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Responses

  1. How does the investor deal with the collateral issue with you? Is the property registered in his name? If the procedure starts with the developer who puts in the first payment and then puts in an investor, a quick cost registration procedure sometimes takes longer than the flip itself. So basically the money is in a period without "hard" collateral apart from the existing contract between the developer and the investor.

  2. The outline is:
    The investor pays the earnest money, home inspection, appraiser, insurance, architect if needed + all closing costs + down payment (working with hard money) + monthly payments in advance for the flip period (in case of exceeding the time frame, the monthly payments are split in half), take a month + margin of safety. Payments are made directly to the service providers (e.g. credit, PayPal, transfer). The investor then pays an advance to the contractor to start the work, which he receives back in the first withdrawals from the loan (up to two withdrawals).
    The investor is aware of the fact that, at some point in time, things that we did not know will be revealed and that at this point we may decide to take a step back and look for something else and that is the only amount that may not be returned.
    After the sale, they return what is owed to Hard Money and the investor (everything he has paid so far) and then distribute the profits. In terms of profit distribution it is usually 70/30 in our favor, but… We look at how much the investor is earning and therefore there are also cases where the profit distribution is different in favor of the investor (going by a low appraiser estimate)