All Forum Posts by: Darrell Shepherd

California is probably pretty strict.  In Georgia anything you touch has to be brought up to current code.  I do some stuff in Ohio and the norm there is to leave the old stuff and run a grounded outlet to each room, I guess because rewiring there is a huge job with the nob and tube wiring and plaster walls, you cant pull anything through with all the knots in the wire.

Anyway, its pretty safe stuff.  Not ideal, but it works.  Big thing there is not to use grounded outlets with non grounded wires.  As far as when to upgrade, a lot of that depends on how extensive your rehab is and what your exit is.  I tend to avoid fixing things that arent broke, but would have planned on electrical with a 100 amp service on 3 units, especially if its the old screw in breakers.  I replace those 100% of the time.

Both work, actually. I do both pretty regularly, and bring the money on JV deals and split profits too.

Here's what so many people miss with this "its cheaper to borrow" stuff, once you get to 100% financing its more about a return on time than anything else.  Just do bigger and/or more deals to cover the split difference.   Plus, once you get to 100% financing with someone else running your rehabs, guess how nice your life can be?

Finding them and funding them is where you should be spending your time once you know what you're doing, that's the part you can't really outsource.   The rest of it you can pay someone else to do for you.  If you can get them funded at 100% with minimal supervision you can up the size of the deal and up the volume without much additional work.  I'm running 9 right now, well 6 active, 3 are newly on the market.  I might have put in 3 hours of work today.  Don't get me wrong, I have my 17-18 hour days too, but I'm not exactly overwhelmed with those numbers and I have zero of my dollars in any of them.

Jeff is spot on, in this environment, the deals are harder to come by than the cash.  In most markets, anyway.  It was the opposite in 2012.

On the split stuff, I personally don't do them when I bring the money unless the split is 50/50 and the profit is over $50k.  Borrowing I pay my institutional lender (who I broker for) 2pts and 8%.  I pay my private lender 2pts and 12%, but no payments there and he lets me put 2nds behind the institutional stuff if I want.  I'm about 70% private money and 30% institutional money right now, its more expensive, but way less headache once the relationship is there.  I could probably borrow for less, but I like to keep him happy so he says "sure" when I ask if I can borrow $360k by Friday on a Wednesday (I literally asked my guy that on the way back from a bar 3 months ago...got the money, bought the house and filed the security deed a month or so after.  This is very much a relationship business)

Anyway, my advice is to go to the money guy and say you want to do business together but you are looking to structure it more for as a lender than a partner.  You want to be the one picking paint colors and at what price to sell it at and you don't want to have to worry if you buy tools at Home Depot and bill it to the rehab, which is fine with a lender, but theft with a partner, etc.  Also explain that it'll keep your relationship better, because there will be cost overruns and surprises and as a lender, his return is unaffected.  Say something like  "is there a rate of return that'd you'd be real happy with knowing the loan is secured by real estate at 70% of its value?"  Mention the stock market is losing $ right now, then offer 2&12 or whatever.   

Happy to talk you through what I do if you want to ring me up sometime.

Yup. Not sure about Washington, but everywhere I know of you're 'license' is to work as an agent for a broker and you can't become a broker until you've been an agent for a couple of years. You should be able to find a broker that'll hold your license and not do much for you for minimal split and cost. You don't need Re/Max or Keller Williams or whoever if you aren't hustling up clients and using their branding and training.

Been like that in Atlanta for a while now...

Yeah, he's definitely acting as an unlicensed agent first of all.  Second of all, traditionally a bird dog works for the investor BUYING the property and is paid by him.  Third, what kind of purchase price warrants a $10k bird dog fee?  That's a lot for a bird dog in my opinion.  

I want the number to that lender.

Buying at auction with hard money is tough.  Can't to that in Georgia, you have to pay at the auction, there's no way to securitize it as its getting bought.

Plenty of people do hard money into long term mortgages.  Its expensive, but if you buy right it can be worth it.  Angel Oak out of Atlanta has a Hard Money to mortgage program, but I'd shop it against using other lenders, I know I blow their rates and fees out of the water on the hard money piece.

John, give me a call.  I've got good money if they want to borrow.

More importantly, and it'll depend some on the deal and the borrower, but I do some JV stuff and can bring all the money and a lot of experience if I think they can handle managing the rehab and my LTV is low enough I can take over and get my money back if they are Fing things up.

A few things, first institutional hard money guys will rarely go down to those numbers and when they do its short term and high fees.

Second, private lenders very well may do that kinda thing.  Mine does, but I've cultivated that relationship over years.  You will not find someone on the internet to loan you 100% on anything.  That is almost always going to be a relationship type of loan.   If you've got stellar credit and great income you could get it on a signature/card from the institutional guys, but thats only possible for a select few.  Try starting with family members and friends, and you're probably looking more for a money partner than a lender at your current level.

Brandon, you are looking at portfolio lenders in that price range.  Try small local banks with just a few branches.  Pretty hard to do much borrowing under $50k these days on 30 yr fixed.  Should be able to find one to do the loan on a 30 year am with a balloon.

I can get pretty darn close on rehab costs from pictures. ARV is pretty easy to figure out from MLS, Redfin and Zillow.

I've put plenty under contract and then went and looked at them during the due diligence period.  Cant remember one I backed out of.

I don't buy a lot out of the MLS, but most of them have been full price offers the day they hit. When they price them right they sell fast right now.

Like has been said, when you know your market, you can recognize a bargain right away.