have interest costs from the loan you took out. For sake of simple math, I'm going to assume you got a smoking hot loan at 6%. I'm also going to assume that it took you 6 months to get this project done and off the books. If it takes you 6 months, that's half a year, so you'd pay half of the 6% for a 3% cost to the project. If I stop right now, I'm at 15% in costs. That 15% in costs equates out to $15k in profit you won't get. So, if I deduct the $15k from the $25k I thought I was going to make, I'm down to $10k. That's not a lot of profit at all. As a matter of fact, it's so small, the likelihood of it being real is unfortunately in the toilet. Something will go wrong. Your rehab is likely to go over budget. Every dollar you go over budget, reduces your profit. This is not a good deal. You need to buy it at a much steeper discount than this is you want to make money with little risk of losing any.

This is a very thin deal. If you told me you were buying this at $50k and it needed $20k of rehab, it would start to sound a lot closer to a real deal where the numbers may work (although, in my opinion, a 70% LTV on a low price property like this is very high risk to you as the buyer/borrower). I wouldn't go above 65% if it were me. If I can't get it for the price that I need for it to work, I'd move on.

It's difficult to give you all the details you need to succeed and analyze a deal in a message. But, I would strongly suggest that you use the deal analyzer that is built into BP; it's a great starting place.

You made a comment about how it looks like it's easy to find money. It can be. If/when you have a really good deal, it'll be easy. When you have a deal that you only think is a good deal, it will get turned down (no one ever presents a deal that they think is a bad deal).

Good luck. I truly hope you can find a really good deal.

@Jeremy James Hartman,

I have to agree with @Hai Loc. It's not that you asked to borrow 20k. It's the way you asked for it. Not providing any details doesn't help us or you secure those funds. You very well may have a great deal that's worthy of funding. Can you provide details? If it's a good deal, I'm sure someone will want to help.