All Forum Posts by: Travis Sperr

@James Watts - if you can get someone to put the money up under that arrangement you described that would be a great deal for you and reckless for them. In that scenario, you have no incentive to stay in the deal if there is a problem.  

Also "I'm trying to structure a deal with a partner who will not be involved in anyway. They have money, I have time"

Someone provides ALL of the money, but will not be involved - that is nieve at best.

@Houston Pitts GREAT QUESTION! 

As a hard money lender - I have people blindly send me all of their personal information without even having a conversation first - it blows me away. Our company has been lending for 8 years and are very well known in our area, but it doesn't excuse how reckless people are with their information. I have closed a lot of loans without even meeting the borrower. So you are right to ask the questions.

I would provide the information they require on a PFS or application - without providing SSN or taxes until you have a deal and approval that feels right

Ask for referrals of other clients 

Try to work with lenders in your area - not someone 6 states away

Ask around BP or local meetings about lenders

I would rather pay a little more for the money and know the lender is legit than to look likea fool at the closing table

Not only is it important to know your information is safe, but you also want to know the money will be there when you need it. There is a lot to navigate, but you absolutely thinking about it the right way.

@Nitin Dhiman or course going after the full amount would be the best case scenario but the likely winner there is the attorney. I would try to collect until you can re lease to a tenant that meets your requirements. without knowing if there were any TI dollars invested on your end and how hard it will be to get a new tenant. But if they can't pay and their business is failing - you are not going to collect. Lastly, even if you got the full amount paid, do you want your space to be empty for 5 years?  

Personal guarantees and singers balance sheet would skew my answer if they are strong outside of this business. 

@Joseph Liechty - hard to explain in forum without a novel - but some highlights

When you use the HELOC to pay down the mortgage, you advance the amortization schedule making your monthly mortgage payments pay more principal than if you just paid on it normally. Then you use your income to or extra money each month to pay down the HELOC, until paid back down - wash, rinse, repeat over and over. I believe the math would ultimately create less interest than you would pay over the life of the loan (even when combing interest on both loans)

I think if you penciled it out you would find that the differences in interest is pretty marginal for the effort required. Ultimately if your goal is payoff your house, just put extra money toward it, keep the heloc in place as a rainy day fund since your extra cash will be paid toward the mortgage.

If you pay it down and find that you are not going to put more money toward the mortgage you can explore recasting the loan. 

@Daniel Dietz not following 100%  - in either case, is the borrower or property titled in the self-directed account?  

just a few ideas-

if titled in the SD account - it needs to be non-recourse and I typically see 65% LTV on those loans.

If not titled in the SD account, the lender likely won't like the equity being borrowed or coming from a source other than your assets.

It is almost always less expensive to borrow the money than a partner, although if the partner is putting up all of the money, you are doing well for no cash into the deal. Lots of nuances in partnering that create more headache than it is often worth.

Don't take real estate investing advice from people that don't invest in real estate. There are plenty of millionaires on this site, myself included, that have found real estate to be a fantastic investment when done correctly. I think you would benefit from doing some serious networking with active investors in your area and growing your sphere with like minded people. I know nothing about your market but if I can be of assistance to help looks at deals or run numbers I'd be happy to help.

@Chandler Smith - First congrats on taking advice and implementing it. Second great job building up some capital.

Seems like a pretty easy decision - investing in multifamily will provide cashflow and hands on experience. Investing in a REIT will give you a lower rate of return than a well bought multiunit - house hacking is the easiest way to get in with that amount of capital - otherwise, you need more than that for the down payment - depending on prices in your area.

@Tariq B. could be a great opportunity  - find a few professionals to bid the work and get the property priced accordingly. Use one of them or find a cheaper alternative, just make sure it is done correctly. Leave some room in the deal in just in case it is more challenging than expected and make sure it isn't a thin deal.

@Arjay Vergara - It will be challenging to fill in all of the blanks without knowing what lenders in your area offer as far as LTV, cost, etc. I would start there and see what your cost of capital and equity requirement are then you can see if you are in the ball park. 20% down at 12% seems high, but it depends on your area. Talk to as many as you need to until you understand it all.

@Joshua D. I am not following all of the numbers - mostly the cash on cash return $55k in for $6,944 annually. Also a big range in value $100-150k. Assuming the higher end of the resale, that would give a nice chunk of money to keep doing deals - if you can continue to find deals in your area, flip or rent, you will do better from a COC return. If it values at $150k and you keep it, consider getting some cash out of the deal to keep your business funded.