All Forum Posts by: Mitch Messer

Having a rental property sit unsold for over six months is what I would call catastrophic, particularly if it's vacant!

However, before you switch agents, I recommend you gather up a bit more information.

You should request recent comparable sales data that will help determine whether the problem is a "slow market" or an incompetent and ineffective agent.

Has anything sold near the subject property in the last 190 days? If so, where, for how much, and by whom?

If not, the problem may be your market.

Also, did you ever get any interested buyers? How many? What did they say? Why didn't they buy? What follow-up was done?

You need more data.

What does your sales agreement say? I'm assuming it mentions a set closing date. If that date has already passed, and the buyer has not closed, you should be free to pursue other offers.

You only feel "bullied" and "held hostage" because you don't currently have other buyers. If you did, you'd simply close with one of them and then move on.

So, go get some!

We learned this lesson the hard way: Never stop talking to prospective buyers until you've closed. 

OK, and for these deals, I assume you use your own funds to acquire and rehab.

With private money, you're now substituting some individual's funds for your own.

However, unlike when it was just your money, you'll need to proceed with extreme caution to make certain your lenders are well protected if/when things don't go as planned.

Private lending is its own whole profession. It isn't something you can pick up in a few Forum posts.

Honestly, if you need private funding, you're best off finding an experienced private lender and doing at least one deal with them to at least see what's involved, long before involving your friends and family.

That is, unless you don't particularly like having friends and family...

Have you already closed your first buy-and-hold deal?

Phil, you're scaring me.

Your friends and family aren't experienced enough to understand why 100% LTV is a horrible idea. It's your duty to protect them and your relationship with them.

Sure, "their interest lies more in the monthly payments" right up until the payments stop coming. Then, someone is going to look very closely at that LTV and all eyes are going to slowly turn toward you.

But, let's say you DID borrow $110K (at 100% LTV) for two years.

What then?

When you go to refinance, no lender is going to offer much better than 65-75% LTV, which means under the best scenario you'll be $27,500 short in repaying your lenders.

Are you financially prepared to make up the difference?

Even if you're planning to just sell the property when the loan is due, then you've still got to take into account the transactional costs: agent commissions, price concessions, holding costs, and closing costs, to name a few.

And, what if it's worth less in two years than it is now? How do you plan to make your lender whole?

Lastly, I'm assuming you are the investor and they are just lenders. So, your comments about possibly taking an upfront $5K "fee" and a backend "cut" are confusing. You're the one borrowing the money. Who do you imagine would be paying you these fees?

I am completely missing what you're trying to do here.

Congrats on finding willing private lenders!

A few observations:

1. Your cash flow calculation is missing vacancy, maintenance costs, and capital expenses. Taken together, they'll likely cut your estimated cash flow in half.

2. You don't specify, but if you're using $110K in borrowed funds to purchase a property worth $110K, you're asking your private lenders for a 100% loan-to-value (LTV) loan, which is super risky for them and for you.

3. Most private lenders don't plan to lend forever, so you should consider how and when you'll get them cashed off.

4. The going rate for private money is considerably more than 7% (generally 10-14% in 10/2024). Your lenders may not know this yet, but eventually they're going to find out. You should plan accordingly.

If these are "friends-and-family" type private lenders, I would urge you to tread very carefully. Borrowing from loved ones is a minefield if not done properly.

Ask me how I know this...

My wife and I lived in Tulsa in 2021-22 and we did 6 wholesale SFH deals while there. The typical cash flows were very attractive (over $250/door) and we consistently saw cash-on-cash returns of 10% or better.

Although we've since moved on, we LOVED our "Tulsa time" and continue to do deals there!

The program that brought us there, Tulsa Remote (http://tulsaremote.com), pays digital nomads $10K to move to the city, and they do (with a retention rate of about 90%). It's one of the most successful programs of its kind anywhere in the world.

Yes, I'd say Tulsa definitely deserves a closer look!

How many loan brokers have you already approached, and what exactly did they say was the reason they couldn't get you refinanced?

For the record: You're not doing yourself any favors here with no profile photo, no info about yourself, no social media links, and only 2 posts.

If you're seriously seeking funding, I'd love to help you at least get an answer, even if it's "no." (My BP profile explains how to reach me.) 

I'm an active investor doing cash flow deals in Oklahoma, Pennsylvania, Georgia, and Michigan.

I'd be happy to compare real estate market notes with you.

Chantel, is your property cash-flowing? If so, by how much?

How do you know how much the building is worth? How much cash are you trying to pull out?