All Forum Posts by: Mike Wood

@Courtney Murphy With 5 bedrooms, you will not likely find one tankless that can handle the demand of the entire house, so you will likely need 2 tankless units. I prefer tank water heaters. I have a 4 bedroom house that was built with 2 tankless heaters, nothing but problems, and eventually replaced with one tank.

With tankless, you are flow limited, as the tankless heater can only heat up so much flow (gpm), after that flow it starts to get cold until the flow is reduced. With tank water heaters, you are total used limited, they will stay hot until you use xx gallons, then take go cold. But you can run everything hot till you reach that xx gallons.

You can also got very large tanked water heaters, so no need to get 2.

@Tim Parker It sounds like you are looking to do a cash out refi on a 2 family house that you purchased with cash well over 6 months ago. Most lenders will want to conform with Fannie/Freddie guidelines, which will put the max LTV at 70% for a cash out refi, investor loan. I would say that 60% LTV is low. Having done a few of these exact types of loans (I use 30 year fixed rate loans), I will say that 70% is what I have always got. I would talk to other lenders.

I will say that most of by cash out refi's have had sort of low appraisal valuations.  They appraiser seems to always put a low value on it since there is no sales price of existing mortgage to base the value on (yeah, I know these things are not supposed to affect the number, but it always seem to).

Rates are typically 1-1.5% higher than the normal mortgage rates (due to it being a cash out plus investor loan). Currently if I was doing one, I would expect that the interest rate would be 7-8% for a 30 year loan. This assumes the loan is in your personal name and you dont have DTI or credit issues.

@Kenneth Hadinoto Do you have any construction or rehab experience?  Do you have the required capital to do it (likely 75k or more, approximately 25% of total cost)?  If the answer to both is no, then pass.  Using a hard money loan would be expensive, and getting a construction/rehab loan from a bank/credit union for a first timer will be very difficult to qualify for.  Would I recommend a huge renovation for a first project, no.  But maybe you have experience that will make sense to look into it.

@Jackson Madonna  All of my contractors work only in NOLA.  Best of luck.

@Jackson Madonna  Your question is not very clear.  I would offer the following costs and very general guidance, assuming you purchase the land/building.  New Construction 1-2 unit building is likely going to cost $125/ft2 on the low end.  Full gut renovations (reusing foundation, framing, exterior siding) are likely going to cost $85/ft2 on the same low end.  If the renovation is not a full gut, it will vary widely on what you are doing.

Student housing is not an easy business, super high turnover, generally tenants are rough on the properties, and potentially high vacancy during the summer months.

@Eli Jackson I don't think you will find many (if any) lenders willing to do a construction loan where your down payment/equity is less than 20-25% to total costs.  My bank requires 25% of total costs in down payment or equity (if you own the land free and clear).   

Additionally, without experience with new construction, most banks will not be interested in making the loan.  For the banks, these investor development are very risky.

I am closing on a duplex construction loan in the next few weeks.  Its a draw type loan, where I paying interest only, WS Prime + 1.75%, 1% origination fee, 12 month term.  I brought the land to the deal for my 25% equity for the deal.

@David Maldonado I have know people that wanted to use their VA loan to build a house, and each one were never able to find a lender. I would find a lender first, before spending time on the other stuff.

Additionally, I believe that your talking a super expensive build (in CA) and it would be way, way over the VA loan limits (my guess is your build costs are over $1mil)

@Duane Gunkler The fact that the framers are still owned money on your project is very, very, very bad.  That would have been one of the first subs to get paid, and they have not.  If they have not been paid, I bet most other have not.  If this was me, I would hire an experienced lawyer in real estate and construction matters (make calls, talk to them and find one that knows what your taking about) and then fire the builder (unless your lawyer advises you otherwise).  Next, I would reach out to each sub (that you can recall being on the project) and find out what's owned.  Some of your subs will have to file for permits, so you can find them with the city (typically plumbers, electricians, hvac), but other you have to track down (foundation, framers, drywall, insulation, painters, roofers, exterior siding).  Run a title report as mentioned by others.  Hopefully the subs are not owned that much, but it could be quite a alot.  Tally that up and figure out if you can pay for that in addition to finishing the house costs.  Dont pay any subs yourself without a lien waiver.  

Sorry this has happened to you.  As @Jay Hinrichs mentioned, the value of the house in the last 16 months has gone up, so maybe you will be whole at the end.  But I would not waste one more day with this builder.  Lawyer up and fire him.  I also agree with other, you wont get a dime from him. I would report him to the state contractors board, but I am not sure I would waste money suing him, as he likely has nothing at the end of the day, unless your lawyer thinks he can go after the builder in his personal name, not just his company.

Understand that firing him will mean delays and extra costs.  While I would expect the major subs to stay with the jobs (electricians, plumbers, HVAC) most of the smaller subs will get replaced by your new builder.  I would also expect that any new builder would only take on the project as a T&M project, not fixed price.  They wont be able to get a good handle on whats done and still remaining, so the best I would expect is an estimate of total costs to finish.

@Duane Gunkler  I assume this is a custom home and you have a contract with the builder.  If you have a contract, what does it say about defaults.  Your bank likely have a construction inspector to verify that the draws are justified with the work completed.  Is that the case?  The interest rate on your perm loan is likely to be the real issue here.  How far alone are you, like what is done in the house.  You can get alot done in 3 months, but you would have to pretty far along to get it done (likely drywall finished at least, with exterior finishes installed).

Without more details, its hard to say what your options are.  I dont care where your build is, in 16 months, almost anything could be built.  The fact that you stated you have paid him draws means its not his house, its yours and he can not sell to another buyer.  He is dragging his feet cause current costs have skyrocketed and he wants more to finish.  I would suspect its time to think about firing him and finishing it with another contractor.  But that depends on how bad you are on your draws and how much is done.  Hard to say without more information.

I would consult an attorney. What options do you have to finish the house yourself?  Have you discussed a default of the contractor with the bank?

@John Grinston If you are planning on trying to use the VA to fund a new construction house, you would need to find a lender that will do that. While the is a VA construction loan program, for all the people I have talked to, they are impossible to find. Generally construction loans are very capital intensive, generally needing 25% of total costs, and are not easy loans to qualify for, especially if you dont have any building experience. You may be able to find local banks that will do construction loans on a single family residence you plan on living in with lower down payment/capital, but not multifamily.

To use ball park numbers, I would say $125-175/ft2 is likely the lower end of the market for construction costs in your area, not including land and finance/soft costs.  Local general contractors will be able to give you ball parks, but they would be very general with wide ranges.  For specific pricing, you would have to have building plans and location determined.

I see zero value in working with a realtor on a new construction.  They wont have any experience in it and wont really have a good way to get paid for their time (contractors aren't likely to pay there commissions).