All Forum Posts by: Sanjay Patel

Hello,

I have been lending to local small companies who rehab and flip houses.

I wanted to know if there are any resources or advice on how to vet deals,and how to structure them?  I realize every deal is different.

I've also run across several different scenarios and would like your opinion:

1. lending to a small lending company where they handle all interactions with the rehabber and I do not get a deed of trust and monthly interest

2. lending to another smaller company (again they handle the entire rehab), I do get deed of trust, higher interest, but interest is paid out at the sale of the house

3. a local private placement fund (lowest interest of the 3).

In cases 1-2, I get to see the property, case 3 not so much. These are generally 9-12 mo deals.

I have good relationships with the above and successfully participated in a few of these deals, so I haven't learned much about what could go wrong.

How do you gauge risk of the above scenerios? How important is it to actually touch and look at the property you are investing in? Should I be speaking with the actual company doing the rehabbing? what are the risks in these scenarios?  

Many thanks for your advice.

Sanjay

thank you everyone. I think IRR is a good approach. My thinking is that IRR is the same calculations as CAGR is in the equities market world. If anyone is willing to share their blank excel template I'd appreciate it. I will post mine if I feel confident in my method.

Hello, 

I would like the forums opinion on how you are measuring your profit in terms of price appreciation for buy and hold properties. For example, I recently sold a rental that was in my family for 35 years. Just to put example some numbers around it, net of all commissions, the price appreciated by a factor of 3 (e.g. $10k to $30k over the 35 year period).

My question is : would you measure your success based on compound rate of return (looks lower) or based on a simple interest model (looks better)? 

Ideally, I would like to be able to compare returns future buy and hold real estate, with my buy & hold stocks.

I understand that there are other important parts to this model (depreciation, expenses over time, etc.) but I want to start with the basics (just price appreciation).

Many thanks for your opinion.

Sanjay

Hello,

Can someone tell me the name of the company that specializes in loans for rental properties? I believe I heard them advertise on one of the podcasts.

maybe BT mortgage or something.

thank you

Sanjay