All Forum Posts by: Margo Roberts

What kind of marketing has been done, Peter? If it is listed, I presume you have a Real Estate Agent you are working with. Some are better at marketing than others. I especially like embedded videos with music. Blast all areas using Craigs List. I have even gone all out to advertise open house one weekend, even newspapers, flyers, MLS, etc. and stated that "the house will go to the highest bidder (as long as it meets the reserve price)" with the decision being made a few days after the open house. I brought the price down low and it was bid up, fortunately.

Offer flat-screen TV or iPad to the agent that brings in a buyer that results in a sale (within a couple of weeks or so).

Is it staged or at least mini staged so that people feel like they could see themselves living there?

Hi Brennon,

There are certainly many different styles of Private Lenders as well as Hard Money Brokers with varying lending criteria. We judge the term of the loan by the amount of repairs to be done, DOM, and permit process. Longer loans get very expensive.

Generally, in our experience, we have found that HMBs will lend 65%-80% of purchase price and Private Lenders lend up to 65-70% of the ARV, on a second. The funding for new construction loans has usually been only about 50% of the purchase price and entitlement costs, we have found. As Jon mentioned, we are one of the many lenders who rolls all of the points and interest payments in to the loan. Other Private Lenders ask for monthly interest payments.

Requirements for cash in by the borrower and/or cross collateral varies as well. It appears almost all lenders ask for some cash in by the borrower to make sure that the borrower is committed to the project until the end. I have seen at least 5%-20% cash in required by both PLs and HMBs.

Second position loans, being riskier, are usually more expensive. However, they are necessary if you do not have enough cash or wish to use less cash of your own.

Also, some lenders ask for shared appreciation on the back end, usually for the second position loan (gap or bridge). Others do not, but may ask for higher interest payments or back-end points.

I suggest you just call around, as there is no consistent practice for lending. Loan practices also vary by location.

Hi Luke,

In my experience, I have had good luck at purchasing rentals out of state, but not in doing rehabs out of state. I suggest you either have someone you know and trust to manage locally or get a good property manager. I would much prefer to have properties locally to keep an eye on things, but I concur that having local experts that you trust is the next best thing. Good Luck!

Hi Leila,

I agree with the above comments. Buying at auction can be very risky unless you know what you're doing. I would pay a seasoned player at auctions to do the research for you. They have access to lien and title research that the average investor does not have, unless you have the resources yourself. Also, very few properties actually make it to auction. Novices bid up the prices on such few properties in N. Ca. I, personally, leverage the experts. They can go in and check out a property on a moments notice when a last minute opening bid is put out there. I can't do that. Also, you might get a tenant occupied property that does not want to leave and is a "tenant for life" as in some areas of N. Ca. Risky business-my suggestion is go with the experts and learn from them.

I am only speaking of California, as I see you reside in California, CK.

That's a great question to ask, CK. I know Sean O' Toole, attempts to predict market cycles with his research, however, he is the first to admit that no one knows what the market will be like in the future for sure. He is hoping for a slow incline of prices, not the rapid course prices have been on. (I believe I am paraphrasing him correctly).

I am hoping the lending laws remain tight, as well, to keep the right people in as owners and the renter population stable.

I have found Miami to be a good rental market where rental demand is high, rental rates are high, yet purchase prices are still relatively low. The cash flow is strong, as I am sure are many places in the US. The key is to find good property management

Hi Tim and fellow Investors in the Bay Area,

I live in the Bay Area as well. I thoroughly enjoyed rehabbing here, but when the inventory dropped, I went out of state without success. Because I was unable to get homes locally, I started funding homes locally, but I do miss rehabbing. At least I get to enjoy the success of others. I would love to meet up with everyone, but will be out of town on the 19th.

Hi Deepak P,

I do have someone who buys at the courthouse steps in Oakland or the Peninsula. He bought a duplex for me and it was profitable. He has all the resources to check title, liens, etc and will even go and talk to tenants and look over the property before the sale. He usually charges about $10K to get a house on the courthouse steps. You can do it yourself, but it can also be risky if you don't have all the resources. Be sure you are not bidding on a second lien position. I do use ForeclosureRadar, which is now PropertyRadar. Good luck!

Has anyone used a "Performance Clause" with their contractor, whereby there is an incentive for finishing early and disincentive for finishing the repairs later than specified on the contract? If so, how was it worded and did it seem to speed the rehab process up?