Cap rate should be 10 or better in this area.I totally agree about economic/demographic considerations.

And even if you do have to draw on it, the interest rate is going to be at least competitive, if not better, than a 30 mortgage.

They also said they would give us the plans after they draw them so we could get other estimates for the actual construction.Also the GC said as of 2006 it became mandatory to have architectural plans for 2 families in NJ...does anyone know if this is accurate?

This seems like the perfect spot to draw the line, and not have them think your skipping out on something major.

The podcast on HML was great, I think this type of loan definitely needs careful consideration but I have my eye on a flip that would be an ideal candidate for a HML (low cost property in need of rehab, great in demand desirable area, high resale potential ), now just to find a local lender or other short term financing...

Thanks, everyone, for your comments.Back to the buying drawing board . . .

Is there any room for a consideration payment to the seller?

My question is where do you draw the line between shooting for 2% vs. 1%?

I found that while they have less deals, their auctions tend to be softer because they draw less bidders.

Listen to the podcast carefully, those aren't the numbers, nor were those the only issues when you take the whole thing into consideration, there are a lot of elements there.