All Forum Posts by: Mark Munson

Hi @Mag Ma

      We have a number of investors we work with that use PadSplit and I'm tied into the PadSplit community here in FL, as we are vendors for them. It can be a good model if you have the right property with at least 6 bedrooms and good parking. Financing is a bit difficult because you are enclosing living rooms and other rooms sometimes, so it isn't necessarily conforming to the zoning. There are specific ways to go about financing them and certain lenders to use. You are forgoing the ability to refinance when rates come down if you now have, for example, a house that is 8 bedrooms but recorded with the county/city as 4 bedrooms and the other 4 can't be permitted. You'll have difficulty with a lender being okay with that, assuming lenders don't change their guidelines by the time rates drop. Overall, it should be a portion of your portfolio, as the cash flow outperforms rental income from a long-term tenant and MTRs.  

Hi @Anne Grello

I would join your local REIA (Real Estate Investor Association). NC has the NCREIA, they teach classes on wholesaling and you can find mentors/like-minded people willing to help. I am a member myself and I'd be happy to hop on a call to give you a bit of guidance as you get started. Feel free to message me.

Hi @Tim Braun

I would call as many lenders as you can and just make apples to apples comparisons. One question you need to ask is what is your rate lock policy? You want the lender to lock your rate once they get your application and credit pulled, so essentially day one. If they float your rate, I would look elsewhere. You want your rate locked for 30 days or more to avoid it changing on you during underwriting. If a full appraisal is required, you should be paying that cost directly to the Appraisal Management Company, not the lender. Some lenders use that as a profit center and up-charge you. Also, aim for a 3-year or less prepayment penalty, that will give you the flexibility to refinance when rates drop (if they do) after year 3.  Ask about a buy down to get a lower rate and if that can be rolled into the loan, there are many lenders that can offer that if you want it. Look at 40-year options with interest only periods at the front end, that can help maximize cash-flow until you potentially refinance when rates come down. Lastly, if the loan amount exceeds $150k, I wouldn't pay origination fees above 2% if you have 720+ credit. The only costs to the loan, aside from the appraisal, should be the origination fee and the underwriting/processing fee. Make sure you get full loan summaries from the broker or lender, not soft quotes. Reach out if you need any help. 

Hi @Kevin H.

      There are two REIAs in the area, I think that is your best start to networking. I'm a member and a vendor at the NCREIA; the Raleigh monthly meeting gets about 100-200 people each time. It is a great group and I'm sure you'll find like-minded people there to network with. Feel free to reach out. 

@Tequila Lamar

As others have stated, your origination fees are high. Interest rate is okay for a short-term loan in today's market. If the property is currently owned and the bulk of the funds are being held back and disbursed for rehab, you may see a rate a little lower than 11%. You'll want to make sure the loan is non-dutch, meaning you don't pay interest on the rehab funds until they are disbursed. Your points shouldn't exceed 3% and could potentially be lower with good credit.  

Hi @Marcus Jimenez

I can't speak for every lender, but that is unlikely. It is a non-arm's length, meaning a purchase transactions in which there is a relationship or business affiliation between the seller and the buyer of the property. That is not allowed. Why wouldn't you just cash-out refinance into your LLC? That can be done.

Hi @Tim Kane

Is there a difference between the loans you would receive? Knowing the gross rent is helpful, but it doesn't tell the whole story. How much cash will you net after paying the principal, interest, taxes, insurance and HOA dues? How much would you need to put down in cash to buy each one, respectively? That will help determine your cash on cash return. There are many other factors to consider, but those metrics would help others give you better advice.

Hi @Rene Bee

      I would issue receipts that he signs and progressive/final lien waivers. Have a formal agreement drawn up as well. Best of luck!

I have closed numerous deals with both as the lender, varying franchises across multiple states. Firstly, I know NW used to require an NDA to go see a property, but not sure if they still do or if that was one branch. I would never sign an NDA to see a property, that is ridiculous and not common practice. Like others have said, don't trust their numbers, trust your own. I wouldn't disparage the entire organization, but I would tread cautiously and just ensure you have all your ducks in a row. Much like other wholesalers their ARVs are wildly inaccurate, in my opinion. Lastly, I fund a lot of wholesale deals and most non-refundable EMDs are $5k. I wouldn't put down $7500 unless the purchase price was $500k+. Feel free to reach out if you need further insight and best of luck!

Hi @Latoya Pryor

    It all depends on how you are generating your leads. If you are running Google PPC, you obviously need a website. Any good wholesaler has a website, but most only have it for acquisition and, honestly, most are terrible. We have audited a ton of wholesale websites, very few are structured well. And most wholesalers don't have a dispo site. Carrot (Google it) offers a website builder that many wholesalers start out with, but they are not the most optimized. You definitely need a website to authenticate yourself, in my opinion. If you are just door-knocking and not spending any money on marketing, then a website may not be necessary. However, if you are cold-calling or using SMS campaigns, then I would suggest a website. You don't have to build the best website ever, just enough to validate your business if someone wants to further validate you as a real person and/or company.