All Forum Posts by: Jim Pintchuk

I'm considering offering Hard Money loans. I need to develop a good contract. Should this be a note or dead of trust? I am looking for a Good Realestate attorney to help me work this out. Vetting out the property (in Northeast Ohio) seems easier than vetting out the borrower. Say I do 10% and 2 points on a $50k property, $20k Reno budget and and ARV of $100k. That leaves the borrower 30% to pay me and other holding costs etc. I am thinking the borrower should also have skin in the game and put up at least 20%. That way my rates can be a little lower but I have extra protection in case the flip goes badly. I have also been told I should be the first Lien holder. If the flip goes badly. Say a contract puts a lien on the property. I believe if I am first lien holder (files first) that I get paid first. If the money runs out whoever is last lien holder doesn't get paid. Any feedback or suggestions for a good local Realestate Attorney would be appreciated.

I am a newbie trying to find my first SFR to rent. We may buy my sons house with cash equity from my house. The house would cost about 100k. Say we rent it for a couple years and apply for a commercial LLC mortgage w 75 or 80% down. Unless I own several properties I don't see much income especially after deducting depreciation. 1. How does a newbie with one or two properties qualify for a commercial loan? 2. Assuming commercial would be possible, would it be better to borrow at the higher rate and have the ability to claim depreciation or go with a non owner occupied mortgage. I could claim the mortgage interest I think. Commercial looks like rates are around 6.5. Non owner occupied is about 5 - 5.5%. Residential 30 years about 4 %. 3. Option 3 is tap some of my retirement pension tax deferred IRA. Convert to self managed Roth and pay cash. I could only do that for a few properties though. I can would like to have the protection of the LLC but it look like that may not be possible if the LLC can't buy houses. I appreciate all the expertise on BP. I appreciate and suggestions.

My Realestate attorney told me Sheriff's Auctions will clear any liens and I should have no concerns about liens.

Hi Mario I am a newbie in Geauga County. I am also a licensed Electrician in Geauga County. I am interested in your group. Thanks for the interesting post. How would this work for a contractor to increase their market share thru this group?

I am interested also. I am debating paying for a title search b fore bidding to ensure there are no liens on the property.

BRRRRR Multi Family

In my area the home owner can pull permits even for non owner occupied investment property, 3 family or less. Four family and above are commercial. I like to act as my own GC General contractor. I understand the risks of my pulling permits and not the contractors. I know several of these contractors well and have workers with them in the past. I draw permits, money is held back until their work passes inspection. I get better contractor prices, this works for me.

I have been watching Northeast Ohio listings and jumped on my first potential deal, a 3 family bank foreclosure. They just dropped the price by $15k to $60k. I saw the house today. The good news is, it's a zoned 3 family in a nice neighborhood. It has a total of 4 bedrooms 3 full baths and a 2 car attached garage. All separate entrances and separate metered utilities - except water. The basement has a kitchen one bedroom one bath, unless I convert the attach garage to a master bedroom suit. People like the garage in snow country - not sure. The First floor has a kitchen, one bedroom one bath and second floor small one bedroom one bath no kitchen. This area rents a 2 bedroom for approx $700. Taxes are $2200 a year. The foundation and exterior are pretty good for a house built in 1908. Except it needs a roof. With laundry, the garage and a nice rehab, I should easily be able to get $1100-1200 month in rent. 
 The bad news is it pretty much a total gut job. Bad floors and walls in multiple places. A bathroom was stolen. Boiler heat with most of the piping missing. I think it should be fully gutted. If we go with High Efficiency Gas furnaces and duct work I can take out two chimneys and greatly improve the layout. It's a if expense.
My son and I (partners) made a verbal low ball offer significantly below the $60k asking price with $10k cash earnest money. My only contingency will be title search. I should hear back from the bank via the real estate agent early next week. I worked on my comps which are scarcely available in my area. Best I can guesstimate without better comps is the ARV should be around $120k maybe a little better. I'm trying to be conservative. Best I can figure my reno costs are around 60k. Multiple furnaces, a roof, three full baths and two kitchen remodels. When it's done we should have a small equity or break even and have virtually a new place with few problems and good rent potential.
If we mortgage, after rehab for $120k, with 20% down my payment will be $454 mth @ 3.9%. Even at $1100 a month that should leave plenty of room for taxes, repairs, and 10% or so vacancy to still turn a profit. Holding costs for a year during the Reno, with no renters should be about $10k. So, even if my rehab cost goes higher than expected, my long term cash flow from this property should be reasonable. We will do a lot of the work ourselves. I am a licensed Electrician. At least with a full Reno you don't have manny hidden surprises inside the walls. Sorry for the long message. Bottom line is I think this is a great location for us but a marginal deal. I'm willing to pay somewhat more for a multi unit place, in my area. They are few and far between. If they reject my lowball offer I probably won't come up much, if at all. Any advise from you, my new Bigger Pockets friends, would be greatly appreciated.

I made an offer on a full gut 3 family in Northeast Ohio. Alll electric and gas are separate. The heat is separate boilers which have had piping stolen etc. Switching to gas finances and putting in all the duct work is a huge expense. I was thinking of insulating really well and going with the electric heat. Possibly all electric so no gas bill. Some people actually prefer electric if the bill is not too high. I understand the AC and potential problems if they lose power for an extended time but the cost difference with the duct work for a 3 unit is huge. Thanks for your feedback

Thank you for the warm welcome. As suggested I have been reading and listening to podcasts to educate myself. Now, it is time to ask for your input. I have been watching listings in my area and jumped on my first potential deal, a 3 family bank foreclosure. They just dropped the price by $15k to $60k. I saw the house today. The good news is, it's a zoned 3 family in a nice neighborhood close to my house. It has a total of 4 bedrooms and 3 full baths and a 2 car attached garage. This area rents a 2 bedroom for approx $700. Taxes are $2200 a year. The foundation and exterior are pretty good for a house built in 1908. Except it needs a roof. With laundry, the garage and a nice rehab, I should easily be able to get $1100-1200 month in rent, total. The bad news is it pretty much a total gut job. Bad floors and walls in multiple places. A bathroom and furnace were stolen. Boiler heat with most of piping missing. I think it should be fully gutted. If I go with High Efficiency Gas furnaces and duct work I can take out two chimneys and greatly improve the layout. My son and I (partners) made a verbal low ball offer significantly below $60k with $10k cash earnest money. My only contingency will be title search. I should hear back from the bank via the real estate agent early next week. I worked on my comps which are scarcely available in my area. Best I can guesstimate without better comps is the ARV should be around $120k maybe a little better. Best I can figure my reno costs are around 40-60k. Multiple furnaces, roof, three full baths and two kitchen remodels. If I mortgage, after rehab for $120k, with 20% down my payment will be $454 mth @ 3.9%. Even at $1100 a month that should leave plenty of room for taxes, repairs, and 10% or so vacancy to still turn a profit. So, even if my rehab cost goes higher than expected, my long term cash flow from this property should be reasonable. Sorry for the long message. Bottom line is I think this is a great location for me but a marginal deal. I'm willing to pay somewhat more for a multi unit place, in my area. They are few and far between. If they reject my lowball offer I probably won't come up much, if at all. Any advise from you, my new Bigger Pockets friends, would be greatly appreciated.