All Forum Posts by: Sarah Hatton

Sounds like a great project - cheers to you!

If you are taking on one project at a time and have plenty of liquidity to not only cover closing and rehab, but also rehab contingency for unexpected expenses - go that route. Bring in a hml when you're ready to take on multiple projects at once and scale. 

Hey Shulem, 

Redfin is a great site to find your ARVs. Enter the property address, click on the map and hit 'nearby homes for sale'. From there you can filter by asset type, sold date (try to stay within 3-6 months), square footage, and lot size. The more refined your search parameters are, the better comps you'll find. From the properties listed look at the ones that within the closest distance that have a similar structure (cottage vs brick, one story vs two, etc). Now match with the level of upgrades you are going for and there will be your ARV comps. Use the price per square foot (or maybe a self determined value between the top comps) and multiply by your subjects square footage to calculate your ARV. Hope this helps!

On the hunt for lenders who can handle larger development deals. I have several multifamily construction loan requests ranging from $5m to $20m. If you are or work for a direct lender who can take deals like this down please DM!

**Tagging some keywords to find the right people: Private lender, commercial lender, new construction, construction financing, multifamily development

Nice!

Hey Garrett, 

Does this partner of yours have capital to bring into the project? 

Have you considered taking on smaller projects to have some leftover liquidity after the down payment? 

Hard money sounds like a good option for you as these loans include funds for rehab. LTVs will range anywhere from 75-90% of purchase + 100% of rehab, held back to be released as the work is completed. These reimbursements can happen frequently throughout the life of the project, but that does mean labor and material will need to be fronted in phases (hence the first capital/liquidity question). Another thing to consider is the holding costs (monthly payments) for the loan; hard money comes at a higher interest rate so you want to have a clear path on the rehab timeline and exit strategy. On top of this I recommend borrowers go into a project with some additional 'rainy day' liquidity. You never know when an unexpected cost will come up, or if the market shifts and you have to pay extension fees on the loan. It's always better to be over prepared then under. 

Good luck!

Hey Aaron, 

Just a thought - have you explored opening a no-interest credit card for the window expense? I've had a few borrowers front rehab on CC until they get reimbursed and this was one strategy a borrower shared. 

Hey Brian, 

Each institution will have different ways of calculating rent.Here are just a few of the iterations i've seen: 

- 90% of in place or appraised rents

- Lesser of the in place rents or market rents

- 100% of appraisal rent

- 100% of AirDNA

- 125% of appraisal rent IF in place rents support a higher value. 

Hey Louis, 

I would consult with a lawyer or CPA but the general consensus is yes. If you are going the private financing route (DSCR) to purchase this property there is a chance your lender will require an entity, also an entity adds a layer of protection between you and the lender in case of litigation, and there are way to utilize your LLC for additional tax write offs.

Hey Andrew, 

Geraci law firm is a great option for generating loan docs if you want to be on the safe side (state specific disclosures and deal specific contingencies). They have lightning docs for $500 per set. Even if your a low volume lender doing 1-2 deals per year it's still worth investing in quality docs.