All Forum Posts by: Robert Walden

One of the advantages of using private money loans is that they can be structured more favorably than an HML or bank loan. However, there are still some general rules of the road that even private lenders expect. I used a PML in the past. But, it was from a family member who didn't charge any interest or points. And, my only experience with an HML was a nightmare! So, I'm looking for another private loan, but this time from an investor. I need to understand or confirm how payments are typically structured for a PML. And, I've read that private money interest can range between 5-15%, plus points. That sounds cost prohibitive for smaller loans!?! (I know each lender's terms can be different, as well as those of each project; some lenders may or may not charge points, interest can be paid at refinance, etc.). Here's what I'm trying to understand:

BRRRR Project (Example): SFH in decent condition, converted to multi-student rental
a. $60,000. asking price
b. $85,000. ARV (min.) [single family rental]
c. $10,000. cosmetic repairs and furnishings (beds, mattresses, stove and refrigerator)
d. Private loan - $70,000. at 10% interest for 12 mos., plus 2 pts.

If I understand correctly, the terms identified in Item d. (above), mean that I'll be expected to repay the lender $7,000. interest, plus $1,400. in points. But, is that $7,000. each month, throughout the term of the loan ($84,000., unless paid-off early), or is it $7,000. in total? If the former, that's more than double the expected rental income each month, and nearly pays off the entire ARV in only 12 mos. (assuming I can't refinance after seasoning for some reason)! How is that cost effective as a financing strategy?!? What am I missing here?

Also, how do I determine the true ARV, taking into account the increased value of monthly rent that's more than that of a single family's lease?

Thanks for the suggestion, Scott! Yes, I've heard of the "House Flipping Spreadsheet" software. I've even downloaded their Lite version. But, I haven't had a chance to use it yet. In your opinion, is their Free version any better than Bigger Pockets' "Repair Estimator" tool? We're a small 2-person company. What are HFS' best strengths and advantages? And, what version (free or paid) would you suggest might best suit our needs?

But what about a SFH being leased as student rentals, where they typically can't afford their own appliances, and they're used to traveling to laundromats anyhow (or the basement of the college dorm)? For them, wouldn't coin-op on-site be a convenience worth paying for as opposed to being "tacky", as mentioned above?

I appreciate your perspective, Bruce. Your points are well taken. The problem for me (and I suspect for many other investors) is that my current database of materials (which took me agonizing weeks of scrutinizing and downloading items, and their prices, SKUs, descriptions and images) is hundreds of rows long in my master spreadsheet, and isn't automated, other than the total at the end. I want something more like an automated database than a spreadsheet that enables me to do quick drive-by estimates so I can deliver an offer "subject to", and then expand it when I get back to the office into a more thorough analysis, should I get a response from the owner. Any other suggestions as to how I might address this dilemma?

Wow! What an awesome analysis of my research! Thank-you so much for all the time you took to respond!! I totally agree with the additional requirements you mention that should be considered; most notably being the ability to produce a SOW, and a materials list. (They seem like such basic features that I assumed, maybe incorrectly, that they'd all have that capability!?!) I'm curious why you didn't include Flipper Force as a possible alternative? Didn't want to seem biased, I suspect!?!  LoL  To be honest, I looked at it too, and strongly considered it. I just didn't include it because my list was getting too long, and I had to cut it off somewhere. Plus, I was focused on products that have more "automated" features (like floorplans created from a mobile phone video and a bluetooth tape measuring tool, or creating a materials list for designated upgrades according to code - e.g., calculating the number of electrical outlets by the length of a wall, etc.). Working by myself has become totally overwhelming and time consuming! And, I'm trying to find ways to automate many of my processes until I can afford to hire some help. I've been trying to identify products that specifically meet the niche class of estimating tools designed for the needs of flippers. Unfortunately, the ones I've found have the limitations you cite, and/or are for GCs and wholesalers. Do you have one or two favorite estimating software tools you recommend that meet these criteria for flippers? And, how does Flipper Force fare against the requirements we've discussed?

