All Forum Posts by: Raden Mantuano

Is there a pre payment penalty? reason I ask is what if in 5 years the property has increased significantly in value and you can refinance the whole thing and use the extra money to quickly fund another purchase that would get refinanced quickly as well. Also do the terms allow for secondary liens? I think it's great for cashflow if that's your goal, but what other doors can you open with that property?

Hey I’m at work currently, but to answer your question. No Pre payment penalty at all.. so it’s great.. as far as the second lien goes I am not quite sure, but I believe so based on the note that we agreed on

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Originally posted by @Matt Gilroy:

@Raden Mantuano How is the first month going on this?

So far it’s going good, just getting rent ready by March 4th. Seller gave me two months free on this until it’s rented out. Actually working on another deal so I’m looking forward to that.

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Originally posted by @Caleb Jordan:

Originally posted by @Raden Mantuano:

So my partner and I are hitting a dilemma trying to a obtain financing for a multi family triplex deal. Most lenders are rejecting us due to the loan minimums. It’s either too low, or we are too new.. is there’s anyone else you can recommenced? Or how would one go about this?

I'm confused as to how people are utilizing the BRRRR or regular fix and flips with hard or private money in those areas when most of the mid west properties are much lower in purchase price.

Private money from strictly retirees? Doctors? We’ve already reached out to the lenders recommended but still a no go..

ARV: $130k

Rehab: $14,112.87

Purchase Price: $77k

Loan Amount needed: $72k + Rehab

Your guidance is greatly appreciated community! Thanks

So that counts as some experience. Some local banks in Ohio might work if they are willing to finance with you being out of state.

Your partner have any experience?

I know of a hard money option that could probably fund 80% of cost, but if your looking for lower out of pocket I don't know of anything.

No experience, he’s pretty much my funding, finance, credit score, money guy. As I’ll be the operations and active partner

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Originally posted by @Caleb Jordan:

Originally posted by @Raden Mantuano:

I'm confused as to how people are utilizing the BRRRR or regular fix and flips with hard or private money in those areas when most of the mid west properties are much lower in purchase price.

Private money from strictly retirees? Doctors? We’ve already reached out to the lenders recommended but still a no go..

ARV: $130k

Rehab: $14,112.87

Purchase Price: $77k

Loan Amount needed: $72k + Rehab

Your guidance is greatly appreciated community! Thanks

Most often the minimum loan amount is 75k or maybe 50k. With that project if you found a lender that can give you purchase and rehab funds with small down payment it could be above the threshold.

Have you or your partner owned any property before even a primary that could show you've at least have homeownership experience?

PM if you'd like, I may have an option for you.

Just my one rental.. but not a primary

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Originally posted by @Matt P.:

@Raden Mantuano where are you located?

I’m in Southern California, property is In ohio

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Originally posted by @Justin R.:

For starters, I would work on your presentation, and deal analyses. No lender will take you seriously when you present a rehab amount of $14,122.87. Your rehab budget is 15k.

If I was in your shoes my borrowing list would look like this.

1. Personal Capital

2. HELOC

3. Cash Out refinance

4. Bridge Loan (small local bank)

5.Conventional Loan (tough lending standards, higher closing costs)

6.Private money (friends, family, partners)

7.Hard money (Yes they WILL lend to you, but they are more interested in the "deal" than @Raden Mantuano

Best of luck!

Appreciate the advice! Just thought it’d make sense to list the exact amount of the rehab cost the contractor budded now for us.

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I'm confused as to how people are utilizing the BRRRR or regular fix and flips with hard or private money in those areas when most of the mid west properties are much lower in purchase price.

Private money from strictly retirees? Doctors? We’ve already reached out to the lenders recommended but still a no go..

ARV: $130k

Rehab: $14,112.87

Purchase Price: $77k

Loan Amount needed: $72k + Rehab

Your guidance is greatly appreciated community! Thanks

1 Vote

With all the hype with the BRRRR strategy.. I'm wondering since the banks will only lend up to 75%-80% of the appraised value (ARV).. the equity thats left un touched.. can that be converted to a HELOC to acquire more properties right away? what's your thoughts on this and is it even doable?

