All Forum Posts by: Jon Rylander

@Vincent Guerrero

I would be careful doing that.  If you use a hard money lender to buy a rental and dont have the refi already set up it could bite you.  you could be stuck paying 10-15% interest on the loan and most hard money lenders only lend short term (6 months - year normally). 

I am looking to use Hard money to fund a deal.  Has anyone heard of or used Source-Capital  the website is Source-capital.com it is founded by Sacha Ferrandi.  I just want to make sure this is a company I can trust and i would like to hear any experience people have had with this company.

@Sean O'Connor

 $970 a month was the standard w/o utilities.  So if the tenant pays utilities then would section 8 deduct a fixed amount every month from the $970?  one of the units is a 3 bedroom so i figured if i ran the numbers with both units being two bedrooms I would have some wiggle room.  Do you set your own rent amount and if it fits within the voucher then thats what they will pay or does section 8 have full control of what the rent amount will be??

This will be my first rental so sorry for the newbie questions

@Dan B.

 @Michael Germinario

 I tried to mention from my phone but it didnt work

Thanks for your comments that helps

thanks for the input guys. @Dan B. @Michael Germinario @oren karp No I am not an experienced landlord but I have a pretty good understanding of the hassle factor. My  girlfriends brother is a property manager and has made me aware of the hassles. Yes the utilities could be paid by the tenants and from what I understand section 8 would subtract a fixed amount according to what utilities the tenant is responsible for so yes my cashflow would be higher. I try to be really conservative with my numbers so when that surprise comes up (notice I said when and not if) I will have some extra funds. 25k for rehab is the worst case scenario. Thanks again for all the help

Hey BP, Need a little help here

Let me know what you think of my numbers.  Am i leaving anything out and would you guys go for this deal or turn it down and why?

I have a duplex under contract in East St. Paul MN that I would like to rent to section 8.  Section 8 will pay $970 a month for a 2 bedroom unit.  One of the units is a 3 bed but to be safe ill just keep it at the 2 bed price

Here are the #'s

Purchase price = $85,000 Down payment (25%) = $21,250 Rehab = $25,000 Closing = 3000 ARV= 115,000 - 125,000

out of pocket expenses = $49,250

Total investment = $113,000

Gross monthly income = $1,940

Monthly expenses:  Utilities = 400   Vacancy (10%) = 194   Insurance = 100   Property tax = 167   Maintenance = 200  Maintenance reserves = 200  Management (myself) = 100   Principle & interest = 328

Total monthly expenses = $1,689

Monthly Cashflow = 1940 - 1689 = $251

Annual gross income = $23,280   Annual expenses = $20,268   Annual cashflow = $3,012

Cash on cash return = 3012 divided by 49250 = 0.061 = 6.1%

ROI = 3012 divided by 113,000 = 0.027 = 2.7%

Using the 50% rule this works 1940 / 2 = $970 - P&I $328 = $642

Using the 2% rule this works 1940 / 85,000 = 2.3 % or would i use 1940 / 113,000 which almost meets the 2% rule at 1.7 %

Thanks Guys!

@Travis Sperr, @Jeff Rabinowitz

Thank you guys for clearing that up for me. I wasn't sure if the whole cash offer thing was possible. Does anyone have examples of how they used HML to finance their deals? Good or bad experiences with them, mistakes that were made, or success stories?

Thanks for all your help

Thanks for the reply Andy 

 I have done some research on pine financial group and red dirt lending and they will only lend to you or take an application if you already have the property under contract which I assume means have a signed purchase agreement. So wouldn't I need proof of funds before I can make an offer especially when trying to make a cash offer?  Are you able to make cash offers or is it more like a conventional loan from the lender?

Does anyone know of any private/hard money lenders that will lend to Minnesota that can make this possible?

Jon Rylander

Hey BP members any advice is greatly appreciated.

I've looked on the forums and blogs but can't seem to find the answers to my questions.

I want to build a business of owning rentals and doing fix and flips here and there. 

I live 10 minutes outside of St. Paul MN, my Dad is an experienced contractor and I will have my RE license in about a month so I know with my resources and the market i'm in this can be done.

I am waiting for 2 short sales to go through right now and the banks are taking their sweet time. Both of those needed a 20% down payment which I have from the previous flip I did (these 2 short sales will be buy and holds) but after those I won't be able to make another 20% down payment for a third investment property. 

I would like to use a private/hard money lender to help me fund future deals but all of the hard money lenders i've researched require you to already have the property under contract. What I would like to do is market alot by doing direct mail, driving for dollars, ect.. and be able to use a HML so I can offer cash to these sellers. Obviously it has to be a great deal and I understand most HML will only finance 65%-70% ARV which is fine. I will be looking for distressed houses that need work.

Does anyone know how I would go about making this work or any HML that would provide PROOF OF FUNDS available in my name so I am able to make CASH offers on these houses?? I figure if I am able to offer cash I would be able to get some deals a little cheaper.

Please let me know if I'm dreaming and this isn't the way it works. I'm still new to this and am very determined to learn all I can to build my Portfolio.

Correct me if I'm wrong I'm still pretty new at this stuff but the 50% rule says 50% of gross rent income goes towards maintenance while the other 50% goes to pay off the loan/mortgage.  Wouldnt you be buying the house with cash then and not having to pay down a loan from a bank? so using the 50% you would be left with $600 (no mortgage in this case) to pay the investor every month? What would be a reasonable return for the investor in this situation where you have their money tied up for years?