 That's what I wanted to know. Thanks for your expert feedback, David!   :-)

I've read a number of inquiries on this forum from investors asking for recommendations on "Cost Estimator" software for flips. Unfortunately, most of the replies I've seen on here tell people to read books, learn all they can, and develop their own spreadsheet. That may be good information. But, that's not really helpful in some situations. I've done several flips, and developed my own spreadsheets. But, they're not really efficient. The more complex my builds, the more time I find myself spending at the computer researching prices and crunching numbers! In fact, I lost a deal last year because it took me too long to modify hundreds of lines of pricing every time there was a Change Order, whether from my hard money investor or my contractor. Its become overwhelming! There's got to be an easier way!

While I understand that most of the off-the-shelf programs use a spreadsheet under the hood, I wonder if there's any added value or benefit to some of the more popular estimating or takeoff programs? I'm looking for something that easy to use and offers these features:
    a.) has a regional pricing database that can be updated with local prices,
    b.) is technically sophisticated, customizable, and flexible,
    c.) is affordable for a 2-person operation (around the $100./mo. price range or less),
    d.) is scalable, for when my business grows, and
    e.) OPTIONAL - has a suite of related features (such as soft money lenders, list of foreclosures and vacant properties, a CRM, automated marketing, etc.).

I've looked at Bigger Pockets' "Rehab Estimator" tool. And, while it certainly seems useful, especially for the investor that's just starting out, my impression is that its not as robust as some of the commercial products on the market!?! Is that a correct assumption? I've done considerable research the past few weeks. And, here's a list of the products I've reviewed that seem to hit the sweet spot between a small investor's needs and a corporate-sized platform:

Cost Estimator (and Takeoff) Software

    1. Rehab Estimator Calculator (Bigger Pockets tool) - FREE

    2. Houzz Pro Estimating Software - $99,/mo.

    3. Buildertrend - $99./mo.

    4. Xactimate Remodel (Verisk) - $50./mo. for Studio version (first year only)

    5. FlipSter System - $97./mo.

    6. REI/kit - $ 64./mo. for Marketing Starter; $104./mo. for Markting Success (includes more/better leads)

    7. Simsol Estimating Software - $100./mo.

    8. Clear Estimates - $59./mo.

    9. Autodesk Takeoff - $104./mo. to $155./mo.

For Apple users only....

    10. Property Fixer (Apple devices only) - $20./mo.

    11. Property Evaluator (Apple devices only) - $20./mo.

At the very least, I've provided a curated list of what appears to be some of the leading software in this market. All of these have their own , and weaknesses. A few were recommended by Bigger Pocket members; two by an insurance adjuster who's also an investor. But, several appear to be geared more toward wholesaling rather than renovations or multi-strategy. And, some appear to be more for contractor Takeoffs. (I'm not sure if there's a difference between the usefulness of Takeoff software for rehab estimating or not!?! Please explain.) Has anyone used any of these programs, or have any opinions about them? And suggestions about these or other solutions to my problem would be greatly appreciated, so I can spend more time finding and flipping houses, and less time being an accountant!

Thanks in advance for any input or advice you might offer!    :-)

Well, the house went for $295,000. at the silent auction. One buyer in particular kept bidding up the price. Unfortunately, in view of the extensive work that's needed to repair a leaky roof, resurface the driveway, gut and modernize the kitchen, plus stabilize the hillside leading down to the water, I think they paid too much. The ARV, by my estimation, tops out a around $350,000. for that location. And, they've got at least $50,000. or more of needed repairs before they get up to the high-end quality of the properties on either side of them or across the street. Good luck!  LoL

Thanks everyone for all your help and suggestions!    :-)

Hi Chad -

Thanks for your response. Did you see my response to you and Bob on April 28 at 12:23pm?

- Robert
:-) 

Hi Bob -

Thanks for your response. Did you see my response on April 28 at 12:23pm?

- Robert
     :-)