All Forum Posts by: Zachary Deal

Hi Lakshmi, I recommend reaching out to the listing agent for the property or if you have an agent asking them. A local real estate agent with MLS access and market knowledge will be able to provide the most accurate rent estimate. Also you could search Zillow or Airbnb/VRBO/Furnished Finder if you will be renting as an MTR or STR

Appraisal can be tough on the hard money side of things if a lender requires one. ARV can be somewhat subjective and lenders that uses an appraisal for hard money loans will defer to the appraisers opinion. I would work with the lender and put together a well thought out Reconsideration of Value (ROV) with better comps and detailed reasoning to justify the higher ARV.

There are lenders that don't do appraisals for hard money loans so you could try that in the future to avoid these situations. 

I agree, I would be very careful doing anything that is not permitted or allowed based on the zoning. Trying to bend the rules will always come back to get you and could end up costing you more at the end of the day than any benefits you gain from it.

One thing to keep in mind if you are doing this is that you are likely to create "functional obsolescence" which could mean you are not able to get a new loan against your property and it can be difficult to resell as well. Basically if there is no "living room" and there are no comparable properties with similar square footage and bed/bath count in your area the property becomes difficult to comp or sell and lenders will not be able to use it as collateral for a loan

Yes, you can use the cash + hard money loans to complete the flips that you're looking at. Most hard money lenders are going to require 10 -20% down payment and then require you fund bring 10 - 20% of the rehab budget depending on your experience flipping (in your name/LLC you own), property ARV, etc. With the funds you listed and property size you should be able to comfortably have 2 even 3 projects going at once (depending on what you're up for), especially after you sell the current house you are renovating.

Networking and doing as much research (reading, etc) before starting are you best bets. Try and undertake fairly simple projects for your first couple even if the returns are not as impressive as you hope (still make sure there is sufficient profit). There will be lots of learning as you go so be prepared to bumps in the road and learn from every experience/situation 

@Nik Farooqui You are correct in that GC licensing is never a requirement but it is more of a "silent factor" that can make a lender more comfortable lending hard money and thus the approval and loan process easier. Experience, licensing, etc are all things lender will take into consideration when evaluating a deal and the more you can show the lender the more comfortable they will be and can often result in more competitive terms, etc

One thing to keep in mind is typically a lender will not be able to reimburse you for labor you complete yourself on a flip. However, as Erik mentioned, having a GC license definitely helps with the approval process on hard money loans and can get you more competitive terms as well! 

I think @Jonathan Greene evaluating both is spot on. The BRRRR strategy is always a great option, especially if you the liquidity to continue to purchase properties depending on how much you are recouping when you refinance. In todays environment with higher interest rates there are less buyers in the market than a few years ago so waiting several years until rates drop to a more palatable range could lead to much higher returns. Also, building a portfolio of cash flowing, appreciating assets is a great way to create long term wealth

Agreed with @Peter Mckernan! If you have a bad feeling about someone or fear they are going to steal your idea that is not a partner you want to be presenting to. Also, they are purely a capital investor then they won't want to do the work and merely want to have faith in their ROI