All Forum Posts by: Kenneth Garrett

@Enrique Roth

In my opinion the half doesn’t do much for value, but it does in appeal to a tenant.  If you were to add a full bath room that would be a better investment.  I always liked to buy two bedroom homes with enough square footage to add a third bedroom.  That’s when you can get a lot of bang for your buck on the ARV side.

@David Switzer

The ADA Guidelines do allow a steeper slope than 1:12 if the site conditions of an existing building can meet the criteria. The goal is to make things as close to accessible as possible. Your state may have additional requirements as well.

Best of Luck.

When I have a tenant sign a lease they also sign a document for the cost of repairs when the lease ends.  Normal wear and tear is painting.  Actual holes in the walls are additional.  You have to follow your state laws on this.  The lease documents should include all information.  I also provide a move in sheet the tenant fills out if there are any defects in the house.  I use this to evaluate damages.  Take pictures of all damages and send them a record of all damages and deductions from security deposit.  I do not send them pictures only the final document and a return of their security deposit if anything is left after the deductions.

@Raj G.

Default Interest rate is a different rate than the original loan terms because the borrower didn’t repay the loan per the loan terms. That could 12 months or whatever you agreed to provided it’s in writing. Here is the language from the note I use.

B. Default. If Borrower does not pay the full amount of the principal and interest on the date it is due, Borrower will be in default. In the event that Borrower is in default then the interest rate will increase to fifteen (15%) percent per annum from the date of the default to the date that the default is cured or the loan is paid off in full, and Borrower will be assessed an additional loan fee of 2% of the principal amount.

I would recommend always use an attorney to draft your documents and use a title company to close. Documents need to be recorded so in case there is a dispute you followed the legal process.

@Khandbari Rai

I have been self managing my STR in an area that is highly competitive. The cost of hiring a property manager is very costly. Find a reliable cleaner and a handyman and your set. It takes a little more work, but it's not that difficult.

Best of Luck.

Quote from @Shaunta M.:

Hi everyone i purchased a property and found out from the tenant that all of the windows are sealed shut. I’m not sure if this was done on purpose or because they had been repainted and dried shut over the years. The tenant says she had someone to break in the front window recently but for reasons unspoken I feel like that may have been someone she knew that couldn’t get in she has a family member staying with her. However, should I replace all of the windows in the house? I’m concerned that it’s a fire or safety issue? 

All windows are required to operate per the building code.  Bedrooom windows are considered emergency windows.  I would repair the windows so they operate.  You could replace them on a replacement schedule.  You don’t necessarily have to replace them all at once.  Old windows will be a maintenance problem.  If there sealed shut it makes me think your location of the property is in a rough area.  I only invest in C+ or better areas.

Quote from @Dominic Richardson:

If you are a PML or Money Partner, what do you look for when someone brings you a "deal"?

Is it Cash Flow, Cap Rate, COC, all three or something else?

If it's cash flow, what is the target amount? 

If its COC return, what is the target?

I understand everyone looks for something different in a deal. But I want to set some parameters when I analysis a property based on  your feedback, so when I find a deal its more appealing when I present it to a PML or Money Partner. 

Thanks in advance! 

I typically lend on fix n flips and BRRRR projects, quick turnaround on my money less than 12 months is the goal.  Track record of operator is critical.  I analyze the deal to make sure it looks to be a successful project for both of us.  I will take first lien position.  All documents are recorded.  Interest rate 12% plus 2 points.  

Quote from @Sarah Reece:

Quote from @Kenneth Garrett:

@Sarah Reece

To be a private lender you need to be able to analyze deals. Is the borrower a flipper, BRRRR investor or rental investor? The type matters and their plan on acquisition and exit strategy. Typical documents are a mortgage or deed of trust (depends on your state, I believe Washington is a deed of trust state), and a promissory note. You are now the bank with all the protections of foreclosure procedures.
 
I always have my attorney prepare the documents.  Analyzing the project is critical.  Success of the borrower.  How many homes have they flipped? Tell me a project that went off the rails and how did you get it back on.  It all about what if something goes wrong.

Best of Luck.

That makes total sense!  How did you develop your methodologies of analyzing? Was it basically trial and error or did you go in with a documented plan?

in a previous life I was a mortgage underwriter, so I have*some*knowledge, however I was borrower focused and need to change to be asset focused.

@Sarah Reece

I had completed many BRRRR projects and flips myself before I started private money lending. My method of funding my own projects was using private lenders, so I knew the process fairly well. You have to treat it like you either you borrowed money from your grandmother or lent money to her. Protecting your interest as well as the borrower is critical. If the deal is not a good one where the borrower will not be successful don't lend to them. Find someone with a good track record. I did almost everything at my local REIA club.

@Sarah Reece

To be a private lender you need to be able to analyze deals. Is the borrower a flipper, BRRRR investor or rental investor? The type matters and their plan on acquisition and exit strategy. Typical documents are a mortgage or deed of trust (depends on your state, I believe Washington is a deed of trust state), and a promissory note. You are now the bank with all the protections of foreclosure procedures.
 
I always have my attorney prepare the documents.  Analyzing the project is critical.  Success of the borrower.  How many homes have they flipped? Tell me a project that went off the rails and how did you get it back on.  It all about what if something goes wrong.

Best of Luck.

I completely agree with @Michael Baum I prefer to have guests who have previous positive reviews, but I will accept first timers.  It is somewhat of a gut feeling.  I usually rent to families, but there are times where it’s a bunch of friends.  I also have the minimum of 25 years old.  So far so good.

Best of Luck.