All Forum Posts by: Magnus Wikström

Hi Matthew,

Congratulations on the deal.

I would just do a fix & flip loan, hard money. You'll probably be reimbursed when you take this out, because of the equity value. Although you want to Aribnb it, you're gonna pay high when refinancing and the ARV is so high compared to your costs. It would make more sense to sell it in my mind, but I'm not the lucky buyer.

Hi again Matthew,

How's it going on this one? Good to see your ARV seems higher than last. Gives you good ground to complete it.

75% ARV shouldn't be an issue. Drop me a message if still of interest.

The deal is probably gone, I hope you got it. You could have used a lender that would allow for deferred interest payments and origination fees, which would have saved substantial liquidity. PM if the deal is still on and if of interest.

Nothing wrong with the deal itself but horrible HML.

Hi Micaela,

Yea, those terms are not very attractive. You should probably be able to get at least 85% LTC / 75% ARV and potentially interest payments and origination fees deferred until maturity. Plenty of options with cheaper origination fees.

Message if you want help.

Best,

Magnus

Hi Nicole,

This is certainly a strong deal.

I can connect you to lenders which allow you to defer all interest and origination fee payments until you sell the projects, which will give you the highest return on your equity and save as much liquidity as possible. If you're able to put in about $100k in each lot yourself, it should be possible to have the rest externally funded, around 85% LTC.

I mainly set up financing for GC's doing these types of projects in their own LLC's but am happy to help if of interest. Message me if you want to have a call.

Best,

Magnus

Hi Yonic,

I think it makes more sense to use a lender that gives you higher leverage straight up, and that potentially allows you to defer interest payments and origination costs, to save further liquidity.

I can probably help you if you want. Message me if you want to jump on a call.

Magnus

You mean 10% down on a rental property? I think you'll struggle to find that.

Hi Stephanie,

Here's more or less what you should aim at in terms of financing in my opinion:

1. Financing for the purchase + refurbishment
- My advice is go for a lender that gives you high leverage and better is if you can defer financing costs, all or some, until you refinance the property. It will increase the return on the equity you put in, and you'll likely want to keep liquidity. You should be able to have 75%-90% of purchase and 100% refurb costs funded by a lender. Careful with junk fees often appearing when you're about to close the financing deal.

2. Refinancing when ready for occupancy
- There are lenders that will give you up to 80% of the property value in a Debt Service Coverage Ratio Loan, DSCR, you can easily Google it to learn more. You want to stay >1, below 1 is not gonna give you a sufficient cash flow. Expect an interest rate around 9-10% in these times. Therefore - If you get a good uplift from the refurb on your property, consider selling. It's also gonna be a prepayment penalty for terminating the loan, likely within 5 years, if you wish to sell it. The higher the value the property appraises at after completion, the more costly your DSCR-loan will be.

You're welcome to message if you need any more help.

Best,

Magnus

Hi @Ian Porter

I work with contractors building their own projects, both setting up the financing and bringing in external equity investors, although this will be more in place in a few months when I plan to start bringing investors from Sweden. I'd be happy to hear more about your projects and potentially look at the financing side. Message me and we can have a call.