All Forum Posts by: Shiloh Lundahl

I read through the entire thread and I don't know why people are negative towards hard money lenders. I use hard money on most of my flips and I am grateful for it. All you have to do is factor in your hard money costs to make sure the deal makes sense with using hard money. Once you build a relationship with a few hard money lenders they usually start to give you preferred rates. I have 4 hard money lenders that I have either used on a flip or who are wanting me to use them with my next flip. Here are some of the terms that we have found in our market of Arizona.

90-100% of purchase price at 16% interest and $1100 doc fee, no points.

92% of purchase at 12% interest with $700 doc fee, no points.

80-90% of purchase and rehab at 12-15% interest with 1-2 points.

80% of purchase plus doc fee.

We have a HELOC, some business LOC, and several credit cards with high limits. We usually don't put any of our own money into the deals and we haven't had any hard money lenders deny us because of that. They are in first position and we have a great track record so they don't ask if the money we are putting in for the down is our own or if it is borrowed.

The problem with trying to get bank loans is it usually takes too long. One of the advantages that an investor has over a traditional buyer is speed. You can usually offer a lower price if you can promise a quicker close and a cash offer (hard money is the same as a cash offer with our offers).

Credit card companies often advertise 0% cash advances for 12-18 months for at 2-3% fee. This is a great source of money.  Say you have 5 credit cards between you and your spouse and each has a limit of 20k. You could get 10k from each card and have 50k to use towards the down payment and the rehab. You would be charged $1500 (at 3%) to be able to use their 50k for a year. That's great. The thing to keep in mind though is you need to keep your accounting straight and if you make purchases with the credit cards after the cash advances then you start paying interest on the new purchases right away. So you might want to have a different card for your other day to day purchases. Make sure you pay the cards off before the 0% term is over. Also, you will probably see a dip in your credit scores while you are using your lines of credit so keep that in mind because it may effect interest rates on things that you might need for your self like a car loan or a personal home loan or if you want to get a cash out loan on a buy and hold property.

With all this being said, I do agree that partnering with someone who has successfully done some flips is a good idea.  You can offer to put up money for the down payment and the rehab in exchange for experience and training. This could end up saving you a ton of money from the mistakes that you will most likely make as you learn the process.

I hope this helps. Good luck and let us know how it goes.

This post is for investors in the Burbank, Glendale, North Hollywood, and Sherman Oaks, California areas.  I just moved my family to Burbank and have been renting since this past July (my daughter is doing some acting). I mostly do my real estate investing in Arizona and some in Indiana but we just got under contract to buy a house in Burbank.  We are looking to covert a vary large attic into living space. I wanted to ask the BP community in southern California if anyone knows of any good and trustworthy contractors, engineers, or architects that you could refer to help us with this attic conversion? You can post it here or send me a PM.

Thanks for your help.

@Ida Saidkariev It's pretty brave to bring a deal to the forums being new and opening yourself up to the feedback and comments of others.  So I commend you on being brave.  

I agree with what has been said with regards to getting your credit cards managed before investing.  That doesn't necessarily mean that they need to be paid off.  Many people use credit cards to begin investing, but they should be managed with a plan and a purpose. In short, your credit cards should make you money, not cost you money.

Everyone who invests needs to start somewhere.  Most people who just jump in make many mistakes and many people lose money.  I lost 5k on my first flip that I did by myself; but I learned a lot from that experience which helped me on my subsequent flips.  As I started learning, I partnered up with other investors who were successfully flipping houses.  I read a lot, listened a lot, and went to seminars.  But I learned most from doing it.  

If you are able to find a mentor or a fellow investor who has had some success in your area, you could probably buy them lunch one afternoon and ask them questions and run a deal by them to see what they think.  They will probably give you better information then what you could get on a forum from people who might not know the area or all of the numbers.

Good luck to you.

@Gaurav Seth This thread has been very helpful to me. I appreciate what has been contributed by @Kevin Moen and @Jay Hinrichs and @Bob E., and @Steve Haight.

I do mostly flips in Arizona but I am starting to do buy and hold deals.  As I have run my numbers, I see an opportunity to sell 2nd position performing notes on these hold deals that I am purchasing. 

Podcast #28 with Dave Van Horn has been a really great help to me in learning more about creating and selling these notes. My plan is to create 5-year interest only 2nd notes that perform at 11% with an extra 1% per year when it matures (effectively a 12% performing note) and I wanted to get some feedback from people who specialize in note investing. I would figure out how to guarantee the note like Dave Van Horn talks about in the podcast.

I don't mean to hijack the this thread, I thought that these additional comments could add to it. Any thoughts or feedback are welcome.

@Hanbin Y. After your research in 2nd position loans, what did you decide to do?  The reason I ask is because I am going to start creating performing 2nd position notes and I want to know what your experience was like so that I can have a better understanding when I approach investors with these types of notes.

@Brian Osipovitch That sounds more like hard money than private money. Hard Money lenders are usually more sophisticated and professional in the way they lend money. Private money lenders are usually people who don't lend money professionally.  They are usually people you already know who have money and they want to invest their money with you in what you are doing so they aren't very familiar with charging points or getting interest paid upfront at closing or those sorts of things.

@Darren Eady I am an investor in Arizona.  I am looking to create some performing second notes to sell.  What interest rates do you offer when you create 1st notes and second notes?

Great job! I love to hear success stories. To add to the comment left by @Lynda Duke about luck, it reminds me of a quote from an all-time favorite book "Would you call a fisherman lucky who for years so studied the habits of the fish that with each changing wind he could cast his nets about them? Opportunity is a haughty goddess who wastes no time with those who are unprepared." 

- The Richest Man in Babylon by George Clawson

Another great quote that I like from the making of the animated movie Hoodwinked "When opportunity meets preparation, magic happens.

@Meghan McCallum To me, it seems like you have prepared yourself and positioned yourself to recognize the opportunities and how to capitalize on them when they come to you. So to give credit where credit is due, nice work.

Wow! What a great thread.  I just spent probably over an hour reading all of the comments here.  Not to make anyone feel uncomfortable, but speaking as a therapist, some people reveal way to much about themselves through their comments. (Haha).

Anyway, last summer my wife and I met a wholesaler in Indianapolis, Indiana, and we started to become familiar with the market. My wife went down there and ran the numbers on some of the houses and duplexes for sale and the numbers were really impressive. Then we both went out there and spent a few days getting to know the area and I really came to like it a lot. The city seems to be revitalizing. You will see one street with beautiful homes and the next street will have several run down homes and then the next with beautiful homes again. So I believe the city is revitalizing street by street. But I thought it was great. My wife and I would go running for exercise and we had a chance to look at several of the neighborhoods. It didn't feel scary or dangerous where we were (a little east of the down town area). We ended up getting 3 duplexes and 1 SFR last summer.

When we purchased the properties, we inherited some bad tenants and we had to put up some money to rehab some of the properties.  Our total out of pocket was about 200k.  With all of our maintenance fees, property management fees, ext. we only brought home one check for around $800 last year.  Very low return right?

However, as we have been able to bring in some better tenants and finished with most of the repairs. Now we have 6 of the 7 doors occupied and we brought in $1600 for January. So we are more hopeful this year. We are going to be closing on a business line of credit where we are going to be taking 60% of the equity out of the properties to be able to do more investing (that should increase our ROI).

I think you are smart by buying only one at a time rather than doing what we did by buying several all at once, but I think you get a better feel for an area when you have more properties there.

I think this is going to work out great for you.  Good luck and I think you will really like Indy.  Keep us updated.

I really like Apache Junction. I've done 5 deals out there. Let me know the particulars in a PM.