All Forum Posts by: Joe Davis

Why not go straight to purchase if you can? Private capital is not going to allow this to be owner occupied. Essentially you will be breaking the agreement you have with your HML if you move in. $10k sounds very light in repair, do you not think the property would pass for going straight to conventional and avoiding two sets of closing costs?

Secondly - your refi would have to be conventional. if you had a tenant/lease in place would be easy to get the DSCR refinance on it, but as it's going to be your primary it wont.

 Are they going to wrap the 5 points into the loan? Make sure that's the case otherwise the 5 points might equate to more than the 10% down and 2 points. Also - love Memphis, great rental market. 

I would avoid going for 100 & 100 if 5 points.. As a lender, we do 90 & 100 - but only 2 points, it's going to balance out better in my opinion. 

So 70% Loan To Value (Max) and 90% of Purchase and 100% of Rehab.

Let's say your ARV is $300,000 and your purchase is $170,000 and your rehab is $60,000

Initial loan (90% of Purchase) = $153,000

Rehab (100%) = $60,000

Total Loan = $213,000 requested. 

70% MAX of $300,000 = $210,000 - So we would adjust the loan to this. 

Your biggest concern will be the amount of the loan, and ensuring the properties are not considered rural. Mostly this will apply on the DSCR/Refinance as almost no lender will cover what they deem "rural" and most have a $75k minimum loan (although some will do $50k).

I would always just be cautious to confirm the "Exit" before you get into the deal. If you have a clear path on stablizing long-term AND good property management (those areas can be tough) you can make it work great! 

Hey Caleb, I am located in Houston - have been an agent here, a wholesaler, flipper/buy and hold guy and now solely lending. We do local hard money loans and DSCR refinances so i know the market well.

It is too broad to give a price per sqft. there are too many variables. Best bet is to get your GC to quote the job before offering, and never rely on calculating your rehab cost purely on size or level of distress/sqft.

If you need some recommendations on contractors here - send me a message.

Essentially what you are asking is to be leveraged 100% against your property? That is not going to be possible unless you can get a line of credit. No lender is going to give you 100% of value, especially on an investment property. 

 I have thought about that, and they have done that with some bank owned properties (written it in the deed). But i think that will be much harder to enforce. Imagine all the homeowners who are closing their primary to get into a new one - would throw the market in disarray. 

Interesting take on the 20% and guess it makes sense. As a lender, we do not particularly care how much a wholesaler is making as long as the deal works, but a lot of the institutional money does. 

On our double-closings, our title company actually does not make us pay title policy on the purchase, passing it over to the backside buyer which is generally the biggest expense. They also don't charge us an escrow fee, but yes double closing does cost more.

Really i think wholesalers in various states need to have it in their back pocket - as we are seeing states become more bureaucratic with wholesaling and non-licensed parties'. In my opinion double-closings is going to be the future, i cannot see how they can legislate something you technically own. 

Hey BP'ers,

We have always used transactional funding for our "frontside" contracts ensuring we don't need to assign a contract or use the and/or assigns verbiage on the contract. We have always felt that it shows a stronger offer if we do intend to wholesale it instead of keep or flip the property. 

Now as a lender we offer this service to wholesalers - however I find the large majority of you still assign. 

What is the general consensus of states such as Oklahoma, Illinois, New Jersey etc. changing the legislation to make it harder to assign contracts? How have you circumvented this, and what will you plan on doing in the future if assignments are still your chosen method?

Likewise, if you are wholesaling in this states and you are not licensed - how to you intend to continue?

Aaron, as a lender of both HML and the 30 Year DSCR refi i can answer your question here.

The most common Hard Money product we have is 90 & 100 up to 70% of ARV. So, Let's say the Appraisal (this is where we get the ARV number comes from, we don't just agree on it) comes in at $200,000 - Our Max is going to be 70% ($140,000)

Let's say you bought this property for $110,000 and have a scope of work for $40,000

Our loan is 90% of the purchase price ($99,000) + 100% of the rehab ($40,000) Totaling $139,000

Total Hard Money loan is $139,000 you have 10% of the purchase price and closing costs as "Skin in the game". 

Back of napkin math, with ALL of these factors considered, title/closing costs etc. you would be bringing around $20,000 to get these deal funded at close. 

Now - once you have owned it for 90 days (best to season a little for rates) you would use a commerical loan (dscr) which yes is going to be a commercial loan and would need to be within an LLC. It is much easier to get than a 30 Year conventional, but keep in mind the most important number on this is NOT the value of the property, but rather the rent...or the ability for the rent to cover the debt service (Principle, Interest, Tax, Insurance) monthly.