All Forum Posts by: Peter Giardini

Josh,

Happy Birthday to your baby!

Bigger Pockets is now the online standard that others can only hope to copy.

Stay true to your vision... as you are changing the lives of tens of thousands of people... one post at a time.

Pete

Eric,

This may take a while... these are some damn good questions.

As I mentioned in the first post, your research should be broken down by price points. Every market has different entry points for certain buyers.

For instance in Baltimore a first time homebuyer home is usually anything priced less then $200K. In DC however, that number is substaintially higher.

In today's market the primary buyers are first time homeowners. We can determine this because most mortages today are FHA or VA. So... your job is to determine from the comps what price ranges first time homebuyers are entering the market at.

Once you understand that price point, it is just a matter of deetermining the absorption rate for properties in your selected area and price point.

This all sounds complex... but it really isn't once you see these numbers on CMA.

I will try respond to some of your other questions as time allows.

Pete

Rashaud,

In my experience hard money lenders will lend around 65% of the ARV they determine. Usually they will finance up to 50% of the ARV for the purchase and then the remaining 15% is allocated towards repairs.

With that being said, a great deal rentlal or otherwise could be purchased for around 30% of the ARV, leaving upwards of 35% of the total loan for repairs.

Hard money lenders, lending on rentals will be looking for your reserves and ability to obtain permenant financing. If they can't get out within 6 - 12 months they won't do the deal.

Hopes this is helpful.

Pete

Eric,

I have found that for retail flips absorbtion rates are a great indicator or what is happening within specific zip codes.

Determining an absorption rate is pretty straight forward.

Using your local MLS, or tools like Realtor.com or Redfin determing the number of properties on the market in your specified area for a given period of time... and even price range. Once you have that data determine the number of properties that have sold in that timeframe.

The last step is divide the number of properties sold by the number of properties on the market. The result will be the absorption rate expressed as a precentage. I have found that in today's maket an absorption rate of 30% or higher is a decent place to be investing.

That 30% absorption rate signifies that the inventory in this location is turning over every 3 - 4 months. That is a healthy market.

Some MLS systems, like the one in the Minneapolis area capabilities that provide this data almost at the touch of a button.

Good luck... and I hope this helps?

Pete

First off... congratulations on completing college and actually finding a job! That in and of itself is a major accomplishment in today's economy.

I can't find in your post if you want to buy and hold or renovate for resale. Knowing your would be helpful.

I agree in part with Brian... having cash, if only for reserves is essential for every investor if they want to sleep at night.

With that being said... the key finding financing for a deal is to buy killer deals! Not marginal deals that rely on appreciation or are overpriced because they are turnkey.

The old adage is... if the deal is a good deal, the money will follow. So... spend your time finding killer deals.

A primary strategy that I strongly recommend is to use hard money to purchase the deal and if it is a rental refinance out once the property is renovated and lease up. Using hard money will allow you get into most deals with very little if any funds of your own, and as long as the deal is great it will be able to carry the hard money costs.

The same holds true for a retail flip... if it is a great deal it will be able to absorb the hard money costs.

I hope this helps?

Pete

Josh...

Congratulations buddy!

You have much to proud of.

Don't forget to take some time to celebrate.

Pete

Shari,

The best place to start looking is to attend local real estate investing associations. There will be plenty of wholesalers there. Get on their lists, go look at the properties they are wholesaling and work the relationship.

You will quickly find the good ones and see that there a many bad ones.

Good luck!

Pete

Nathan,

Congratulations on jumping... you sound like you have a plan and the will/capacity to execute it.

Your question regarding financing appears to assume that all of your deals will be financed via conventional financing means. While that may be a great way to get into a deal, as your post implies, there are significant limitations regarding the number of loans you can have. At this time the Fannie/Freddie limit I believe is 10 loans including your personal residence, but many lenders have capped their conventional lending to 4 loans.

S0... if you stay with the conventional financing approach you can expect to be done investing with your 10th property. That may be enough to achieve your goals. If so, great. If not... then what?

I recommend that you learn to finance your deals using commercial lending practices through small local banks. While the interest rate may be higher... around 7% or so, you will have much more flexibility with the number of loans and you won't feel like you are undergoing a proctology exam everytime to go through the process.

Also, using small local banks (you will be looking for portfolio lenders) your degree of confidence in knowing that your deals will get financed will be much higher.

I recommend that investors purchase their deals with hard or private funds and then refinance thosee funds out with a local lender once the property has been leased up.

Hope this was helpful... and best of luck!

Pete

17... eleven rental units and 6 retail deals. All completed start to finish in 5 months.

The scariest thing is how fast cash flows out of your business when multiple renovations are underway. Very scary!

A strong team, loyal well trained employees, stong lender relationships, and being just plain crazy will get your through it!

It would only matter if the tenant opens the letter.

By sending the recommended letters via certified and 1st class Angela will be covered to take the actions outlined in those regardless of whether the tenant ever opens the letters.

It will be very hard for the tenant to claim that Angela took an inappropriate action when Angela provides to the judge the unopened certified letters outlining her intent to protect her rights as the landlord.

Pete