All Forum Posts by: Matt Cariello

@Kristine Baker - great insight.

All things I will have to look into. I reached out to a local hard money lender and will hope to chat with them tomorrow in more detail to find out total costs. Noting that I only need the money from them for ~2 weeks before refinancing through a bank, I will need to weigh the costs of taking out a 2 week hard money loan and then immediately refinancing through a traditional bank (and paying back the hard money lender) VS. just taking out a hard money loan for the entire term of the flip (5-8 months).

In general, a traditional bank loan for a deal like this would look like:

- Purchase price: $400,000

- Rehab: $100,000

- Total cost: $500,000 (our bank would allow us to finance the total $500,000 (house + rehab) with 25% down)

-25% down: $125,000 ($75,000 from me and $75,000 from my partner)

- Sale price after closing costs and commission(s): $680,000

- Profit: $180,000

- My share: $90,000

In this case, my share ($90,000) will also be subject to whatever the hard money costs are on my end. Hope to know more tomorrow! 

@Kristine Baker, thank you for the reply. 

Leverage is exactly our angle here... I hate the idea of having to pay all cash but that is the reality of buying this foreclosure - Hence why we want to refinance immediately after purchasing in order to pull our $400,000 back out and then do a traditional bank finance of 20-25% down. Our bank actually allows us to finance our rehab costs in with our loan... which is nice as well (but need 25% down for this).

Anyway - my question is more in regards to how to initially raise my $200,000 needed for my portion of foreclosure purchase? Noting that we will immediately be refinancing and I'll be able to pay that portion back to whoever I got it from (line of credit, hard money lender, etc.).

Hi everyone,

My partner and I found a very solid (single family) flip opportunity in Milwaukee, WI (where we both live) that just went from a short sale to a foreclosure. I have personally never purchased a flip through foreclosure (FSBO or major value-add's on the MLS are the traditional ways we look to purchase) so I am more used to the traditional 20-25% down type of financing through a bank. It's my understanding that the foreclosure has to be purchased with 100% cash down at the time of the Sheriff's sale but that we could then turn around and expeditiously refinance through one of the local banks we have relationships with - getting us back to the more traditional 20-25% down model that we are used to... pulling back out the majority (75-80%) of our cash.

Let's assume:

- Purchase price of home at the Sheriff's sale: $400,000

- Will be refinancing (financing?) the house as soon as we can in order to pull our cash back out

- 50/50 partnership split between my partner and I ($200,000 in cash needed from each at time of purcahse)

- My partner will be fulfilling his portion (his $200,000) down through a personal line of credit he has with a high net worth relative of his

- I don't have the full $200,000 in cash needed on my end for the initial cash down process at the Sheriff's sale (I have about 1/3rd of that in cash which I will be using as my half of the down payment when we refinance / to have for improvements we need to make for the flip)

Saying all of that, my question is: What are the different ways in which I can finance that initial $200,000 of cash down I need on my end for the day of the Sheriff's auction? i.e. Personal line of credit? Business line of credit? Hard money lender? Family loan? etc. A little about me if it helps:

- I have a high-income "9-5" W2 job (6 figures +)

- Credit of 740+

- I am a renter (no home/mortgage in my name)

I'm curious to hear about all of the different ways I can structure this. My assumption would be that it will only be a few days/weeks that I will need this ~$200k float so I am not too concerned about a high interest rate considering it's short term (before we refinance). 

Thanks everyone!

Matt

Thank you everyone for the help! I was able to connect with my attorney who assured me that there are work-arounds and that this can be handled. 

Appreciate the input and direction!

Best,

Matt 

Hi everyone,

A partner and I are in the process of syndicating a $1-1.5MM multi-family apartment deal in Milwaukee, WI. We have 4 accredited investors (plus our own money being put in) so far for a down payment of roughly $250k. My partner was recently approached by a relative who is now a resident of Florida (and also accredited) who says he is willing to put in $300,000 as an investment which now allows us to dig into the properties at the higher end of our range. 

This is all great - however, my question now lays into the securities laws surrounding having 1 of our 5 accredited investors being from Florida, while the other 4 are in Wisconsin. Will this cause an issue? Are there certain laws or regulations that prevent this and/or special/additional documentation that will have to be completed due to this 5th investor being across state lines? Specifically Florida to Wisconsin? 

When we originally met with our attorneys, one of the questions they asked was if everyone was a WI resident. At the time they were so we thought nothing of it - we had no follow up questions. We can and will follow up with them again in this regard but I wanted to pick the brains of my biggerpockets colleagues in the meantime! 

Thanks much! 

Very cool @Lee Schram. I always enjoy seeing the before and after photos. 

In Wisconsin it is common that the SELLER pays the full commission. It's set at 6% and the tenant rep broker gets 3 and the sellers broker gets 3. Seems to work out fine and this is what happens 99% of the time.

Hope this helps

This particular property was in Racine.

I ended up finding some others in the greater Milw area that are closer to your figure - you're right, the $99k was a bit too much!

All good questions! All things I will start looking into. Wanted to make sure the up-front numbers make sense first!

Thanks Emilio!

Unit 2 is suppose to be $600... NOT $500. Please take that into consideration when evaluating - thanks much!