All Forum Posts by: Steven Goldman

Quote from @Abdullah Hamididdin:

Hey everyone, I'm a realtor in Philadelphia, I'm finally in a financial position to start flipping my own houses. The MLS has nothing but inflated prices, wholesalers are also inflating prices leaving only buy and hold as an exit strategy. My question is, What tactics are you using to reach sellers directly?

 Hi Abdullah, I also buy I flip in the Delaware and Lehigh Valleys. The way I find my properties is to determine what neighborhood I want to work. Than I will drive the neighborhood and find physically distressed properties. I door hang them and look up the owners of record and use skip trace to get phone numbers emails or other contact information. Many of the numbers are old or incorrect.  Still, I call those numbers and leave message and try to reach the owner. I also review the foreclosure filings in the target zip code by searching the courthouse records on line. You can find good deals on the foreclosure list or tax list. 

You can also check with L & I website for violations for the property that may direct you to contact information. It is a time consuming process but if you hit on one it is worth it. Good luck.

Quote from @Christian Hanus:

Hi everyone, I know different people have different preferred methods for how to pay for their flips. I was wondering, for those who have done it on a business credit card, which one is the best to use. I’m looking for something with 0% interest in the first 12 months and a large enough limit to complete a cosmetic flip. Any suggestions?

 Hi Christian, be sure that the business card is not being reported to your credit. If it is, it will slow down your ability to borrow money for another purchase. Are you buying in cash? If not, why not use a rehab. loan? Good luck.

@Edwin Saldivar Most hard money construction lenders require that the investor have previous experience in new construction. I believe that is a reasonable requirement. New construction has more pitfalls than rehabbing. Before I would execute on your strategy I would locate a HML willing to lend to you for ground up construction. Investor ground up is different than owner occupied ground up. Owner occupied ground up is usually the purview of local banks and they will work with you and a contractor on ground up for your primary residence. Good luck.

Quote from @Felicia Walker:

I'm getting back into the investing game after focusing only on my W-2 for a good many years. Back in 06-09, I was a realtor, landlord, and flipper, but so much has changed since then. For "fix and flip" deals, I've been discussing the "draw system" with various lenders and they seem to all have different (but yet similar) systems. Is there a standard, good, or bad system out there? Some require me as the investor to start the process with my own funds and others provide 20% up-front. Some require an inspector to check the work each time, with me as the investor paying for those inspections each time. What is a reasonable system/protocol for using this time of financing?
Felicia

I prefer using rehab lenders who only charge interest on the total amount advanced as opposed to the entire amount escrowed.

I prefer using lenders that charge only for the total amount advanced as opposed to the total amount escrowed. The lenders I use are prompt in reviewing the draw request and funding the draw. Not all lenders are good at executing on the release of funds. It comes down to working with a good lender who can both originate the loan and administer the construction draws. I will not start a project unless I have enough capital to keep moving regardless of the status of a particular draw. Good luck.

Quote from @Karalyn Duncan:

Im new to investing i currently own a owner occupied multi family but wanting to add more real estate to my portfolio. Only problem is i lack the capital to buy house straight cash. I been researching hard money lenders but i was wondering if anyone else had some suggestions on ways to get into this game if you lack capital? Any guidance is appreciated TIA

Hi Karalyn: Starting out by JVing with experienced partner is always a good idea. The only way you are going to make that work is by contributing something to the deal. Concentrate on finding a good flip property. Your contribution to the deal will be the property. In my experience a good property is harder to find then the funds to execute the deal. So if you can find a good property and lock it up with a wholesale agreement you will be able to find an investor who will either pay you a wholesale fee or, JV with you on the deal. I know a lot of investors who used that formula to get started when they did not have capital. Good luck! ( You really do not need cash to lock up a deal if you think outside the box. Just a down payment.)

@Kieran Dowling I agree with everyone that you should act as your own General contractor and hire the sub contractors to do the jobs you can not tackle. Keep in mind the subs will want to time slot the work. If you can not get their work space ready they will reschedule and may delay or add to the time for completion.  Make sure you have enough time for demolition and debris removal before you schedule the carpenter for termite repair or the plumber and HVAC sub contractors. If you a re borrowing money check with your lender to make sure they will allow you to act as your own GC. Good luck.

@alanasriants I personally think the concepts I discussed are universal and this is just not a good deal. But everyone is entitled to their opinion and learning experience. As a older investor I have taken enough lumps that I do not walk into a beating. A old friend of mine used to say: "No need to by a ticket to a wake!" 

@Sami Gren  I would strongly urge you to get legal counsel to create a form contract you can use in your business. But you need more than that. You need a set of specifications and a scope of work so that the work performed can be compared to the work required by your agreement. Some people will have an architect draw the plans and specifications. The specs should delineate the quality and quantity of materials. Most of the horror stories I have been told would have been avoided by better contracting and planning. If you do not have a set of specs and scope of work  with a contract than how do you know what is included and what the contractor may later claim is a change order or extra?  Finally, resist the desire to make a big advance to your contractor for materials at the start of the job. Pay for the materials after delivery rather than as an advance to the contractor. Good luck.

@Alan Asriants The deal you describe is a no go for me. I do not like leaving that much of my cash behind for such a small return. This only makes sense if you are in a rapidly appreciating market or location allowing you to refinance, or HELOC, getting more cash out in a reasonable period of time. Just saying.

Quote from @Joe Pirapakaran:

Wondering if anyone can provide some insight

So your done rehabbing your deal and ready to refinance 

lets just say, you owe your private money lender 140k thats purchase, rehab and interest 

the house appraises for 200k.  With a 80% cash out refinance your loan amount is 160k

Are you only writing a loan for the money you owe the lender ? (140k) or the full 80% of the ARV (160k)

what are there pros and cons of both  ? 

 Joe, as a starting point you are asking the right question. How do I execute out of my rehab.? You should know the answer before you begin. If the answer is not satisfactory you should not begin. If you strategy is to build a rental portfolio as fast as you can then, you want to refinance at the highest available leverage. (75%) That allows you to preserve your capital so you have down payment money for your next deal. If you have access to  large amounts of capital then you can set your refinance at a comfortable payment based on your desired return. Most people need as much of their initial investment back as is possible. Good luck!