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How do Private Lenders Value Duplexes and Quads vs Multi-family Apartments?

September 26th, 2011

The valuation of a quad is based on comps (sales of similar properties in the last 3-6 mos), just like single family homes.

For multi-family, the valuation is generally based on the NOI "net operating income" which is defined as the total actual annual income from the property minus the total actual annual expenses. Then the formula for the Estimated value is:

Estimated Value = NOI/(cap rate)

Thus if the cap rate is 10% and the NOI is $50,000, then the estimated value is $500,000.

The cap rate will depend on the class of the apartment (from "A" - high end living space & amenities, to "C" - working class functional, to "D" - livable but not nice.) and the economy. "A" has the lowest cap rate (5-6%), B (6-8%), C (9-11%), D (12% or greater). A bad economy tends to increase the cap rate.

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Private Lender Due Diligence with Rental Property

by The Professor

September 26th, 2011

Private Investors are very concerned about how much risk you are exposing their money to. Obviously, renting to a poorly qualified tenant is going to risk eviction costs and cause other problems which could cause a loss of investment or return. So, even if the investor doesn't ask you, your failure to address that will diminish you chances of getting an investment.

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Categories Deal Structuring for Private Lenders, R.E. Software & Tools, Real Estate-Private Lender Valuation, Uncategorized

Getting Private Lender Money for Rental Property

by The Professor

September 26th, 2011

With rentals, you have to address 2 issues for the investor:
1) What is your exit strategy: When and how are you going to pay the investor back his principal?
2) How are you going to pay the return on his investment. With rentals that return is usually paid out of the cash flow from the rents. That cashflow should be at least 25% more that the payment you are making to your investor.

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Categories Deal Structuring for Private Lenders, R.E. Software & Tools, Real Estate-Private Lender Valuation, Uncategorized

Are private investors actually interested in funding wholesaling deals? or are they only wanting long term investments?

by The Professor

September 26th, 2011

Private investors are most definitely interested in wholesale deals. A quick turn over of their money with a high profit is actually the best scenario, especially when the risk is low. If for example an invest lends you $50K, and you flip the property for a profit of $20K in 2 months, and lets say you agreed to pay you investor a fixed 5% of his investment. Then the investor would recieve $105,000 in 2 months. That's a 30% annualized return. Your investor would be delighted.

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Categories Deal Structuring for Private Lenders, Private Money Tools & Plans, R.E. Software & Tools, Real Estate-Private Lender Valuation, Uncategorized

Funding for Short Sales, REO’s and other Flips

by Richard Odessey Ph. D.

May 25th, 2009

With so many homes going into foreclosure, or already taken back by a lender, Real Estate Investors have the opportunity of a lifetime to make huge profits by negotiating

1) short sales with lenders who foreclosing on homes
2) big discounts on bank-owned inventory (REO's)

and then reselling them to a new buyer at a higher price thus making a profit while still offering the new buyer a great discount.

In the past, these types of flips could be accomplished in a simultaneous closing such that the investor closes with the buyer, and simultaneously uses those funds to pay off the lender at the negotiated price and pocketing the difference as his profit.

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Net net this is a nothing down transaction because the investor is using the buyer's funds to pay the lender.

Unfortunately, this is no longer legal and will not be permitted by the lender, and closing attorneys will not do it. Read More→

Categories Access to Private Capital, Business Plan for Private Lenders, Deal Structuring for Private Lenders, R.E. Software & Tools, Real Estate-Private Lender Valuation

Deal Evaluation Tool & Software

by Richard Odessey Ph. D.

March 27th, 2009

Explosive Strategy to be Revealed to 200 investors...

private money lender deal evaluation tool

Congratulations,
there is another special opportunity waiting for you.

Is your deal "investment ready" for private lenders? When you want to raise $100,000’s or even millions of dollars for your real estate ventures, you’re going to want to be talking to people with money—the high net worth individuals and angel investors.

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Now, these investors are going to scrutinize your deal to make sure it can generate the kind of return they’re expecting and not expose them to too much risk.

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Give you multiple options for offering your investors those "can’t refuse" high returns through promissory notes, and/or equity investments while bringing you cashflow through management fees and equity sharing.

software-box-250

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