All Forum Posts by: Nathan Spangler
Nathan Spangler has started 3 posts and replied 5 times.
Post: Financing for Flip Opportunity
- Posts 5
- Votes 4
Quote from @Jeff S.:
You might review your numbers, @Nathan Spangler, and perhaps post them here (Purch. Price, ARV, & Rehab Est.). Does your $150k to $200k in profit represent the difference between the ARV and your purchase price or is it the result of a detailed P&L evaluation considering at least the construction costs, HML charges, and realtor sales commissions? I'll guess the former.
For properties with an ARV less than about $250k or so, a purchase price plus rehab estimate totaling around 70% of ARV will result in a profit between about 12% to 15% of the ARV.
You can use 75% for higher priced properties and result in the same profit as a percent of ARV.
Claiming a $150k to $200k profit suggests to me that either you're looking at an ARV in the $1M to $1.5M ballpark, for which I'm doubtful, or you are simply subtracting the purchase price from the ARV and calling that your profit. It's not. This is a common error when valuing a property because it ignores all other expenses beyond your purchase price.
How did you calculate the profit you claimed?
Be careful with any lender who either doesn’t know how to calculate profit or is willing to work with you even though the numbers don’t make sense.
The target PP is $500k, estimated rehab is $200k, ARV between $900-$950K. I did not factor in HML charges, so I suppose there is a bit more in terms of cost, but still a very healthy profit.
Post: Financing for Flip Opportunity
- Posts 5
- Votes 4
I have an opportunity for a flip that would require significant financing. All the hard money lenders I've talked to are saying they require purchase plus rehab to be 70% of ARV. This opportunity doesn't quite fit that, but the numbers still leave between $150k to $200k in profit.
Is there anybody with other options that deviate from the 70% guideline?
Post: Financing 2nd, 3rd, 4th property
- Posts 5
- Votes 4
I am trying to buy my second rental property, and am running into issues with financing given my existing DTI. My first property is under my name, as is my primary residence. When I go to purchase a second rental property, my DTI is too high as a result of having two mortgages (even though the first rental property cash flows).
What are the best options for obtaining financing in a situation like this? Would doing a quit claim deed to an LLC remove that obligation from my personal DTI calculation?
Post: House flipping advice thanks!
- Posts 5
- Votes 4
Tell people what you are doing. I've been able to get two flip properties from people that knew I was looking for flip properties (friends, family friends, etc.) referring me to somebody they knew that had a property. This also applies to private money. The three flips I've done were financed by people I knew that were looking for a hands-off investment and were happy to front the money. The key was making sure people were aware that I was looking for properties to flip.
Hey BP,
My name is Nate and I live in SE Wisconsin with my wife and four kids. I've always been interested in real estate; my dad owns his a property management company, handling large multi-families for other investors, and owns around 20 doors himself, so I grew up with real estate being a focal point of the family. I even added a real estate major during my undergrad. Now I want to use it to take my family to the next level.
My dad and I have flipped two homes together and are currently working on our third (a pain of a cat house we had to tear down to studs). I also bought a side by side duplex in July for my first long term rental investment. That property was purchased for $164,500 with 25% down (HELOC on primary residence to obtain) and a 3.5% note. It currently rents for $2,025/month with monthly expenses (including the interest on my HELOC) around $1,400. I'm extremely anxious to find my second property, but don't have the capital right now.
I have a goal of an additional 8 doors in the next five years, which I think is extremely achievable if I can find a second property this year. After that, that income snowball should begin to make it a lot easier to put together down payments for a third, fourth, fifth, etc. I'm just putting this out there for some accountability to keep pushing toward what I want. I'm looking forward to learning from so many of you.