All Forum Posts by: Peter K.

Hi Timothy.  It sounds like you are on the right track and are very close to putting this all together.  GCA is a great option. They will do a 50/50 net profit split in most cases.  And they will bring money, tons of experience, accounting, project management, etc.  They will want a few contractors to bid the job and you'll have the option to take the project if your quote is reasonable compared to others.  If not they will hire another contractor and you'll still get your net profit split at the end. 

Another option is to spend some time calling 25+ Hard money and private money lenders.  Ask the leaders of the local Rei meetups for good private and Hml lender referrals.  Use Google and search "Arv hard money lender" plus your town or nearest large city name  Also look at the lender search here on BP.  

Come up with a 30 second elevator pitch explaining what you are looking for and what you are bringing to the table. Be nice, honest, open, confident, professional, build rapport. The person on the other end of the phone might just make you a millionaire. Ask them their criteria, rates, Arv-based or LTV based (Arv is much less common but probably better for you as you'll need less cash up front), min/max dollar amounts, geography they like to lend in, etc

Most good hmls have a huge network of contractors, investors, appraisers, etc   If you develop rapport, and promise to bring them your business they will sometimes open up their network to help you if there is a missing piece of the puzzle.  

Spend an hour or two and put together a portfolio of completed projects with before and after photos, basic numbers ( purch price, Const costs, basic scope of work, holding costs, finance costs and sold price, net profit)   

Since you have experience in most aspects of the project except finance, the main missing piece will be filled by a good hard money lender.  Go find the right match and enjoy the profits.

For the long run, talk to everyone you know about what you do and that you can help people earn 10% plus returns on real estate secured loans.  Over time, you'll have access to more money than you can easily place.  Most title cos or RE lawyers (whoever does escrows in your state) will handle the paperwork between you and the private money lender.  

Third option is to attend the top 2-4 rei meetups in your area and get known as the contractor that will JV with investors. From my experience, the two hardest parts of the flipping business is finding deals with enough meat on the bone and finding reliable , fast, experienced contractors. If you become known as a contractor willing to work at cost for a piece of the back end, you'll be too busy.

Best of luck!

Hello BP Community!

I have a flip opprotunity in the Bernal Heights area of San Francisco with some meat on the bone.  I was originally going to rehab it...and still may, but I have a few other opportunities and am thinking of taking a fast dime, rather than a slow dollar. 

Here is a quick overview.  If interested and qualified, I can send more details:

Currently, house is legally 2/1, 1250 s.f.

Purch Price to you:  $1,020,000

Construction budget: $300K (6-8 month project...maybe less if you have a good, fast crew)

ARV: $1.8M

Scope of work:

 - Gut rehab of existing square footage

- Rework the already finished basement to non-permitted in-law quarters of around 1,000 s.f.  Basement is already finished.  I would update and add a kithenette and laundry to make it "rentable" or great in-law unit.  For some additonal budget, it's possible to permit basement with some excavation.  

- Convert attic to permitted s.f. making the main living area around 2,400+ sf.  Already talked to the city.  This is an over-the-counter permit, since the building envelope is not changing.  There is 10' height in the attic.  7'6" is required for living space. 

- Add large deck off of kitchen to back yard, dramatically increasing usability and creating amazing views of the city. 

Finished project would be a 2,400 to 3,000+ s.f. beautiful, renovated home in a good area of the city with amazing views and a large deck for entertaining.  

Qualified, experienced cash/private money buyers, feel free to call or email me for more info. 

Happy Investing!

Peter

hello @Elvin Pena need more detail.  All depends on the following:

Commercial or residential.  

If resi, is it sfr, 2-4 units

If commercial, what type?  Retail, hotel, 5+ resi, etc

Owner occupied or non?

Approximate loan amount? And/or as-is value and Arv. 

Borrower strength?  

Asset base, other properties to cross collateralized. 

If you don't want to share this info publicly, you can pm, email or call me and I can give a quick idea of viability and approximate rate and terms.  

Happy investing. 

Hello @Ramon Jenkins   Good question.  Wholesale lenders or standard lenders with a wholesale department typically give discounted rates through Mortgage Brokers since we are bringing the client and handling the loan processing for them. 

It is why often times why a good mortgage broker can be very competitive to direct lending quotes (often times even more attractive) and make the client's life easier by being able to shop many sources for them and have multiple back up sources, should the loan get rejected by the lender's underwriting dept.   

Because we already have a complete loan package put together, you often won't have to start from scratch with each lender...filling out multiple applications, resending finacials, taxes, etc.  

Having said all of the above its still a good idea to get at least one quote from a direct source to compare.  Especially if you have a banking relationship with that source.  Some institutions will be quite competitive and a little more flexible to their existing clients. 

Commercial blanket loans against multiple residential properties are fairly common. I have 10+ wholesale lenders that do these loans regularly.  

The rate and terms are very dependent on property values, locations, LTV and borrowers strength. Generally speaking you'll likely see rates in the 5-7 range. Terms vary widely. Most will cap out at at 70% LTV. Commercial Hard money could be another option if you getting a great deal. Once tenants are in and rehab (if needed) is complete you can refi to a more palletable rate.