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Originally posted by @Ryan Blake:

@Raden Mantuano Where are you getting your HML calculators from? I would only use the one from the company you are working with. The reason for the difference is each HML will have a different requirement on your portion of the purchase price. It can be anywhere from 20% to 0%. The example you give of being fully covered by the LTV of the ARV (75%) is accurate if the company is willing to financing 100% of the purchase and 100% of the repairs. Right now, the most common I am seeing is 90% of purchase and 100% of repairs. In this scenario you would need $8k for the purchase, $3,700 for the points, and $1,800 for loan fees. This would mean you would need $13,500 less your $5k EMD leaving $8,500 to close on the loan. Then you will still need to fund the closing through title/escrow/legal office depending on what state you are in. The reason your points are high and your fees are high (both higher than average) is because you are getting a low interest rate (much lower than average). If you plan on making this a really quick flip, then this is probably not the cheapest option. If you are doing a BRRRR (like you said above) then you may hold this 6 or 12 months before a refi the low interest may really be worth the extra up front fees.

Things you need to ask:

1) What is the % financed on purchase?

2) What are your draw fees? These are fees charged each time you pull on your repair funds.

3) Is there a pre-payment penalty, back-end fees, or any other fee that you haven't discussed with them yet?

4) What lenders do you (the HML) regularly work with for refis? You want to set your refi company up as soon as possible to get a full understanding of their requirements.

Good luck. Hope you get your feet wet and get a good cashflowing property.

Hey Ryan,

Thanks for the response.. those are def some great questions to ask.. it helps break down the numbers...

is it normal to have little to no cashflow during the stabilization process? because with this deal, there are currently two tenants already occupying the property (section 8).. we are planning to renovate the one unit and the exterior, raise the rents in that unit and overall, in hopes tenants do stay so our estimate can just be with the one unit and exterior, that way it can give us time to collect some cashflow till the two other tenants leave.. or does it make more sense to get the overall loan on all three units?

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So lately i've been on a blitz on cold calling home owners in different states and have had several opportunities to submit LOI's, analyze and crunch numbers. Felt so busy the last few weeks doing so, as i've been back and fourth on here as you maybe have seen. I'm having a tough time calculating and projecting pro-forma on a Triplex opportunity shared by a local wholesaler... am i suppose to calculate those numbers based on a conventional loan or hard money terms?? and also, can someone clarify as to how hard money is calculated using the BRRRR, as we are looking to do it with this deal, using that strategy.

Details......

ARV: $132k

EMD: $5k Towards Purchase

Rehab: $15k

Purchase Price: $79k

Hard Money Terms..

Interest: 9%

Points: 4% = $3760 (I think is HIGH)

Loan Terms: 75% LTV

Closing Costs: $1797

Total All in Cost: $99,557

Here's whats confusing me on the HML part.... since we are trying to leverage most of the money used on this deal, meaning EMD, Purchase, Rehab and maybe closing cost leveraged by HML, Does this mean at a 75% LTV.. the highest leverage we can obtain on this deal is 132K x 75% = $99k??? I'm calculating 75% of the ARV (Correct me if im wrong) Meaning our purchase price $79k plus the rehab bid $15k = $94k is pretty much covered by the hard money lender?, and the only out of pocket cost for us would be any difference outside of that total cost (Points, fees, closing costs and etc)?

However, Every time I use a HML calculator online, I'm getting different numbers everywhere, one calculator shows, all we need to come up with is $6k for closing costs, the other says, we need about $25k to close this deal, i've also asked another lender and they mentioned that it'll take about 15% of the ARV to close this out of pocket......So i'm confused as to what a rule of thumb is on this, so i'm calculating our strategy right.. and also, because using hard money can be HARD as far as terms goes, do you apply the high interest only payment as a holding cost for the time being and not for the pro forma analysis?

Thanks in advance everyone

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All Forum Posts by: Raden Mantuano

Raden Mantuano has started 11 posts and replied 50 times.

Post: Question on Interest only loans..

Post: Question on Interest only loans..

Post: Minimum Required Financing Dilemma Need Help

Post: Minimum Required Financing Dilemma Need Help

Post: Minimum Required Financing Dilemma Need Help

Post: Minimum Required Financing Dilemma Need Help

Post: Minimum Required Financing Dilemma Need Help

Post: BRRRR then HELOC strategy after Refi?

Post: Financing calculation confusion for the BRRRR strategy.

Post: Financing calculation confusion for the BRRRR strategy.