All Forum Posts by: Josh West

I am looking to build a team for a potential future project in my home town. The project I am thinking about is to transform the use of an already existing building; it's the planning stage and I would like to start reaching out to the various parties that need to be involved. I have never done anything like this before so any advice is greatly appreciated.

Thank you, BP!

@Bonnie Low I do have an opportunity to use private money in the future but it would be under similar terms as a HML, making it only a bit of a better option. Thank you for the help though! For this situation, I would have wanted to refi and use the added value to pay back the HML, but as I thought about it more, it didn't seem like a viable solution if the property was purchased around what its actually worth. Do you know if people use HML on properties that are on the MLS? I just can't seem to wrap my head around how using a HML would be a benefit in that case.

I am not, just a quick back of envelope you could say, trying to flesh out my thought process on how this would work. What I'm gathering now is that a HML would only work well if the property is bought for significantly less than comps, which would allow you to have equity because the ARV increase more than the amount put in for rehab, right?

@Julio Garcia

Thanks for the info! What about if the lender was a family member, would my original thoughts still stand?

I have been looking into how hard money will work with a BRRRR deal and have watched videos of people using none of their own money after everything is all said and done, which is the point right? I included an example scenario that I have been thinking about and would love help narrowing down any mistakes so I can better understand everything. Maybe I am overthinking this but I feel like it would be better to just save up enough money to do a deal like this alone since it seems like you'll be spending the money either way.

Example scenario: Buy property for 500k, 20% down with 50k for rehab over 6 months until it is able to be refinanced. Lender wants 10% return so they would need to be paid back a total of $179,428 after the 6 months if they also covered the mortgage since no rent would be coming in due to 100% vacancy. Let's say the ARV is $550,000 since 50k of rehab was put into the property. The refi will be 70% of the ARV, so $385,000 for the new mortgage. This is where I get confused and would like help to determine the equity in the property. From what I think I understand, you would have 50k in equity but in order to pay back the lender, you would need to put in $129,428 of your own money, $179,428-50k equity.

Questions: 

Is it normal for the hard money lender cover the mortgage cost for those 6 months? I understand the ARV aries by location but I can't seem to understand how it would appraise for enough money to be able to pay back the lender without putting any or very little of your own money into the deal. Does this usually work if the loan is conventional and the downpayment is is significantly less so the amount you have to pay back could be covered by the refi? Is this usually reserved for off market deals where the price of the property is significantly less than market rat so the ARV is a higher percentage of the purchase price?

Thank you for any help! 

@Sonya Habibi

Welcome to BP Sonya!!

That's what I have found too! I so wish I could wake up that early and conquer the day; lately I have been trying to wake up before 7, the darker mornings now make it much harder 😅! I hope to be able to do that someday, right now though, my early mornings are reserved for pow days at the ski hill!  

I have heard of the book, but haven't read it yet. I really enjoyed Digital Minimalism by Cal! 

Wow, that sounds like a great app, I tried having my phone on "do not disturb" but found that I would forget to respond to notifications that were important sometimes. I hope it's available for iphones!

Thank you!