Ask Cornerstone

Ask Cornerstone: Where can I find a standardized list of rehab supplies for my flips?

House flipping supplies list

I’m in the process of adding rehab projects to my real estate skills and portfolio.  I have a background in REI, a good understanding of finance and property management, and experience in buying and holding income properties. The part that overwhelms me is putting together a standard list of supplies for my properties.  Is there a good list of rehab supplies that I can pick and choose my expenses from?  I’m looking for things like bathroom and kitchen fixtures, tiling, cabinets, paint….etc.   I’ll customize it to my market, but if I had a list, it would help tremendously. You are on the right track by focusing on planning in learning […]

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Ask Cornerstone: How can I find a private money lender for a $50K loan on a $45K purchase?

hard money lender for income property

I am looking to purchase an income property. It is a duplex in Monee, a suburb of Chicago, which was fixed up by a previous investor. It’s an income property and is already rented out. The asking price is $45,000.  I would like to borrow $50,000 for duration of 30 years. I can give a lender the analysis of the monthly cash flow and complete estimated closing cost. How can I find a good private money lender for this purchase? Unfortunately, you probably won’t find a lender that would be willing to loan in your situation. It’s a 111% loan request. An FHA loan is probably the best loan one […]

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Ask Cornerstone: Why do house flippers pay much higher rates to private money lenders when banks only charge 4-5%?

interest rates hard money loans

First, I’ll explain the difference between the two types of loans. Conventional loans loans from banks are given to homeowners who meet lending criteria in regards to debt-to-income ratios, credit scores, and several other guidelines. All the major systems such as plumbing, electrical, heating, and roof, need to be in good working condition. Private mortgage insurance is also required when the borrower has less than 20% equity. These loans typically take four to six weeks or more depending on problems found in the application process.  The lower interest rates reflect that it is a relatively safe loan to the lenders. Hard money loans (HML) are made by financial companies or the companies that […]

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Ask Cornerstone: Do brokers give referral fees for bringing a person needing financing and a hard money lender together on a deal?

loan referral fee

Do brokers give referral fees for bringing a person needing financing and a hard money lender together on a deal?  I have a friend with a property under contact in Indiana. She needs a loan for about $100K. How much can I get compensated? Indiana’s lending laws and regulations might be different but in California most of the private money loans are made thru the brokers just as hard money loans are. The reason is that by using a broker, the private lender is not restricted by the laws that conventional loans are and can charge the higher interest rate they require for investment. The broker arranging the loan charges […]

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Ask Cornerstone: What’s the lowest offer I can make on a short sale house that is listed at $850K in the Los Angeles area?

Price for Short Sale

I don’t recommend focusing on the lowest offer as much as a thoroughly analyzed price you are willing to pay based on your desired profit. If the offer price is too low, the seller will not consider it as a serious offer.   You can determine the right price for you, as an investor, by deducting your costs and required profit from your projected selling price of the home after it has been refurbished.  That selling price is called the “after repair value (ARV)”. Step 1: Ask yourself “How much could one sell the property after fixing it up and pricing the property to sell within 30 days.”  Use this value […]

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Ask Cornerstone: Will my Business plans of building four quality built cabins on my land increase my chances of finding financing?

business plan for building construction financing

I own the land in Maine near a major city with a value of about $42K. For a cost of about $200K, I can build four separate cabin units.  The makeup of the surrounding area should support this plan with the colleges and a hospital nearby as well.  A possible business model would be to run it like a motel of short term fully furnished housing. It would bring in about $60K a year, at 30% occupancy, to upwards to $200K. Cost of running would be estimated around $36Kon the low end. Another business plan is rent it as monthly housing  to bring in about $6K a month, which would […]

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Ask Cornerstone: Should I borrow against one deal to fund another?

I’ve found a new property to rehab that requires a cash purchase simvastatin 10 mg.  I would normally use my own funds to make the investment, but my money is tied up in two other rehab projects that are currently on the market and in escrow. Should I use the property being purchased as the collateral or the property that is already rehabbed and is waiting to be sold? Most lenders would give you approximately 70% loan so you would need 30% down payment plus closing costs. If all your money is in your property being sold, the best option is to use both the property being purchased and the property […]

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Ask Cornerstone: I inherited a house that is a total disaster but with huge potential. Should I sell it as is or try to make the most of this opportunity?

I have just inherited a house. It’s a total disaster and although I haven’t had it appraised yet, I’m assuming I will not get much when I try to sell it. It was built in 1993, the driveway needs to be replaced, there’s a sink hole in the back yard, the landscaping is horrendous and the interior has leaks, visible mold and nothing is salvageable. What I really want to do is gut it, remodel and sell it for the highest profit available. The houses in this area are selling in the 270,000 to 310,000 range. I really don’t know where to start since I am a stay at home […]

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Ask Cornerstone: Should I take extended time off from my regular job to focus on a real estate venture?

Is it a good idea to take extended time off (2-3 months) from my regular job to focus on their real estate venture? I’m interested in purchasing a multi family, that will require a good amount of work. After the purchase, I imagine I will be spending lots of time supervising improvements to it for a good while, until I can stabilize the whole thing. I get the standard 2 weeks vacations and holidays every year, but that’s not nearly enough. I can afford to go a few months without a regular salary. Can a few months off have any impact on my ability to borrow money down the road […]

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Ask Cornerstone: I’m having trouble finding private money for my projects. How do I better attract hard money loans? Is there any specific technique or language that is being used that works best?

language for hard money lender business proposal

The main reasons private money lender reject deals are in the numbers, not in any of your “specific language”.  Loan request proposals, including your exit strategy, do need be well written and clear, but more importantly the figures and data need to show that the property is a good deal.  As a lender, if I am not convinced that borrower will make a decent profit then I will not lend. So again the secret is in a “good deal”. When you present a deal to an investor or a lender make sure that it is complete and its assumptions are well backed up with data. Primarily, your project should clearly […]

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