All Forum Posts by: Kevin Rodriguez

 ok i didn't think it would be overly important for these numbers as my main concern is the structure of the deal itself in a way that would secure my boss money as well as if another investor where to lend to us. At this point you can pretty much run the other investor at 15% interest yearly and the deal still makes sense; ofcourse we are in the business of profit maximization. the rent roll  of this fully rente is $14,300 and monthly expenses are $2,583 which is $11,716 minus w.e the loans come out to be. However keep in mind there are renovations to be made caahflow is zero on purchase because units are vacant. Anyhow my boss always lends me at 8% without any pts. pre payment penalties or any other fees that you imagination can come up with. Also no monthly payments he waits untill refinance to get his interest on his money back. the other half of the money will depend on wether we get someone else to lend or we just get a business line of credit on my boss behalf. I know this doesn't make total sense to most of you who think why would my boss do this but we have created a trustful relationship and i am closer to our business and plan on taking over the business in the near future. aka we have a great relationship real estate aside. if you have any input as to what options would  structure this deal best feel free to chime in. thanks for your time!

@Account Closed I'm a New York investor i do fix and flips and recently looking to acquire buy and hold deals. I am in Rockland County and my brother is also a realtor. i would be interested in discussing potential deals if you have any or just networking for the purpose of building relationships. DM me if interested. Thanks! 

Deal has to be bought cash and can't do another type of conventional or sellers financing for this deal. I would rather get a loan in my boss name, use our business as collateral which has decent revenue and then come in all cash to the closing table and do everything needed to be done cash in terms of renovations. i guess my next step would be getting a lender to give our business a loan.

Dear Biggerpockets Community,

I have come across an amazing deal and would like some input on how to structure the financing.

Currently i have my boss as my main investor for my flip deals but this is a buy and hold. these are the numbers:

1. Purchase price:$700,000

2. Rehab Budget:$160,000

3. ARV:$1,500,000

We have 2 options which are the following.

Option 1:

My main investor (boss) can come up with half of the all in budget $430,000 and we can bring someone else on the deal for the other half $430,000 but neither my boss or the other person would be considered an equity partner instead they would lend for the purpose of getting interest on their money. 

Option 2:

my boss can squire another loan such as a business line of credit for the other half and i would just reimburse him for the interest on that other loan and pay for his interest when refinancing takes place. 

We have discussed both options and would appreciate if anyone has a better way of structuring this deal. Main concern is that my boss feels safe and secure with his money. i was thinking somewhere along the lines of creating an llc with my boss and having him as a interest only partner if that makes sense? so he would own the deal with me until refinance just for the purpose of security. It is understood he won't have a lien on the property maybe the other loan / investors will because he is comfortable lending to me at this point but given the amount of equity in the deal i don't think there should be any worries. 

Worst case scenario there is a default on the loan on my behalf, which is basically impossible i have enough money to hold this for couple years without refinancing, the sale of this property would have enough equity to pay everyone back.

Any input would be highly appreciate it thank you!

@Derek Hanners Depends on your goals. i would get local properties and then sell that long distance property with those numbers. To me $150/month is peanuts, might as well work an uber at night or work overtime at your current job?. It's not worth the hassle owning real estate with those small margins in my opinion. Any simple problem in the house and all your cash-flow gets wiped out and you'll go negative which is a deal i will never have. Is this a multi-family or single family? Are you budgeting anything for CapEx? What are you numbers if it goes vacant?

In my honest opinion, appreciation is more of a gamble. Cash-flow is the winning strategy; the more you have the easier it is to help you get through the tough times on any property. As soon as you get another property sell it.

@Matt Hurley Hey Matt, First off i'm not an expert, wholesaler or off market guru but i can suggest you get a contract of sale template that many have talked about here in BP it's free and it gets the job done. You can probably tweak it any other way you want if you need as well.

On the topic of funding i have always opted for private money it is simpler, less costly and quicker than anything out there. Just convince people to invest in the deal, get them excited about making money at a higher rate than any other investment out there currently. Also explain the benefits of investing in real estate and the demand for renting that currently exists today and is likely to grow due to the upcoming market shifts etc. If not than just go with a hard money loan. Also have you thought about sellers financing?

@Jared McCullough Well Jared you have to ask yourself, what is it that you are trying to accomplish. For me is always been about creating value so that means you have to acquire property that is in real bad shape because those are the deals that have the most potential and people often overlook. Whether that is driving around your neighborhood or doing direct mailing it is your duty to find out what works in your market. If you're not into spending time into looking for them you can leverage this by spreading the word, through social media or other means, about you buying real estate and offer people cash if they can find you potential leads. This can be friends, family members or people you just met; aka bird dogging. Having said that you have to do the most important part which is getting that potential lead under contract and closing. The main reason why this technique works so well is because you are dealing straight with the seller you don't have an agent or intermediary to go through making it a hassle.

Now, you could find deals that are fairly readily but those will be tougher to come by and the margins will be smaller because people see the demand and the overpricing of properties and they want to do the same. The main thing to focus on is people that are in need of help with their current situation. You need to find people that need to move quick and are motivated to sell. 

@Ed Moran MLS deals are often overpriced and most of the time get multiple offers because they are the easiest deals available to the public. Manny foreclosures sold as is with tons of problems, tight margins and getting priced close to market value; meanwhile new guys underestimate the rehab budgets and run into problems later on. The demand of new real estate investors has increased enormously at this point or at least on my market.

Ofcourse, you can find a unicorn once in a while in the MLS but they are hard to come by and really have to be distressed enough to the point no one looks at it the same way anymore. I'm not trying to discourage anyone from buying a deal in the MLS, you should definitely look at the MLS everyday; just be careful when analyzing the deals and creating a rehab budget.

@Mark DiRocco run it through deal check

If you can go with a loan do so. I would absolutely without a doubt leverage the purchase and rehab costs of the home with OPM. (If it cash flows of course and it better)

i would say try to privately funding this deal if you can, if not HELOC is fine; if the deal is a killer one act fast take out the HELOC and figure out re-payment later. Especially now, you never know what can happen going forward with the market that could damage your chances of refinancing for higher ARV. That said in my honest opinion, never buy a property that does not cash-flow with a loan; leave that to the doctors and lawyers who have nowhere else to put their cash. You need to be able to leverage and have cash-flow coming out in order for the deal to make sense if not than you are overpaying and deal is no good.

Also if this is your first deal and if its 1-4 family deal you don't need a property manager, just ensure you do proper background checks and screen tenants thoroughly. Get in contact with any local handyman and come to an agreement to be on call for any potential issues. It seems like you are looking for single family deals so just be aware that 1 vacancy=100% vacancy.

Lastly, Please be careful with MLS listings and don't overpay; I can't emphasize that enough.