All Forum Posts by: Marshall Robins

Love all the contributions on this thread and I tend to agree with what seems to be the overall theme here. 

The reality is you started with $25,000 two years ago and have a dicey chunk of equity spread across quite a few properties. Get out as quickly as you can and even if you have to cut your asking to the point where your post portfolio-sale and consumer debt service leaves you with significantly less than that ~$1.4m equity figure you listed (which is certainly will), take the cash you net, use the lessons you've learned in two year crash course you've been on and start again! 

It all depends on the private lender - when we look at a luxury property like this we generally want to understand the market (HCOL etc etc), and fully understand the renovation. 

We would want to see a cost-breakdown of the work you'd want to do to the property relatively early in the process and like some others mentioned, we would need to see some cash into the deal for us to play with it. As ARV lenders, we'd also want to present your plans to an appraiser to verify the estimated value of the home after the work is completed.

I'm seeing a lot of correct answers here. If you're doing a fix and flip you'll need some cash down and a (relatively) experienced contractor. They won't need to co-sign the loan with you, but most Private Lenders will want to see a license number and small portfolio of work. And Chris is correct about DSCR's being used for completed projects. Your rates will vary on the LTV. You'll get the best rates the further away from the DSCR lender's LTV threshold you are.

I would echo @Brandon Croucier - the secondary market for DSCR's is super aggressive and rates typically reflect that. We see DSCRs coming in at or under conventional, but it does depend on LTV etc etc.

As long as you're not in a rush, we always recommend spending some time asking questions of DSCR lenders you might be looking at.

The best projects I've seen from my desk are folks who are doing hyper-targeted, well-researched deals that are generally in higher cost of living (there are exceptions) areas. 

For California, ADU's are still the untapped gold (ok, maybe silver but still) mines that I see a lot of folks leaning into.

Example - borrower uses loan to purchase a home in a B or C grade neighborhood for 380k, spends 50k rehabbing primary home, uses 200k to put an ADU in the back, appraisal comes back at 925k.

We also see a lot of ground up projects in HCOL areas that do particularly well. 

Totally understand that those things don't closely mirror the BRRRR model too closely, but that's what I'm seeing right now.

Totally get it, and if I were reading that prospectus it would be an interesting and moderately helpful footnote, but it wouldn't be the foundation of what we'd be considering. 

Just off the top of my head, I wouldn't feel super comfortable with non-US properties because properties in the US are held to HUD code (at a minimum). But if you have 12 US properties, that's plenty to show in a resume/portfolio for any serious HML.

Hey Brian, 

Generally, a HML org will want to see some diligence around the contractor or get some idea of past work if you're doing the work yourself. But the draw request and fulfillment process really shouldn't be all that painful.

Good HML's in ground up or rehab will provide a very easy/handy way to request and distribute draws using something like Built, which we use and it gives our borrowers and our team a single source of truth for all things draw-related. 

I would start asking questions about how the organizations you work with handle draws administratively and that should give you a good idea of how things will go. 

Hey Anderson,

Great to hear from you and thank you for following up! Happy to hear you're considering leveraging SB9. I think it's one of the most underrated ways to create value right now, especially considering California's difficult development landscape. 

SB9 was state-wide, so it's up to cities to implement. At this point, from what I've seen, there hasn't been enough demand from the market to push cities or counties to put up any serious hurdles to slow it down. At it's core, it's basically an "upzoning" ordinance that cities have to adopt. San Jose did as an example and there are a few resources they've put out. 

It seems like there was a lot of hype at the government level but owner/occupied demand hasn't been what they thought it would be. But I think there is a gap and opportunity for investors to realize a tremendous amount of value from this, especially those in the HCOL/SFR space. 

Cheers,
Marshall  

Definitely makes sense - I haven't been on any Meta platforms for years but it might be time to dive back in.