Reader Questions; Private Lending

Heres a little Q&A from some of our readers…..

Hi, I’m a wholesaler from Louisiana and I visit your blog, I was wondering how do you finance your rehabs?  

We finance all our projects using mainly private lenders. We will use our own money from time to time but that is not our preferred route. With our private lenders we give them first mortgage postion and no greater than a 70% LTV. They lend us purchase and rehab money. Terms and interest rates vary. Alot of our private lenders are using funds set up in a self directed IRA. With a self directed IRA an individual can invest in not only stocks and bonds, but also Real Estate, notes, tax liens and mortgages. This gives you much more control, greater diversity, and better returns than just sticking your money into some mutual fund!

So, what is a Private Loan? It is a loan made to a real estate investor that is secured by real estate. Private Loan Investors are given a mortgage that secures their legal interest in the property and secures their investment. We are not talking about high Loan-To-Value (LTV) ratios the banks and savings and loan institutions make on homes. We offer very low LTV ratios to our Private Lenders to increase security of the loan. Our standard LTV ratios are under 75% of the value of the property securing the loan and frequently as low as 65% to 70%. This means additional security on the investment.

 

Working with private lenders has allowed us to take our business to the next level and do the volume of projects we are doing today. Dominic is an expert on the ins and outs of Private Lending… so if you have any further questions about self directed IRA’s,  or private lending, shoot us an email at info@hampdenhomebuyers.com.

Playing in the Dirt

We spent the afternoon doing landscaping over at Brooks St. I generally don’t do too much work at our properties myself, I leave that for the real contractors, however I do enjoy doing the landscaping from time to time. I don’t go to overboard, I usually will just plant some shrubs, evergreens and an ornamental grass or two. My favorites are boxwoods, azaleas, spirea, rhododendron, and Alberta spruces. I like to throw in some ornamental grasses for color and dimension. Because I use mainly evergreens I use the red mulch to add some more color as well. The main goal is to make it look fresh, clean and not too cluttered. If I can, I will try to save the mature landscaping already located around the property, but most of the time everything is so overgrown and unkempt it is best to take it all out and start fresh.

Heres what we did at Brooks St today:

Landscape Before

Landscape Before

 

Landscape After

Landscape After

 

Landscape Before

Landscape Before

Landscape After

Landscape After

House Before Landscape

House Before Landscape

House After Landscape

House After Landscape

 

We didn’t do too much, but it definitely helps the overall curb appeal of the house. We landscaped that whole front bed for less than $200, and most of that cost went to the three tall Arborvitaes, which cost $30 apiece.  The arborvitaes are a great foundation plant, especially in this situation as they block that ugly front wall pretty good.

Closing… my favorite seven letter word

Every real estate investor knows that closing days are very special….. whether you are selling a finished rehab, or closing on that great deal you just spent the last few weeks negotiating. It’s the culmination of all your hard work, endless phone calls, restless nights, and dealing with attorneys, lenders, buyers, sellers and agents….. and hopefully they result in nice paydays.

On that note, we sold our short sale rehab on Arnold Ave today. We put together a short little case study video on the deal…….

This property was a rehabbers dream …. a cosmetic renovation that we were able to purchase at a big discount, rehab quickly, and sell the first day on the market!

Five Closings and Stainless Steel Appliances

It’s a gorgeous day here in Springfield, MA. Right now the thermometer reads 80 degrees.  My partner Dominic just made me aware of something I didn’t realize, we could have five closings this month week. If it happens it will definetly be a record for us. A few years back when I was starting this business I would have been happy to have five closings in a year!!!  Things tend to come up last minute which may delay one or two but what should happen is; we sell two of our finished rehabs, we purchase one pretty house sub2, we purchase one rehabbed house at 70% of ARV, and we purchase the fire damaged three family. We’ve been FLAT OUT BUSY this whole year…. I love this depressed RE market.  

  One little tip I wanted to share is about Stainless Steel Applainces. We have been adding them to all our finshed rehabs, even the lower end starter homes… and the feedback from buyers has been awesome. It is an added detail that puts your finished rehab way ahead of the competition, and is one of the major reasons why I think our houses have been selling so quickly (less than two weeks on market).  Now stainless steel can be expensive so what we do is frequent Lowes and buy all the open box/ display models/ returns that they put out on the weekends. The key is to make freinds with the appliance workers and get them to call you when any good ones become available. We’ve made freinds with associates from both the Lowes near us and they will call us when they’ve got something good. We usually pick up stainless or clean steel appliances for a little more than the brand new white appliances.

Check out this kitchen:

Arnold Ave Kitchen

Arnold Ave Kitchen

This is an 864 sq. ft. ranch. We sold it in one day for above asking price at $121,000. We kept the original 80’s style cabinets that I always like to replace. However once we added the stainless appliances and staged it you don’t even notice the old cabinets anymore!! 
Well I’ve got to run to Lowes, they have a stainless steel Bosch dishwasher that retails for $540 dollars that we are picking up for $315. This will be going into the house on Bessemer.