All Forum Posts by: Joseph Dasmerces

This can also be avoided when you are working in advance to fill months vs trying to slash your rates and fill at the last minute 

Hey @Joseph Dasmerces, you don't want the dregs using your house. You have to find the balance.

Post your listing so we can get a look at it.

Are you also on VRBO?

1% is a useful screen criterial for evaluating cash flow properties.  It is a quick and easy way to sort through a bunch of prospective properties.  If you see a $400k property that rents for $2000/month move on.  It isn't going to cash flow.  Don't bother running the in depth numbers because it just isn't going to cash flow positive.  If however it is close to 1% then it is worth taking a closer look.  June year we closed on a 10 unit complex that was 0.9% that is cash flowing nicely.

Don't believe the nay-sayers that 1% deals no longer exist. I closed on a 2%+ deal in April. Our overall portfolio average is 1.6%. In todays market you are going to look a little harder. Off-Markers deals not on the MLS. Or tertiary markets outside the major markets in the path of progress.

Hey Joseph,

I deal strictly with the construction loan (Hard/Private Money) side so I can shed some light on possible terms/ expectation but Given your strong ties with your local bank, it would be wise to consult a loan officer for tailored advice. They might have specialized products for flippers or even suggest a combined approach.It's also valuable to discuss the pros and cons of finalizing the deal under an LLC or Corporation, considering both tax implications and legal standpoints.

Rehab/Construction Loan:

• - Most lenders offer between 85-90% of the purchase price and cover 100% of the rehab funds.
• - Rehab funds are typically escrowed, and you'll operate on a draw/reimbursement system. - --- You'll only pay interest on the rehab funds as they're used.
• - Interest rates generally range from 9.5-11.5% (interest-only) over a term of 12-18 months.
• - These loans are often granted to an LLC or Corporation rather than an individual.
• - Unlike traditional loans, Hard/Private money lenders don't base their qualifications on DTI. - - They also don't require tax returns, income verification, or extensive bank statements. --- ---- Moreover, credit checks are typically "soft" pulls for such short-term loans.
• - The average closing timeframe is around 14 business days.

Refinancing Considerations:

• - If you intend to transition the property into a rental, be mindful of the seasoning -requirements for cashing out, especially if you’re switching from a construction loan to a traditional one.
• - Some lenders offer a DSCR loan right after rehab completion, while others might stipulate a 3-6 month seasoning period before allowing cash out. It's my understanding that most traditional loans require a 12-month seasoning before cash-out refinancing. However, I'd appreciate any corrections or clarifications from other members on this point.

Traditional Financing:

• - Interest rates are typically lower than construction loans.
• - There might be no provision for extra renovation funds. Consequently, you may need to -allocate a considerable portion of your $150k towards the down payment and renovation.
• - Might have a hard credit pull, and qualify more on DTI (needing more paperwork)
• - Might require a higher down payment