All Forum Posts by: Rodney Marcantel

@Benjamin Cowles currently we have all funds in play at the moment but will have funds available in April or May depending on when client rehabs get sold.

But you're welcome to visit our website and see our lending guidelines and online application for future projects. www.buydallasinvestments.com

As a private lender, I have a rehabber who wants me to lend money to them. They do several RE transactions a year and look good on paper. I'm asking for $300 up front with paperwork to cover the cost of our RE Lawyer to produce a Deed of Trust. Is it fair to ask for $300 up front to cover that cost as a small earnest money investment by the rehabber? I don't see an issue with requesting this but they do and aren't willing to pay the $300 until closing.

@Kevin Burns, you might consider getting @J Scott's book Estimating Rehab Costs here on Bigger Pockets. Valuable information if you're new to estimating rehabs.

Should always follow the 70% Rule to attract investors.

Asking Price = ARV (average of 3 or more comps) X .70 - Rehab Costs

If you're comparing to homes that have 2 baths, then you need to adjust your rehab costs to include what it would take to add a 2nd bath. If that's not possible, then you need to adjust your ARV down subtracting what a 2nd bath would be worth.

Note: Some people don't understand a true ARV number. Make sure your ARV is the average of 3 or more comps sold in the last 3 - 6 months. If that's not possible, then expand your numbers (6 - 12 months or 2 sold and 2 active comps or expand your area some).

Also, your rehab costs should not be your personal estimate. Should be a firm bid from a contractor or several contractors.  That will really help to attract an investor.

@Mimi J., Private or even hard money loans are typically for short term as the interest rate would be higher than conventional loans. If using private money to fund buy and hold deal, we require your term to be limited to 12 months and within that time frame, secure conventional financing so you operating costs not hurt your profit margin. Private money for us starts at 7% at 70% LTV plus repairs. At 7% interest only payments past 12 months on a buy and hold property, there's a risk of market shifting downward and affecting our ability to fully recoup principle when you sell.

As a private lender myself in Dallas, I offer the following which depends on several factors including inspection report, expected ARV equal to the average of all comps pulled (preferably all sold comps if 3 or more are available within the last 6 months). FICO score greater than 650. No credit reports pulled. I will have $250K to lend by end of August.

70% LTV at 7%
80% LTV at 8%
90% LTV at 9%
100% LTV at 10% plus 2 points or 12% no points
Plus 100% Rehab Costs

Terms are 6 months (will extend under special circumstances)
All this assumes you're following the 70% Rule.

So if your purchase price is $100K (LTV) and your comps show average sell price (ARV) to be $160K - $175K and you put in $25K in rehab costs, we will loan...

70% LTV at 7% = $70K ($95K with rehab costs)
80% LTV at 8% = $80K ($105K with rehab costs)
90% LTV at 9% = $90K ($115K with rehab costs)
100% LTV at 10% plus 2 points or 12% no points = $100K ($125K with rehab costs)
Plus 100% Rehab Costs = $25K 

@Jesus Chavez, follow the 70% rule or run away from the deal. 

$410K ARV x .70 - Rehab Costs ($30x1100sq.ft) = $254K purchase price.

I'll use $30/sq.ft rehab as it's in the middle of typical costs and carrying costs around $2,500/mo. Here's my numbers...

On a $330K purchase, you'll need $378K to buy the house and sustain the rehab time.
$378K earning 7% interest will yield about $2,200 monthly. So you'll need to make at lest that much profit of a 6 month period to justify the purchase. That is if you have the $378K in cash to buy. If borrowing, then your carrying costs are likely going to be higher than what I quoted above. So...

$330K is too high and you'll lose money at $30/sq.ft. ($30x1100sq.ft=$33K). So add in closing costs of $24K and carrying costs (say 6 months $2,500/mo. = $15K). 

$330K + $33K + 24K + $15K = $402K

So if you can get $410K, you might walk away with $8K for 6 months of work if it takes that long or if you have drop your price any, you'll likely lose money and waste 6 months of your time. If it takes less time, then the numbers only change by roughly $2,500 each month. With that said, your extremely close to losing money and my numbers are based on no additional problems being encountered (the hidden repairs).

$8K / 6 mo. = $1,333/mo. earned at a sale price of $410K 

Maybe you can shorten the time to completion, but my numbers are closer to real numbers for the new investor and good conservative numbers for the seasoned investor.

@Account Closed yes, 20K - 70K depending on the classes and days you attend and parties, etc. I never attended cause I'm smarter than that. Although, they said they would work 3 deals (I assumed wholesale deals) with you to help with expenses.

@Brian Eastman, please send me info on your program so I can compare. Thanks.