All Forum Posts by: Aaron Pfeffer

$850,000 unencumbered. My oh my...good for you! The possibilities with that kind of dough are just endless. So many choices: 1031 into units, JV with a developer on a build project, buy three other SFRs at around $250,000 each getting close to the 1% rule. Eh, maybe skip the last idea. But seriously...commercial, industrial...a ton of options with that much money in Upland.

First, this is over 10% rate in CA so a broker should be involved. Second, the borrower should be paying every dollar of every part of the transaction...so what you should really consider doing is ripping this note up and using an attorney specializing in hard money/private money loans to draft a new note and deed from scratch at the borrowers expense. Third, having five other properties to cross-collateralize is wonderful, and an appropriate contiguous DOT in your favor is fantastic added security. Fourth, it's not terrible to defer all payments until the very end, but make sure you set up the servicing with a great third party company who specializes in deferred payment. Fifth, yeah, I'm curious to know what position lien-wise you're really in here. Sixth, this whole transaction better clearly be business purpose.

What would you expect rent would be for your example?

Are you picking this up with current tenants still in place?  If you're purchasing at that price and expenditures with stable paying tenants it sure sounds nice, otherwise it can definitely be a headache concern without guaranteed rent subsidy. Are neighboring duplexes in okay shape? Are there For Rent signs all over the neighborhood?  Just searching for red flags here...

Create an Executive Summary template for Multi Family Homes.  Include: Bios of your team, a simple Pro Forma for five years out, proof of funds from principal investor/proof of funds letter. Then when you contact a broker who has a property you want to put under contract they will respond to the professionalism of your very simple exec summary specific to their property.

Smart move to do that. They exist for a reason. And thank you for sharing the crux of your decision making, as the whole story always truly reveals our motivations. Best of luck with it, and sincerely hope your success with this passion project leads you into more uncharted investment waters. It's exciting out there...

@Brant Hampton

Curious...who was the listing agent when you initially purchased the property? Were they good? Or how about the buying agent who represented you in the initial sale? I'm asking because our best endeavors are settled well before we ever cash that final check.  If you buy at a proper price you don't sweat the perfection of the rehab, and if you settle your disposition affairs before the listing comes around you don't sweat final cost because you already know the final cost before you get there. I another words...if the listing agent was good and you also used them as your buyers agent when you initially purchased the property, you should be negotiating with them at time you bought the property that they get a 1% fee for your ultimate resale.  Most agents are happy with that if they got both ends of the sale the first time around AND another listing on the ultimate resale at an even higher price after your rehab (plus they already have a buyers list for your sale). If dual agency is not allowed in St Louis, then negotiate with your initial buyers agent to get the resale at a reduced listing price.  In your first post you say: "After pouring my soul into this property and literally renovating every square inch it pains me to think of relinquishing control and losing/spending another $12k so I can close a deal." 

Bad place to be. Emotional over real estate and in pain...

@Carley M. That was one of the most concise and helpful posts I've seen on BP.  Couldn't agree more with all of it!

@Megan Ducat

I'm definitely interested.  Please PM more details, thank you.

@Megan Ducat

I'm very interested.  Please PM details.  Thank you.