All Forum Posts by: Ryan Blake

@Kevin Turano

I don't think you will find a lender that will lend 88% LTV (88% of the ARV). I have seen some that say they will lend 80% LTV but then make you put down a 20% down payment on the loan amount (just so you know this is essentially getting a loan at 65% LTV). Many lenders are in the 70% to 75% range and will make you put down a 10% or less down payment, sometimes even no down payment. This would be the 100% financing you are referring to with the low out of pocket number you are looking at.

I think this same deal would work if the numbers were:

ARV: $340k

Purchase: $200k

Repairs: $50k

Then you would need to get a 100% financier that would go up to 75% LTV. Hope this helps spread some light on the situation.

@Mark Puen Short answer, YES. This is a great way to get started. Make sure you have enough capital to make the payments and keep construction moving while you are working on the property. Then refi. Make sure you have your refinance bank ready to go as quick as possible so you aren't in the hard money loan longer than needed.

@Tuan Phan

Welcome back to DFW. It has been a market that is hot, and now possibly overly hot. In 2009 when I started we were buying properties at 60% to 65% of the ARV including the repair number. Now wholesalers are looking for 80% and you might be lucky if you jump on an MLS deal quick and get it for 70% to 75%. Best way to get deals now is to source them yourself but this can be costly and time consuming. It is all about the working relationship you have with your GC or subs and capital. If you can keep the costs down on these two items, you can purchase in the 75% to 80% range. If not, then you really should be purchasing sub 75%. I can't give you exact numbers because the are all going to be relative to each property. I think staying at the $150k to $250k ARV in the Tarrant County area or $200k to $300k ARV in the Dallas County Area is a good starting point. This is the range of properties that should fly off the market if done well and priced accordingly.

@David Hull Your interest on the hard money loan will also be a deduction. It should be treated the exact same way as an LOC or just a business loan. When it comes to businesses, even sole proprietorships, expenses are all deducted from income.

@David Hull To start, I am not a tax accountant and am not providing advice as such. I do have my accounting degree. I don't know of any significant advantage from a tax standpoint towards one or the other. If you can get your business loan as a line of credit (LOC) then you only pay for the money that is drawn out. Therefore you would not be paying for money that is not at work. Also look at the difference in interest rate. You are probably paying more with hard money. Depending on what your company can qualify for, you may even use both. Use your LOC to get some base funds and then use hard money to supplement. Maybe you fund one deal solely with personal funds and then any additional deals you do you can use hard money.

As for LLC or sole proprietorship (that is the default if you don't use an entity), your tax benefits should be nearly the same. LLCs that are not filed as S-corps are just a flow through entity and earnings are filed on your personal taxes. The benefit that comes with the LLC is asset protection. Anything done by the LLC when the corporate veil has not been pierced is protected in that the only assets subject to litigation are those owned by the LLC outright. No personal assets are subject to loss unless gross negligence was present.

Hope this helps some.

@Juan Martinez

What the lender is doing is very normal. Most lenders will only lend if it looks like a good deal. It is expensive to take back a property so that is not the goal at all. A good lender should work with you and provide as many resources as possible. However, they should not be running the property or making finishout decisions, only providing advice or a list of names of possible contractors. You should still be free to do what you want and choose who you want to work with. If that is not the case, there there could be some legal issues with you working as an agent of theirs and not independent.

I think when you are staying LTV you are actually meaning LTC. I get to this conclusion because you are stating that they are lending 80% and you are paying 20%. That is a loan to cost equation. When looking at the maximum loan they are willing to give based on the ARV, you are looking at LTV (most lenders are between 65% and 75%). As for LTC most lenders fall between 80% and 100%.

@Steven Ngo If you want an experienced team I would check out either @Sherry Patterson or @Kyle Mccaw and their respective teams. They are both great.

@Chika Nworah I would search for land in the North Dallas, Plan, Frisco, Lewisville, Grapevine, Southlake areas or anywhere along highway 75/Central Expressway.

@Chika Nworah What is the cap rate you are looking to buy at? That will be the biggest determining factor. Because neighborhood classes are so subjective, I don't know if that is purely the best way to look at things. A class neighborhoods will typically be one's with the highest household incomes. You can do that search pretty easily. But know in DFW you will be at a 4 - 6% cap rate in these places. If your ownership group is okay with that, perfect. 

Here is the reverse google search for the two guys. They used the pictures on the far right and far left of the search.