Wisconsin Rehab Projects: Insights from a Local Lender - Good Faith Funding

Speaker: Tony Broullire, Owner, Good Faith Funding, LLC

Tony Broullire: In our market here in Wisconsin, we're definitely still seeing a lot of people rehabbing properties. One of the concerns we have in, in a recent trend is that there are some homes that are sitting on the market a little bit longer than normal. And when I say normal, I knew within the last three years when things were flying off the shelves, there's still not a ton of inventory. But with rates where they're at and because we're coming into winter time as well, we're definitely seeing a shift where some homes are sitting a little bit longer than they were in the past. If they're priced right, they're still flying off the market. But you're not going to get those super high prices with that we were before. And I think a lot in a large account due to where rates are at this time. We are seeing people still getting a lot of their deals off off market via wholesalers, their own efforts. There are a couple of deals though, more still coming off of the MLS, but some of those deals that are sitting a little bit longer and sellers are getting a little antsy and willing to knock their prices down a little. So that are the most, those are the most recent trends that we're seeing here currently.

Tony Broullire: There are two big challenges that our investor clients have been facing. These last couple of months, one of those is contractors and that seems to be a challenge, a continual challenge. But to get contractors show up to get them to do the work that they say they're going to do. So by having a good contractor, they're worth their weight in gold. The other challenge too is is getting properties to cash flow with where with the new rate environment. So from our buy and hold clients, they're looking at these deals that were cash flowing just fine, even a year and a year or so ago that are not cash flowing like they were at that point. So it's really re readjusting your numbers and making your, your buy, you make the money in the buy. And in this particular case, you have to make sure that you're buying low enough so that these can still cash flow when you get them rehabbed and refinanced.

Tony Broullire: Typically with our, with our investor clients, we've, we've seen a pretty even split between those who are doing fix and flip and those that are doing rehab and then renting those properties out. Keeping the, keeping the properties. When I'm counseling a client though I'm talking about multiple exit strategies. I wanna make sure that they have both of those options on the table. Especially my fix and flip people. I want to know that they're ready to rock and roll for the end financing just in case that flip goes sideways, which I've seen happen from time to time over the years. And I wanna make sure that they're ready to rock and get that property refinanced, rented out and make it some money on that, even if they have to keep the property. With my, with my rehab and rent people, it's the same, same scenario. I wanna make sure that they have enough equity in that property so that if they do have to sell it down the road or shortly down the road that they can and still get out of it and make some money on the deal.

Tony Broullire: We like all type of rehab projects. But it really depends on your experience level for. So we're really looking at the borrower in that scenario, if you're a first time borrower, which we do lend to, we're looking at, hey, I don't want a full gut on that deal. I want like, you know, re cosmetic rehab, you know, paint flooring, maybe a kitchen, you know, that type of thing. If you have some more experience where if you wanna do a gut go right ahead. We can, we can handle that as well. It just really depends on the experience level and that's, we're getting to know our clients and then getting to know us, we can determine, hey, what's going to be our, our most successful rehab, depending on the, the experience level that you have and the, and the team that you have built around you.

Tony Broullire: I like things simple. So our process and our product is very, very simple. We go to 65% of the after repair value. So we have a realtor get us a CMA, comparative market analysis and we go to 65% of that value. You net 65% up to 65%. And that can include both the purchase price and the entire rehab. As long as it falls within that 65% guideline, you also do not have any payments. We do not require monthly payments. Everything comes due at the end of the term. We do not have a prepayment penalty. So the sooner you pay it off, the less interest you pay on this, on this loan, we're at a 12% interest rate. We have three points origination, the three points again are above and we put, we roll those in. So it's above the 65%. Again, you're netting 65%. Whereas other companies oftentimes they'll say 70% lo loan after repair value, but they take their points and their fees out of that. So you're not really netting that amount. Whereas with us, you net the 65%. We do have a six month balloon feature again, no payments, no prepayment penalty. And we do not need you to have done a deal before. Now we're gonna talk to you about that and we're gonna figure out, hey, does this make sense? And can you handle what you're taking on? But we will, we will definitely take a look at any borrower and I meet with every single borrower been doing this for 25 plus years and it allows me to talk to them. They get to know me, I get to know them a little bit and then we can help mentor them through that process as well. So that is what we have to offer again. 65% of the after repair value, no prepayment penalty, no payments, a six month balloon, 12% interest rate, three points. And we will help you through the process with some of our advice and try to make this as successful for everyone as possible.