All Forum Posts by: Lynn Bown

@Matthew Bell and @Bill Gulley are both right.  This is an age old problem where owners value their property unrealistically.  The approach I would take is to get some comparable 2-5 sold recent and 1-2 listings in close proximity as possible.  Then meet or call him and discuss the reality of the property showing what properties like his are selling for compare condition, amenities, and get him so see the value, then explain that is he listed it what he would get and consider the realtor fees, closing costs, and potential time It would take and that you are an investor for profit and willing to close quickly and get him down to Florida faster.

May not work but if you cant turn him around on his view, you cant change your criteria to match his view or you will be the one with unrealistic profit expectations.

Lynn

Cash is based on 75% all in cost

Hard money is 70%

Private money is 70%

cost of money
I use a spreadsheet we wrote that figures every deal based on the parameters of the costs of finance and how much we would have to bring in cash and pay at final sale to be profitable on each deal.  Also on the rehab I also add 10% to your numbers for "surprise" we average 7%.

Cash is your own cash 

private money is based on 10% of purchase with 0% of rehab from you

Hard money is based on 20% purchase with 20% rehab from you

Hope this helps

Based on your numbers

BTW for a good estimate by zipcode on repairs

I have a network of both wholesalers and investors in Sarasota and Charlotte counties florida.  Please add me for anthig in those counties

Lynn (at) atragent (dot) com

Each hard money lender has its own program.  For purposes of outline I will try to cover the factors that are involved.

1. Value of the property ARV After repair value is usually the mark for the loan to value of the financing. The accepted ARV can be as high as 85% in some cases but the standard is 70% of ARV for the purchase, rehab, ALL IN costs is the desired max financing
2. Points. Most HML will charge anywhere from 2-10 points on the loan either up front or factored into the total loan
3. Interest. Interest will vary from 10-15% the target in most cases is below 13% this is usually paid interest only.  I have seen programs where there is no interest but rather a % of the final sale price.
4. Term. The term is usually 1 year max but can go into 2 years.  I have seen programs where the interest or fees will increase every 90 days.
5. Skin in the game. HML want you to contribute 10% minimum and usually 20% on the purchase price, 0-20% of the rehab, and you will be expected to pay the buyer closing costs.
6. Be prepared to justify your ARV, most will require an independant BPO or an appraisal before they fund, therefore put a clause in your offers "Subject to financing partner approval" or something like that and count on 7-14 days for this contingency.
7. Finally do your research on costs in your area and be sure to outline details of your intended rehab with line item costs
8. Ask about their draw down procedure.  Each one wil have a different criteria for each draw down and you may be expect to front the rehab and be paid on a schedule or inspection basis.  Some will charge up to 400 per draw down as a processing fee.

Again every lender is different but these are the things to be aware of when shopping for hard money.

Usually if it is in proceedings but not foreclosure they have filed a Lis Pendens that will be recorded on the tax records.  If it is not being moved on it is usually 2 general reasons.

1. clouded title IE. Liens, death, Etc

2. No equity

Once the bank forecloses they have that on their books counting against their reserves if there is no equity they may sit on it until market comes back.  Bottom line is that there is still an asset manager involved but hard to reach and there wont usually be a servicing company until they foreclose.  Its in  purgatory   Getting to this property requires reaching the asset manager on that account, which is harder to do but with alot of calling and work can be done.

I would be happy to.  Send me the address and information and your intent, flip, hold, etc.  also the financing, points, % down, interest.  Email me the list of repairs you see doing.  I will run it through my numbers and send you back my spreadsheet.

Lynn

Glad to help. PM me the address and I can look it up and send you some information on it from the MLS. I cant represent it but have access to the Tri County MLS through our partner in investments in Hollywood @dante

@Account Closed

lynn (at) atragent.com

I been doing Bank owned pre list for 9 years, they have a process they go through after they get possession.

Finish all the foreclosure paper

Lien checks

Valuation

finally Listing, auction, or portfolio package

The bank is in no hurry and offering before the list it is a 50/50 chance as they are sometime very unrealistic about value.

The best way to get in early is, If you go by the property very early they post a paper taped in the window or on the door that gives legal notice of the status.  This doesnt tell you much but it usually has the number of the "servicing company" to contact in the event of emergency.  this company is responsible for maintenance and weekly drive by inspections and reporting to the bank, sometimes like in our case it is the Realtor that it will be eventually listed with.  (realtor can not take early offers)

Contact the service company and ask if you can have the asset manager contact for this property, they have an asset manager that is in charge of this property that takes it through the long process.  This doesnt always get you anywhere but with the right touch you can get the number and if there is any chance of an early wholesale buy this may help, if you cant get to talk to the asset manager, at least you may get to talk to the realtor that will list it early and ask to be notified and discuss opinions on value etc.

Lynn