All Forum Posts by: Whitney Breedlove

Really? But it's extremely common for rehabs to take longer than 6 months, and then if your exit strategy is to refinance (as opposed to selling) then this is pretty much guaranteed to take longer than 6 months including the rehab time. I'm just surprised this is the answer considering it's very common for HML to offer 6 mo loans (when this will rarely be enough time to complete the project.)

 Thanks Michelle! So this is a not a real deal, just a hypothetical I made up (although it's not uncommon I encounter something similar.)

Just a follow up question though. Where are you getting that $3150 figure from?

Super basic question alert! 

I have trouble factoring in exactly how much my hard money expenses on a given project will be. I am looking to use hard money to purchase a home with cash, perform light rehab, and then refinance to exit out of the hard money loan. For example, can someone analyze the hypothetical below to let me know how much I can expect to pay my hard money lender:

Purchase Price: $100k

ARV: $150k

Rehab: $20k

Rents: $1500/mo

Hard Money Terms:

Up to 70% of the ARV

3 points origination 

$750 processing fee

$500 appraisal/application fee

$25 flood cert

13% interest only payments.

6 mo term

Some additional questions I have include: What if the rehab/rent/refinancing process takes longer than the 6 month loan term? What additional expenses should I expect at this point? I'm assuming  any rehab and refinance will take longer than the 6 mo loan term allotted by the hard money lenders because there is typically a seasoning period of at least 6 mo. 

 For sure!

Welcome to BP! I'm also in Pearland! 

I'm new to this as well, so I'm going to leave the ROI analysis to others but, one thing I will say is that I think you're vastly under estimating the amount of taxes you will owe. Typically in Houston, taxes are about 3% of your home's tax appraised value. So if your house appraises for $190k, your taxes will be about $5700/year or $475/mo.

So your Principal and interest payments for this property would be $1020 (30 year mortgage at 5% interest.) Once you factor in taxes of $475/mo and insurance at $115/mo, your total monthly payments will be $1610 and that's before the other expenses that you mentioned. So if you can rent out two of the bedrooms for $500/mo you'll be paying $610 to live not including all of your other expenses. Considering you're paying $650 right now, I would look for a cheaper house, or something you can rent out for a higher amount. 

So that link doesn't work when you click on it (at least for me.) Can you just post the numbers on your thread?

There is also very little multi-family in Pearland, and almost no multi-family that goes up on the MLS.

So I just played around with it a little bit and it definitely doesn't take into account all the expenses the BP calculators do. I just analyzed a deal using DealCheck's calculators and it looked like a pretty good deal, however, I'd already analyzed it earlier and determined I would have been in the negative in cash flow so I'd be careful!

I'm running into this exact problem. House hacking within the loop in Houston may not be the best option with how expensive the market is considering the rents still stay relatively low. Last year I was a tenant living in a triplex in the third ward and had a 1300 SF 3 bedroom unit and my rent was only $1250. I would caution you on the third ward though, it is getting better, but we were forced to move after having to call the cops on the people who hung out around our area and caused issues around our house. Gun shots were heard multiple times. So if you have a family, just be aware of this and be careful!