All Forum Posts by: Kevin M Finley

Seems like this situation happens often. It sounds like there are already a few local investors offering to help. 

Join local REIAs or facebook groups and post ads saying "investor special", or needs TLC. Have a few of these guys come out and make you an offer. Don't tell them what you paid or what you think it's worth- neither should matter to them anyway. 

If their offers are higher than what you're in it, congrats, you're right, you got a good deal. If they're on target or lower, perhaps try to JV with someone to get it done and gone and try to learn how they evaluate deals so you don't repeat the mistake.

Just my $.02

Pretty much what @Paul Welden said. 

I did a 203k on my primary residence in 2016. $102,500 purchase price with the $35k renovation budget. My contractor was awesome and had done these 203ks before and knew the tricks, but my broker was terrible. Awful. My loan was 4.5% interest and took 108 days to close with equal fault lying with the broker losing and re-requesting paperwork and the fact that it was a HUD Home with flood damage.

At the end of the day, the 203k was a bit of a pain, but got me where I needed to go. I had a loan amount of $132ish and racked up another $7000 in CC debt for everything else to finish out the house. I cash-out refinanced 6 months to the day into a conventional loan and the place appraised at $190k. In 2018 it appraised at 232,500. If I listed it this year, I would list at $250+. 

I used the cash out of the COR to pay down my CC debt and had enough left to buy my first flip with hard money. Rest is history. 

Long story short, it's a pain but will get you where you want to go. Make sure your contractor and broker have done these before and are on the same page. 

Like others said, don't over-dwell on the rehab costs. No two deals are alike and everything will cost different amounts. You will notice ranges, and you will start to hone in on your costs, but just know you will be wrong... every time. 

I used hard money loans for my first three rehabs and now use private money. Hard money was fine but you do need to ensure you have plenty of working capital, understand ALL the costs of these lenders, and know your numbers inside and out. I paid 5 points and 15% on my first rehab, totaling about $10k in fees and interest on a $60k loan. However, I made $23k. When you're hungry, half a sandwich is better than no sandwich. 

https://www.biggerpockets.com/forums/67/topics/500096-finance-of-america-commercial-any-good

Traditional funding is for sure not going to close by the end of the month. I had a 203k take 108 days to close 

Find someone else. Search on this site and you'll find many posts about poor experiences. My local brokers have stopped supporting their products. 

Find a LOCAL hard money lender who knows your market. Don't worry about the points and interest so much as the ease of working with them. A few thousand dollars in interest is nothing compared to the hassle of lending gone bad. 

This thread seems to have gotten off the rails but I'll offer a few points: 

-Oil based primer will lock in any odor. Get a spray gun and go crazy. 

-I estimate $38-45/ sheet of drywall hung, mudded, taped, and sanded. 

-1/4" drywall over is much cheaper than gutting. Dumpsters cost money too. 

-Knockdown texture will mask a lot of imperfections in walls either from shoddy work or an old house. 

-Change all of your switches, outlets, fixtures, and make sure your panel is pristine. Don't screw around with the wiring. 

I prefer to work with local hard money lenders that do not require appraisals but have someone on staff that can verify retail comps and knows the market. Appraisers, in my experience, are not investors. They cannot accurately come up with an after repair value and they end up using similar comps despite the scope of work they have been provided. Additionally, any HML that requires an appraisal AND states that they close in 7-10 days is full of it. Appraisals right now take anywhere from 14-20 days minimum. If your seller wants to move quick and you have made timing promises based on promises from an HML, it can get nasty quickly.

2 deals I've done with appraisal HML. This HML required 10% LTC and would loan up to 70% ARV:

-$90,000 purchase, $26,500 renovation, $165,000 ARV. The appraiser came in and appraised at $130,000, thus my total loan amount was only $91,000 with a $10,000 repair escrow. My cash needed just increased by $16,500. Also, you don't get the full $10,000 escrow until the entire project is 100% completed, so really I needed my down payment + $26,500 in working capital + holding costs. This deal suddenly required a ton of cash. I sold this house for $169,900 in 3 days.

-$72,000 purchase, $83,000 renovation, $209,000 ARV. Appraisal: $145,000. Total loan amount $101,500. This gave me a $36,700 renovation escrow instead of the $83,000 I requested. I had to close so I bought it anyway and refinanced with a private money lender through some other connections. We got this house done and it sold for $225,000 in 4 hours.

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $72,000
Cash invested: $83,600
Sale price: $225,000

The biggest transformation yet! This 2 bed 1 bath 1136 sq. ft ranch home was in desperate need of updating, but we took it one step further and added a full second floor with a massive master suite. What's better? This home sold in one day!

What made you interested in investing in this type of deal?

Great location

How did you find this deal and how did you negotiate it?

Wholesaler

How did you finance this deal?

Credit line/ private money

What was the outcome?

Profit and a 1 day sale

Lessons learned? Challenges?

Despite having a repair escrow, you need working capital.

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $66,500
Cash invested: $30,000
Sale price: $138,000

Smaller 2 bed 1 bath home in a great neighborhood. Empty since 1990. Complete gut of interior, plumbing, and all new HVAC

What made you interested in investing in this type of deal?

Great area

How did you find this deal and how did you negotiate it?

Another investor purchased at auction and decided he didn't want it.

How did you finance this deal?

Private money

How did you add value to the deal?

Full gut

What was the outcome?

Profit $$$