All Forum Posts by: Travis Lemley

Shelby, Reference Blake's response above is pretty accurate. The market has shifted from the old "gold standard" of 70% of ARV minus rehab as a solid number for the investor/ buyer. If you add in wholesale fee to that and then push the 70% up those deals are going to be tough to move. I think/ hope this will correct the market some and get us back to the old standard. The real challenge exist on what effect this is going to have on the ARVs of homes. Are we going to have a slight stall and values pick up right where they were before, are values going to take a 10-20-30% hit, or will pent up demand surge pricing the other way. We dont know as we have no historical evidence to guide us. I think using a previous recession as an example is reasonable but even that is very speculative.

Best of Luck

TJL

@Francisco Ruiz- Dallas/ DFW metro is a great market for both rentals and flips. The BRRR is proven model that works really well here. Feel free to reach out with any questions. I live in McKinney and my office is In Legacy Tower. If you want to meet for lunch/ cocktail to go over strategy I'd be open to that.

Sandra,

I was going to ask when and where but after I posted I saw it in the heading just not the body. 

All the Best

Travis John Lemley 

@Scott Reese, Looks like you have had most of your questions answered. If you come up with anything additional Hard Money or Conventional with regards to financing and funding feel free to reach me. My office is in Plano at Legacy and DNT. I can easily meet and discuss what your goals are and some tips on how to get there most effectively. 

@Odie Ayaga - you can do a rate and term refinance with 1 day title seasoning. You cannot do a cash out refinance until you have been in title for 6 months and a day (Fannie/ Freddie). In your example if your hard money loan was $150k and the property appraised at $300k you could refinance at $150k plus closing cost (lets assume $5k) to be zero out of pocket on the refi. You cannot exceed the lesser of 1% of loan amount or $2k on the rate and term (allows for minimal cash out so you dont have to be exact on the loan amount). If there is that much equity it might benefit you to wait and pay the hard money interest for 6 months and close on the day after to pull the equity if you need the capital and have a place to deploy it too. 

@Dennis Parslow, Most HM lenders will have a mild preference one way or the other but not drastically. The HM Lenders that are more risk averse like the Rentals as most the borrowers qualify for conventional Fannie/ Freddie Refinance. They are also smaller loan sizes. The two factors make them less risky loans. The lenders that prefer flips like them because they are typically larder loans (most rental properties are under $300k) and have more margin. In the off chance the lender gets the property they can usually finish the project and break even or get close to it and not lose much. The HM loan for rentals typically have less equity and if you get it back the chance to get whole is less. 

@Ernesto Sanchez, Andrew is spot on for the most part. $30k is enough to get into a deal or two but unless you find the unicorns you're going to want more capital. I'd suggest a safe flip that will generate $20k or so in profits and then do a rental, then a flip, and so on. This keeps your liquidity up and helps you build the portfolio. You should be able to refinance out of HM as high as 85% LTV with a conventional investment loan. That said the rates stink above 75% and typically kill the cash flow. Reach me directly if you have any further questions. I am both a HM lender and conventionally licensed RMLO so I should be able to answer any of your lending questions.

Travis John Lemley 

Your math is right and that is the formula. The most likely reason for the no's is that other wholesalers are offering more. It makes selling the property a little more challenging but the buyers in DFW now are hungry and buying at 75%-80% of ARV with repair cost. Especially properties that are good for rentals because they don't need instant equity to cash flow. The equity comes in appreciation over time with the tenant paying the mortgage. Some of those buyers are going as high as 90% on the right neighborhoods. Stick to it and you'll start to see it pay off.

Femi,

Not sure what your trying to gain here. You posted a similar post in a DFW Investor page but have omitted all the failures you knew you made (that post included them), the post generated hundreds of responses. 

When you purchase a distressed property it is your responsibility to do your due diligence verify the comps, get an accurate budget from a contractor and manage the project efficiently. You admittedly did none of those things. 

On what grounds can I sue a wholesaler New Western Acquisitions to be precise.

I bought a property from Tanner Hester in June, and this is the worst real estate mistake I’ll ever make.

I made a mistake to trust the company’s judgment , and I didn’t do enough due diligence on the property. They make you feel if you don’t buy now, the property won’t last another 2 hours.

They claimed $40k would be enough for repairs, but the house had lots of issues which they should have known based on their experience. Now I’m spending way above $53k, and already in the red.

1) The foundation worse than expected. I spent double the estimate.
2) House has no attic for HVAC installation, also no space under the house for the duct work either.
3) The boundary line cuts diagonally towards the edge of the house and cuts off some portion of the lawn. They knew this issue, but never told me about this.
4) The entire structure is illegal. It wasn’t built with a permit ( this is causing delays as the city hasn’t approved our permit application for about 2 months now).
5) New western also charged me too much for the house. I paid way too much for the house, and I’m already in the red.

Can I sue on these grounds? What can I also do to deter other new investors from buying from them.

Armel,

LTR in the Frisco, McKinney, Allen, Grapevine, Lewisville areas along 121/ Sam Rayburn Tollway should with proper research provide reliable returns. For STR you want to stay more in the core and near destination areas. Use caution as STR are being cracked down on and banned in many areas, Arlington, Texas is one unless in the entertainment district which is roughly a mile circumference around ATT Stadium.