All Forum Posts by: Karl Kyler

@Michael McCartney Thanks for explaining.  I do know most of that but what I don't know is how the appraisal works with a private lender and how a bank that would issue me a heloc would see the appraisal from the sale.  I was under the impression they assess value based on the county assessement.

@Edward B. Awesome!  Thanks Edward.  

Hi fellow BP members,

I am currently working to secure a fix and flip.   I have gotten a couple of quotes that are up to 200k in repairs.  I am considering on doing some of the work myself to increase my profit margins.  

Here are some of the figues:

ARV: $420k

Repairs costs: $180k-200k

Purchase price: $120k

One of the contractors is a friend who suggested that I can do the work myself and he would help/jump in and do the things that are outside my abilities.  If this is the case, then he said material costs would run about $75k.

What I am wondering is this, what stops me from buying this home with a private loan and then opening a HELOC which can be used to buy the materials I need to fix the place up. A HELOC would be way less expensive than a hard money loan and wouldn't have any of the upfront costs.

Any help is greatly appreciated.

Karl

Ryan,

I'd be up for meeting up.  PM  if you are still planning to put something together.

karl

You're in the right place to find all the answers you are looking for.  Continue reading the articles here, listing to podcasts and interacting.

I help a lot of new investors get into the real estate.  Let me know if I can be of help.

Karl

@Parker Cox 

You bring up good questions and concerns.  When a foreclosure first goes to auction it has to go to for the full amount owed.  If it does not sell (which it usually doesn't in this market) then the property is reassessed and either auctioned again at a different lower amount or dished out to real estate agent for resale on the market.  

Your concern as to why the home was not picked up the first time is valid but nothing to worry too much with.  It would be a good idea to align yourself with an agent here in SD like myself to get you a comparative market analysis on any properties you are interested in.  This will give you an ideal about the value of the home.  

Now with regard to the second mortgages being completely wiped away, those banks used to insure their money incase of a foreclosure. When the market was booming (till 2008) there was litle risk. When the marke went to the crapper and people started to loose their homes, the insurance companies could not repay all the secondary loan positions that were washed away in a foreclosure. This is why you don't see 80/20 loans anymore and PMI is big deal right now for anyone buying a home with a loan that is more than 80% of the appraised value.

Auctions are very risky which is why title companies won't ensure them.  There is opportunity there though.  The paranoia is good to have.  Let's chat more in detail and I'll see what else I can help with.

Karl

Parker,

There are a lot of moving variable pieces here so I will do my best to explain.  The state of California will allow someone to go deliquent up to 4 years on their taxes before they foreclose on the property.  In this scenario, I am not sure if th delinquent taxes transfer to the new owner.  I'd imagine that they get paid after the auction but I cannot guarantee that.

As for the mortgages, the first is the primary loan and usually the biggest.  The first is usually the bank that forecloses on a property first because they are only second to the taxes on the deed....meaning, they get paid out immediately after the taxes do (this is why I believe that taxes get paid from the auction).  After the first is paid off, if there are any funds left over they will go towards the second mortgage.  Whatever, if any, is not paid off it is washed away.

If you want, I can do some addition research for you through my title company and help you with the purchase.  Don't worry, I am not out to steal the deal from you.  Just offering some help.

Best of luck,

Karl

Jimmy,

To start, the lower the amount of money you put down the lower the risk because if you loose the property for some reason you haven' t lost any of your money.

Getting in is difficult with no money down, though BP will make it sound quit easy.  I think this is relative.  For someone who knows the area and can do their own searching buying w/ no money down can be simple...still difficult, but simple.  

My suggestion would be to start small if you are going to invest here in SD.  I'd start with a 2 unit and get to know the ropes.  With your schedule it will be a balancing act.  Jumping in too deep with  8 units might be too much and will cost you more in the end.  

I had these three clients who were all in the military and were all friends.  They bought a 4 unit together.  One lived in it and the other two rented a place together elsewhere in SD.  They worked on fixing it up over time.  A little over a year later they called me saying they were ready to buy another property.  So we found a 2 unit.  The two that were renting else elsewhere moved into one of the units, rented out the other and then started working on fixing it up.  They are currenlty exploring the option of buying another one, but I suggested we wait because one of them might be getting stationed on the east coast.

I hope this helps.  Maybe this will spark an idea for you!

Karl

Jacob,

Devan is on point.  I understand how you may want to hire a property manager as well but if it is possible I would suggest to try and manage it yourself.  I can help align you with a handyman/contractor that could fix/resolve any problems you  may not be able to.

Karl

MJ,

As everyone has mentioned, your agent has to be licensed in the state you are buying in.  Be mindful, some states (not CA) do not allow agents to both represent the seller and buyer due to a conflit of interest.   Something to be mindful of.

Karl

Jeff,

Great to have you on board.  There is a ton of info out there.  I hear a lot of people saying the SD market is not the place to do flips, but interestingly I am finding investor doing them left and right.  BP is a great place to start if real estate investing is where you want to go.

Karl