All Forum Posts by: Steve Balinski

I have an interesting scenario. My insurance co might write me up to a 30K check for damage to property from a recent storm. This would include costs to replace my roof, siding, and gutters. My question is - is it typical for them to write me a check and then I can choose to do what I want with the money?

My dilemma is replace the exterior items (which I can't really raise rent for). In addition, the windows are probably 30yrs old so from my understanding I might as well replace those as well which is another 15K out of pocket.

Do I use the $$ and replace the kitchens which are very out-dated, which I CAN raise rent for.

0 Votes

Quote from @Chris Seveney:

That is high but also it's a cost your borrower should be paying not you. Typically it will be 800-1200 - what state is this in?

Wisconsin

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Quote from @Patrick Roberts:

$2k seems high. I would expect about half of that for a straightforward note and mortgage/DOT and title review. If there is something complex about this deal, then maybe that justifies more. Also, a reasonable amount of this will be paid by your borrower in the form of fees (this is part of what those fees cover).

This is also why most lenders have minimum loan amounts. Origination costs are largely fixed - it's roughly the same cost to lend $200k vs $20k.

If I can charge the borrow for that, how would I phrase it or justify them paying for it?

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Quote from @James Mc Ree:

You also have another asset: a template and related documentation for your note that you can use again in years 2+. You shouldn't have to go back to the attorney again for a whole new note.

You should ask your attorney about servicing requirements and maybe docs on how to sell the loan, forclose on the loan and anything else you can anticipate you might have to do. Your servicer will have those docs too.

Each deal and borrow may have different requirements though, therefor documentation modifications are likely. I wouldn't call that an asset, its not something I can resell or get my money back directly for.

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Hello, I'm very interested in becoming a private money lender. I've found 1 local attorney who's written lending notes before. He said just to start and get a basic contract with my preferences would be about $2k, does that sound right? Seems pretty steep. If I lend 30K for 12 months at 12% I only walk out with $1600 if I subtract the attorney fee alone + any other related fees. Doesn't seem worth it, at all. What am I missing? Even if I lend 50K it doesn't seem worth it.

2 Votes

I have an interesting scenario. I believe I'm about to get an insurance claim approved due to "storm damage" for a roof/siding, gutters, and shed for the duplex i currently live in (no actual major issues, just justified repairs based on what the roofing/siding company reported). Here is my dilemma.

To my knowledge if a claim is approved and a check is cut, it's my decision if I want to get the repairs done, OR cash the check (please advise if that is not the norm). IF I get the work done, the windows are 20-30yrs old, from what I know that'd be the best time to get the windows replaced as well, BUT thats another 15K out of Pocket.

Do I take the check and replace both kitchens which would allow me to raise rent as well?

In a nutshell:

Option 1, get the roof, siding, gutters and shed replaced + 15K out of pocket to replace all windows

Option 2, take the check and replace both the kitchens which allows me to raise rent.

Also, which option do you think adds more value to the property?

0 Votes

Quote from @Jonathan Warner:

Quote from @Corby Goade:

I've got a few tips- like any other business, this is a relationship based thing. Get to real estate meetups and network with people out there doing deals. Here are a few high level thoughts for you as a beginner:

-Don't lend in second position

-Don't do deals with new investors

-Don't experiment with new strategies, even with experiences investors- ie, don't jump in to a first development project with someone just because they've flipped 20 houses.

-Start at a title company- they will help you structure liens and deeds so that your interest is protected properly. They can help make sure your contracts reflect your equitable interest in the deal.

-Vet contractors and builders that your clients want to work with. The trades can make or break a good deal.

There are a billion more, but that's a start.

Good luck!

This is great, thank you. So basically, get an attorney to put my contracts together as the first step, reviewing them with a title agency as the second step, putting the other team members together as the third step, and starting the search for borrowers as the fourth? Or do you mean for me to approach the borrowers first?

Not speaking from experience, but I'd think relationship building takes some time, so finding someone to lend to should be step 1 IMO, then you can start meeting with attorneys and title companies to get the paperwork done.

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Quote from @James Hamling:

@Steve Balinski as your presenting things with no context of details such as asset class, tenant class, cap-x, appreciation etc., I have answers ready that match:

1009 7th Avenue S, Saint Cloud, MN 56301

5bd, 2ba, 1680 sqft, Listing/Purchase Price $159,900 - Rent Range $1,830 mnth - Prop tax $1,852yr.

1016 12th Avenue SE, Saint Cloud, MN
4bd, 2ba, 1,466sqft, Listing/purchase Price $226k - Rent Range $1,800mnth - Prop Tax $2,012yr

19 Mckinley Place N, Saint Cloud, MN

4bd, 3ba, 1,686 sqft - Listing/Purchase Price $169,900 - Rent Range $1,870 mnth - Prop Tax $3,100yr

1007 6th Street N, Saint Cloud, MN
4bd, 2ba, 1954sqft - Listing/Purchase Price $175k - Rent Range $1,910mnth - Prop Tax $1,874yr

Need I go on ?......

If a person is going to use tunnel-vision metrics of just looking at price sub $250k, rent's and prop tax and take 0 context otherwise.....

Dude, how many PER-DAY do you wanna buy? Serious. 1 a day, no problem. 2 a-day, I got you!

I can fire-hose these things......

Daaaaang, those numbers don't exist near me, not even close. Curious how you found those, do you know that area or happen to stumble upon it? Cheapest 3/2 near me even in a low class neighborhood is 250K in good shape, or 200K with work to do (nearly a wash after upgrades are done). $1800/month rent around me in C class neighborhoods (and most of WI) is a 250K home. Can stretch to $2000-2200 if its a fresh remodel, but the #'s still don't work.

Looking at B or C class properties, no section 8. No Cap rate being SF. Doesn't have to be an appreciating neighborhood as cashflow is my goal right now. Purpose is to get out of my W2 job

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Milwaukee, Wisconsin

Quote from @Kasi V.:

What about vacancy rates and leasing fees ? ...they can significantly impact your numbers. It's a good idea to use a standard spreadsheet or one of the online calculators. You can find one on BiggerPockets, calculator.net, rollytally.com or baselane ROI calculator.

All accounted for in my calculations

1 Vote

Milwaukee, Wisconsin

Quote from @Theresa Harris:

Have you tried looking at longer term mortgages (eg 30 year)?

yea its calculated at a 30yr

0 Votes

Milwaukee, Wisconsin

All Forum Posts by: Steve Balinski

Steve Balinski has started 34 posts and replied 101 times.

Post: What to do with 30K check from insurance Co.

Post: Contract for Private Lending

Post: Contract for Private Lending

Post: Contract for Private Lending

Post: Contract for Private Lending

Post: 30K Insurance claim, take the money or get the repairs??

Post: Private lending. Where do I start?

Post: I'm losing motivation, can't find anything that works.

Post: I'm losing motivation, can't find anything that works.

Post: I'm losing motivation, can't find anything that works.