I would start with whatever institutions (banks, credit unions, etc) that you currently have accounts with.  Because of the relationship, you may either get a loan from them or get a good local referral.  Lenders local to the properties will typically be a little more flexible and affordable.   If not or if you want a 2nd quote, feel free to reach out to me. 

Hi Travis. Welcome to the BP community. This is the best site that I've found for networking and sharing REI knowledge.

Maybe I'm confused, so bear with me.  But what does the mortgage co have to do with this transaction?  Are you trying to negotiate a lower payoff?  Unlikely unless owner is behind on payments. 

Here are my thoughts...not legal or professional advice.   Let me know if I misunderstood something.  

1. Write up the offer with as much runway as you can with the seller. 45-60-90 days, if possible. This gives you breathing room and flexibility to find a buyer, with less pressure. Listen to Michael Quarles "Buy Sell Fix Flip" (BSFF) podcasts. This will give a great overview on how to structure deals directly with a seller. This sounds like a great potential oppty for a Subject To deal. But even if seller won't do a Sub-To, the end buyer will simply pay off the mortgage. I would also recommend paying the $100 or so to join the BSFF Academy. This will give you access to all of Michael's forms, including his purchase agreement, which is golden. It gives marketable rights to you so that you can sell the property via MLS or other avenues, while in contract. (Pay the small amount to have a RE lawyer review the form to legality in your state, but find one that specializes in RE Investing ,highly preferralbe if they are a RE Investor themselves). Michael does over 200 transactions per year for many years, with this form.

2. Immediately put bandit signs saying something like "3/2 House for Sale, Cash Only" or words to that effect. This will generate a ton of calls to help build your cash buyers list, and may sell the property. Also if you use Michael's form, you can immediately put it on the MLS (this is called Wholetailing). Depending on your market, you will likely get a higher price than if you do traditional wholesaling. This is because it gets a wider audience, and you get the potential of contractor/flippers, contractor/owner-occupants, and owner-occ buyers that are willing to do the work slowly over time. They often pay much higher than a traditional flipper.

3. Put it on Craigslist, backpage and all of the other RE listing sites. 

4. Once you find the buyer with a fair spread for you simply assign the contract to them for your negotiated price.  Chances are that you will make double by wholetailing it.  I would recommend negotiating a non-refundable deposit of 5%-20% if possible to insure that you have a real buyer that won't play games. 

Whichever route you decide to take, I don't see where the lender gets involved.  They either keep getting their payments via Sub-to or they get paid off at close of escrow.  Read up on sub-to, because there is a slight chance that they will excercise the "Due On Sale" clause, but it rarely happens.  Even if they do, you will have time to find other exit strategies, depending on the foreclosure process in your state. 

None of the above is legal advice, just my 2 cents. 

Happy Investing!

Peter

Absolutely.  Would be great to meet up. My schedule is pretty flexible...until it isn't.  Lol. 

Can you send me a calendar invite?  [email protected]

Sorry for the typos.  Big fingers and iPhones are not a great combination.  :-)

@Jay Hinrichs   Thanks for reaching out Jay!

@Account Closed  Thanks, Michael!  

Essentially, it's putting the property right back on the MLS, with little to no work done. In this particular case, we are planning to draw plans and pull permits to market it as a "Turn-Key Project". This strategy works well as a Plan A, with Plan B being to complete the project. We usually decide to accept a "wholetail" offer if we can net close to half of the profit that we would by completing the project.

Michael buys directly from a motivated sellers and has provisions in his contract to be able to market the property while in escrow, avoiding double closings and costs.  So far, we are closing, then marketing, which adds 5% or so in closing costs. 

Benefits are: short exit (less than 45 days total, usually), no project management, less risk (market changes, project delays, inaccurate ARV,etc) and little to no construction costs. This seems to work well in a hot market. In the Bay Area, we are seeing tear downs go for way over "as-is" value with multiple offers. If you can't beat 'em, join 'em!

We completed a wholesale deal in the East Bay a few months ago.  The only work that we did was to fumigate for termites, a small amount of clean up.  We sold it in under 60 days for $100K over purchase and netted around $65K after closing costs.   We would have netted about double that had we completed the project, but with all of the above benefits, it made it an easy decision for us. 

Regarding the Bernal Heights deal in San Francisco. Close date is a couple of weeks out. We are probably not interested in a 50-50 on this one as we just received a private money offer for reasonable points/rate with a small back-end. As you know, there is so much money looking for yeild in this area, it's pretty competitive. I may be interested in JV'ing on major construction deals, in the future.

I'll send you an overview of our recent projects and a proforma for the Bernal Heights project.  Hopefully, we can find a great project to partner on.  

Have a great week!

Pete

Hello @Marcus Svehlak

@Johnson H. @J. Martin all host BP- friendly meetups in the Bay Area.  Also I attend SJREI and Thomas Brahglemann's BaybArea Private Money meetup hosted at Harrys Hofbrau in San Jose.  All are on meetup.com.  

Let's chat and grab a coffee or lunch sometime.  I Ana local Rehabber and Commercial Mortgage Broker.