All Forum Posts by: Steven Goldman

Hey Community!

I am looking at buying my first investment property. The property is in San Diego, CA. I am wondering if you can help me figure out the process of my first flip.

I’m a licensed general contractor so I have a very good grasp of what the construction/rehab process will be like as I have been the contractor for 75+ Flips.

There are two main questions I have with the process. Both questions revolve around the way that my money and loans will work. I will purchase this property using hard-money. I plan to keep and live this property.

First Question- Who and how do I use to con vert my hard-money loan to a mortgage? Which bank or institution can help me with this?

Second Question- How can I get at least my down payment back out of the deal?

Here’s the scenario:

Purchase Price:$520,000

Out of Pocket= Down Payment-18% ($94,000) / Closing Cost/Fees-$110,000

Construction Loan-$60,0000

Total Loan Amount-$468,000

@ 11% Interest= $4455 Monthly Payments

Estimated ARV-$675,000

Please let me know if all of this looks correct and how I can go about getting at least my $110,000 back out of the deal when converting to a 30 year mortgage.

Also, any advice would be greatly appreciated!

Thanks so much in advance!

Joseph

My main strategy has been fix and flips and I've built up enough cash and relationships with private lenders that I want to start getting rentals added to my portfolio and investing strategy. With that said, refinancing the loan is bringing a whole new vocabulary and I'm wanting to get some clarity even though I know this will be looked at as a dumb question. 

When I finish with my remodel and I'm going to refi the property and I want to do a cash-out refi, will they give me cash proceeds if I refi at the 75% and its more then what I owe my HML?

So if I have $65,000 invested in the property and its arv is 100,000 will i be able to get that additional 10,000 in cash proceeds as part of my "Profit" or is it only allowed to cover what other loan is on the property? Again, I know this is probably a dumb question because the answer is within the question, but I want to get clarity before I just push all in on this model. 

Thanks!

Hi, I am looking at a deal where the purchase price is at 70% or less the ARV. How could I get with the bank and get this property with no money out of pocket or very little?

I hope I understand your questions, I will base my answer on what I am doing.

I'm using a hard money lender for the purchase + rehab costs. For rehab, I sent him SOW with the budget and what I'm going to do. 
On the closing(using your example) it will show 60K for the seller and the additional 20K will show on the buyer as a credit( Will not receive it), this money I will get back after paying it and sending the lender construction draws. I'm using 0% APR for 12 months cards to fund it and helping my clients get it as well, After that once I have my tenant moving in I am doing the refinance 70% from ARV of 120K = 84K like that I'm paying back the hard money lender and I will pay the card and close the balance of the card.
Hope it answered your question 

@Patrick Goswitz Depends on the contractor. All of my work is a material plus labor type of payments so I'm not paying a contractor a premium for buying the materials. Some will float the cost themselves, but you've gotta also be quick to pay them draws on time so they can pay their guys and keep it going. 

I recently bought a 4 bedroom/2 full bathroom row home in the Overbook area 2 blocks from Saint Joes University in Philly, PA, with a full finished basement with a third full bathroom plus garage on this level. I am planning on renting the 4/2 on the upper two levels and living in the basement. I am debating turning the oversized garage plus a little of the other finished space into 2 bedrooms (walkout basement/garage so both would have windows), or leaving it unfinished as a garage. There is enough space either way for me to live so not worried about the livability, more considering what will be worth more when I go to sell the property in 5-15 years. I am very handy and would do the garage -> 2 bedroom conversion myself and would cost maybe $5-10k, obviously keeping garage as is would be free. Parking is also pretty easy on the street and the driveway has 2 parking spaces.

House technically is all attached so when I sell it could also leave it separated as two units (illegal, but with variance is allowed in zoning if I put the hassle in), or open it up and make it all one unit again. I plan to leave the staircase, just adding a wall to separate that could be easily removed. So house in the end could be: duplex (4/2 + 2/1), duplex (4/2 + Studio with garage), single residence 6/3 without garage, or single residence 4/3 with garage. I am trying to decide which would make the most financial sense. Thoughts or things I might not be considering? 

Thanks in advance!!

@Matthew Crivelli @Steven Goldman @Peter Mckernan @JD Martin
@Chris Seveney @Ben Aaron @Alan F. @Account Closed @John McDonald @Nick Dallaire @John Clark

Thank you all for your help! Do any of you have an attorney in mind for this situation?@JD Martin

Greetings to everyone, What are the best states or cities to do the Brrrr method with greater cash flow and appreciation?

I'm investing with an equal partner and unfortunately we're defaulting on our hard money loan because we don't have the money to pay it off and we won't be able to sell the home by the due date. A contractor also put a lien on that house. What would be the impact on my credit and would the lender be able to force us to sell our personal real estate if we are personally guaranteeing the loan? Any advice would be greatly appreciated. TIA.