All Forum Posts by: Aaron Pfeffer

Since you used the word "permanently" in your question I'm going to answer with a resounding "No." At some point MLS inventory will be worthwhile again when there is a glut of inventory. Whether that's 18 months or 18 years from now it will happen. But "temporarily" speaking I'm still answering "No." The inventory itself is always a good barometer for what you can acquire off market so it should never be ignored completely. Also, if you are very selective and diligent you can find a needle in the haystack listing from an Out of Area listing agent that wants to move a property quickly and work closely with an investor they know will perform for their client.

Killed in The House. Let's see what happens when it hits the Senate floor and how much is amended...

There is a law firm here in SoCal: Geraci Law Firm that specializes in such documents, so you could perhaps Google and call them for a local peer recommendation, or perhaps they will be able to help you in Florida as well.  $1500 does not sound steep to me, as long as the document being created is all-inclusive and intelligently crafted.  There are a few ways to go about your agreement, and you and your investor need to think about who wants the liability of the project itself.  Meaning, is your investor willing to share in that liability and be a member or even a guarantor of an entity you create together?  Or would they rather act as a lender to you and put a lien on the property to protect their investment?  The good news is at the end of the day it is not a terrible complicated endeavor, but it does demand very specific language that should leave no questions for either party.  You'll want to think about if the investor is giving all the money up front, or giving you some up front or the rest in draws, or if you are doing the work out of your own pocket and then being reimbursed in draws by the investor.  You'll want to think about if more money may be needed down the road and who would end up paying for that.  The investor may also want "floor" of what they need to make on their money regardless of what you expect to make if the project does not garner your expected profit. I'd reach out Geraci.  Good luck with it!

Fantastic, congrats!

Yes @Gary Wyatt, that is essentially what Gap Funding is.  It often includes the rehab amount/or portion of the rehab amount as well.  It is essentially a partnership agreement, but is often structured in such a way to be perceived as a loan...merely a loan with a percentage of the profit (plus monthly interest) going back to the Gap Funder.

Sounds like a lot of liability for a Broker to take on with you for essentially little chance of you actually selling one of your properties or work with any other buyers/sellers in some capacity.  There may be a broker willing to take a small monthly fee from you in lieu of ever expecting to receive a portion of your commission.  Wish you luck!

Yeah it's definitely a potential issue, even if you get to use the cash flow from the property to increase your income as @Nicholas Lohr suggested. Speak with a local loan officer about what your DTI might look like in 6-8 months after you've completed the renovation and are renting for whatever amount you project...see if they think you'll qualify for a conventional refinance. Otherwise you may get stuck in the hard money refinancing loop or take on a little longer term loan with an Alt-A lender, but the interest rate and term of the loan still won't be nearly as good as a conventional loan.

You got an offer above asking price? Obviously that's a good indicator you were right about the value and a buyer (or buyers) agreed. But you also admit comps are hard to come by in this area, and that could continue to bite you if you lose this buyer and go with another and that new appraiser also comes in low. Instead of demanding the current buyer cover the difference that their lender won't with this appraised value, see if you can split some difference with them. Maybe $360,000 sales price if they really want the house badly enough and have the extra cash to spare. This is a shame, but you may get caught in a long cycle of new buyer/low appraisal purgatory. Outside of an all cash buyer, this is all part of the risk if your buyer needs a loan. Unless you have a solid backup buyer (thinking you might because you got over asking price) and you know that new buyer would pay the difference in appraised value...then do everything you can to work it out with current buyer and move on.

Hope you are buying well. The light rehab, back on market quickly game is dubious right now, especially in SFV. If you are buying well enough under market cool, but it's real "value add" time for flips. Bigger remodels with higher ARV ceilings or sq footage adds win the day now. Please be careful on your margins. And yes, new windows!

Absolutely.  I will DM you to discuss.