All Forum Posts by: Marina Wong

Cause could be poor circulation. We did get several quotes from contractors, only one of them is a mold removal company and everyone (regular home contractors) quoted higher than Green Home Solutions and they make no guarantee that what they quoted will be the final price because they do not know if the mold is deeper than what is seen.

Has anyone used Green Home Solutions? Please share your experience. I have a property that has mold 33 ft from the floor (indoor gym) So the look of the end product is important. I wonder if anyone has any experience as what the end result will look like. They have 1 year warranty  and that's what I like about it but I am uncertain as what it might look like because they do not have before / after pictures to share with me (can find some online but not enough to extrapolate for my particular situation) Thank you. 

I did get involved after checking many things. It just started. I have not had a chance to drive by the property yet. They postponed closing so it just closed 20 days ago.

Anything in particular that you want to find out? You can call me EST in the morning if need to. 978-328-8060.

I like the idea of using HELOC to buy something cash and then rehab. That's how you can out bid your competitors.

I have the impression that only the interest on the first $100K of HELOC can claim tax deduction. No one says anything about this so I wonder if I am incorrect on this.

Thank you all for your input, just want to give you some update: with the bank's permission, the builder will give the investor a 2nd mortgage. The builder is not putting any of his own money in the deal.

I have verified the builder's track record with 2 cities' building inspection department. Yes, I do realize each individual deal has its own risks no matter how good the builder is.

The 50% return is on my portion of investment, not the builder's return. As his agreement phrases it, he is looking for investor. Unlike debt transaction, he will not have to pay if there is no profit (he will pay the bank first, then the investor(s) then the builder). However, the investors are not equity partners in that we have no say in this particular project. I am not entirely sure if the builder is putting in any money himself. I want to gather all the questions before I ask him.

The builder is an experienced builder. From his resume, he has been doing this for over 10 years. And of course I will need to call various towns' building department to verify.

@Dion DePaoli I agree the lack of security is scary.

@Kenneth Bell There is no builder or developer fee, just a lump sum construction cost. There is no personal guarantee either. How detail do you need the pro forma to be? the funding he is looking for is 30% of the purchase price of the current property.

@Account Closed I would imagine a second position lien is something reasonable. When I answered above that there is no guarantee and no security, it is based on another investor agreement that he signed with someone else. However, if one person cannot provide the entire equity the builder is looking for (let's say maybe 5 people can put together the amount he needs) then is it still possible to put everyone as second position (assuming everyone put in the same amount).

Thank you all again.

Hi Mark,

Thank you for your quick response. I am not sure what is the rational behind this is (I mean not tapping into the primary resident's equity). Also, I am an investor, I can only get 75% LTV. If I get individual loans, first it is quite hard given what I already have. Second the cost to get 3 individual loans is more than getting a portfolio loan I believe.

I came across a builder who will be building in a high demand town near Boston. He needs an equity partner and will pay 50% return. I do not personally know the builder (I know him through a friend who knows him through his CPA). If I can check out that he is an experienced builder, what other info do I need to check? He has given me a couple of references. I talked to one who is his real estate agent and partner. He also gave me a list of houses he has built in the past 10 years. The equity that he raised will be for down payment of the purchase of the existing property (30% of the total cost) and the builder will get a construction loan for the remainder of the cost. He expects to finish the project in spring of 2015. The building is by right so no special permit needed. I can also check the ones on his project list and they all seem to be very high end and sold relatively quickly. He gave me a break down of the costs. I have never done this before so not sure if the return is typical (from his contract, it does not seem that the equity partner has any collateral). I can also check if the projected sale price of the final condos is reasonable or not.

Any advice is appreciated. Thank you.

I have a 2 condos in my investment portfolio and I am acquiring another one. These have no mortgages. At this point I am thinking of either get a portfolio loan on them or take out more from my home equity. Just from the point of view of cost (of acquiring the loan), portfolio loan is more costly. What other things do I need to consider in order to choose between the 2 of them? The home equity has a better rate. Thank you.

@Shaun Reilly

Thank you for your thorough explanation and Happy New Year.

Band of Investment method verifies that the returns calculated in the scenario posted are as you said (though I got slightly different at 4.95% with the 25% down case). I am surprised too that all cash in this particular scenario would have a higher return than with mortgage. The explanation here is the original return is low (6%) compare to the interest rate of 5%. The mortgage constant in this case is larger than 6% (6% is also the cap rate when there is no leverage), therefore it does not give any leverage. In order for financing to have leverage, the mortgage constant has to be smaller than the CoC return without financing.

Band of Investment is used mostly in commercial mortgage to calculate what an acceptable cap rate is. Or at least verify if given cap rate used to calculate the value is reasonable or not. The rationale is you would never want your Coc to be lower than say bond or other not so risky investment. So in the above scenarios, if we were back in the days when bonds were yielding much higher, this would not be an acceptable investment alternative. I can use it to evaluate various mortgage scenario and find out what my Coc is.

Do you usually do a ROI on yr one for your own analysis or do you do it for multiple years? I see people throwing in annual appreciation with multi-year calculation.