All Forum Posts by: Josh H.

This question seem pretty naïve for someone that's flipped about 30 houses. 

The answer is no. The auctions are just as dry as the MLS and wholesaler deals. What ever you're doing to find/buy/create deals is working. Keep doing it.

PS; What ever I'm doing isn't working because we haven't bought anything. 

The entire, “What should I call myself as a lender?” has been around forever and solves nothing. More concerning, @Josh H., is you’re splitting your profit 50/50 with a partner and suggesting hard money is for suckers?? Do you run the numbers for each deal? Do you really know the cost of your financing options? Hmmm.

We run a detailed evaluation of each scenario and find that most house flippers only estimate their final profit and don't know all their true costs. It's easy to show that for a typical Private/HML loan, where rates are in the 11% /2pt ballpark, the P/HML will take approximately 25% to 33% of the profit. You're freely giving away 50%. This could be worth it if your investor were adding value beyond providing the money. You indicate, however, “We do all of the work and management…,” so I have my doubts.

You’re also making assumptions about service with little apparent basis. P/HMLs run the gamut from disinterested brokers who might arrange a loan for a fee and then disappear, to the giant mega P/HMLs that are more concerned about keeping their Wall Street investors happy, to smaller lenders who lend their own money and actually care that you make a profit. All provide a service, but it sounds like you’re looking for the last type.

The website you referenced is nothing more than a referral site -- and a bad one at that. (Most of the links don't work.) Like that on BP, Scotsman Guide, AAPL, CMA, NPLA, and so on, referral sites like these are a dime a dozen. You're not looking for a list, are you? Face-to-face is the way to meet small service-based lenders, Josh, and real estate clubs are the most efficient way to find them.

I know everyone gets tired of hearing it but lending really is a business based on relationships. If you must squeeze the last tenth of a percent out of a loan to make money, which you don't, I suggest you need better deals. If you’re looking for service over the course of a loan, for example, if you have a problem and need an accommodation, then you need someone who cares. Smaller lenders like us (and @Jay Hinrichs), who lend their own money professionally, are your best bet. You won’t find these on a referral site. Nor will these people care what you call them.

 Hi Josh,

I'm interested in structuring a deal with an investor much like you mentioned in your post. Do you split the profits 50/50 or does it vary deal to deal? I've never entered into a real estate partnership and would like to make it a win win for everyone involved. Thanks in advance.

PS since I work as a capital partner just like the guy your using now. there is huge benefits compared to borrowing from HML or PML.. the benefits are basically if the deals start to wobble you have much more flexibility to work them out with your capital partner then U do a HML PML who wont show you the same flexibility.. mainly because they cant they are tagging their wholesale lines and there are rules for using them that your simply not aware of as the end buyer but will become very aware of if a deal cant be paid as agreed for any reason. And also not a dig on Brokers but Brokers can basically offer zero help in most instances if your having issues.. they get paid to close the loan then are out of the picture they have no authority to do workouts or modify terms etc U would be working with the actual lender then..

So you have a team in place , subcontractors that do the work , you have done 30 houses , so you know the construction game . No houses to flip , no big deal . You are basically a General contractor as I write this .  Get your Home improvement licenses in the DMV areas .  Become a contractor . You wont have to touch your funds , the customers money funds the projects . 

You will make more as a contractor with minimal risk ,