Its not a LLC Idea it is a method it is very common so strike that through. The LLC is the escrow for the property understand that? Borrower defaults the lender has the property. Its like a legal multisig is the best way I can explain it.
Why would the lender go after the borrower if you have collateral worth more then the loan in your possession?
If the property is not able to sell for the amount of the loan then the lender will lose. The kind of real estate you are talking about is speculative and is not guaranteed to increase in value. You have collateral but the collateral may not sell for the amount of the loan, traditionally speaking when this happens the lender would go after the borrower personally, with a LLC arrangement this is not possible.
Why should I pay more then 50% when I am physically out there fixing and finding the property? Getting them ready for market and selling them?
Your time and expertise is not worth this much. The lender could hire his own contractors to preform the repairs himself for less cost/risk.
If you want to come swing a hammer and work I will be will to give you more of the cut. I can wholesale you the property for +10K on top of the prices listed if interested and you can do it all the work yourself if you think you are up to it
.
Why would
anyone ever do that? If someone wanted to handle the repairs themselves they would buy the property from whoever is selling them directly. Do you somehow think that you making a post on the internet somehow entitiles you to $10k if they end up buying a distressed property because of it?
Break down of math for you
Total
Loan 73,000
Total
Collateral 109,000
Its like someone giving you 149.32% collateral on your loan.
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See my first comment.
Start reading here
http://www.biggerpockets.com/ come back after you have read this part
http://www.biggerpockets.com/real-estate-investingThen visit
http://www.hamiltonridge.com/http://www.thenorrisgroup.com/http://www.dohardmoney.com/http://www.pinefinancialgroup.com/http://maggiocapital.com/http://shermanbridge.com/biggerpockets/http://wdbfunding.com/1) Lender never lend more then 70% of the ARV of the property. So if something does fail they can at least get the money back.
Any appraised value of a property is subjective and when trying to find the value of a property that does not need repairs/improvements there is not necessarily someone who is willing and able to pay that price, this fact is exaggerated when dealing with properties needing repairs.
2) If a lender wants to find discounted properties.... then they would not be a lender. They would be a fix and flipper lol. Its called passive real estate investing.
My point is that there is no benefit to lending this money but only receiving 50% of the benefit. All you are offing is "sweat equity" and sweat equity is not real. You are forcing the lending to take on all the risk but only half the reward.
Again this is just sweat equity. You are not adding any real value to the lender.
//traditionally speaking when this happens the lender would go after the borrower personally, with a LLC arrangement this is not possible.
Key word bolded this does not fit in that category.... its a REI loan.
The point is that these loans carry a lot of risks, there is an extremely high chance the project will fail. If the project is not going to be very profitable then there is nothing that would stop the borrower from walking away from a property that is in the middle of repairs.....this arrangement actually encourages it
Dude you have no idea what your talking Ignore this guy, if it was true no one in the world would ever get loans to fix and flip houses, there is a whole huge industry in it.
Like I said ignore the guy above he is cluess, I doubt he even has the money to loan in the first place he is just trolling. Tends to happen around here.
If I had the money to loan you I would, I know its secured in fact more secure then most loans on this forum backed by altcoins.
The flux in digital currency is way more risky the a investment in a property, property tends not to dip 20% in a day it takes years for that to happen.
Best of luck to you, I suggest you do not feed the troll above.
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enough said umkay bye bye now noobie
