Any connections to hedge funds or buy & hold investors?

Question

Hey guys, first time poster, long time listener.

I have a property in Pittsburgh that I over flipped and am now having a hard time getting it off my hands. My loan terms are coming to an end soon and I can’t refinance as I’ve been bait & switched on terms twice now.

I have to dump this place quickly before we get foreclosed on, which would pretty much ruin my investing career before it even took off.

My question is - has anyone been in this position before and had to do a short sale to a hedge fund, or to a more established investor looking for portfolio ads?

To this day I’m still happy with how the renovation turned out. We just got caught in the middle of rising interest rates, and overspending on our budget, and can’t seem to find a way out.

A year ago there were a ton of hedge funds coming in and buying up properties here. I would love to be connected to someone at one of these hedge funds to send them over the deal and try to close fast.

Happy to share details with anyone in here as well. Any help is much appreciated. Thanks guys!

Alfath Ahmed · Answer

Why don't you rent out the property and list it on the market as a rental? This way your are not burning through as much cash for the PITI every month and you might be able to find a buyer that will pay more than market. The property is in Pittsburgh after all which is a hot destination.

Bob Stevens · Answer

WTH does that mean bait and switch on terms??? Also if you cant even dump it , well its a very bad deal. Live and learn.

Good luck

Nick C. · Answer

Is the property listed? That's your best bet for selling it, why the obsession with selling to a hedge fund?

Minna Reid · Answer

You don't need to sell it to a hedge fund or investor. Just list it and get it sold to the highest bidder  stat. If its negative, pay the difference out of pocket or attempt a short sale. The market won't be getting any better, not anytime soon, definitely not next year lol.

Caleb Brown · Answer

Eat the higher terms for the refi and rent it out. Find a lender, there are plenty that can do a  refi. You might not make anything but it's better then foreclosure or short sale. Then next year you can sell and move on.

Alfath Ahmed · Answer

Rent it out. 10+ cap rate is high, what was your previous number?

Chris Seveney · Answer

@Connor Zarefoss

List it for sale and see if lender will take a short sale. They may seek a deficiency judgment against you for the balance which they could collect on especially if you signed a personal guarantee. So your investing career will not be over but could be put on hold for a very long.

Also what do you mean “bait and switch”

Stacy Raskin · Answer

@Connor Zarefoss, have you thought about converting the short term loan to a DSCR loan for long term financing to get out of your current loan. If the property can be rented and the minimum credit score can be met, could be a good way to go. You can pay off your hard money loan in the refinance and set up 30 year fixed financing that you can refinance when rates are lower.

More on DSCR loans:

DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth. Here's a bit more in detail about how rates are calculated for DSCR loans:1. Credit score- the higher the best. 760+ generally gets best pricing for investment property loans with most lenders2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.4. Are you cash flowing the property? Is your DSCR ratio greater than 1-meaning are you cash flowing. Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit.I've included an example below to help illustrate this.So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.See example below:DSCR < 1Principal + Interest = $1,700Taxes = $350, Insurance = $100, Association Dues = $50Total PITIA = $2200Rent = $2000DSCR = Rent/PITIA = 2000/2200 = 0.91Since the DSCR is 0.91, we know the expenses are greater than the income of the property.DSCR >1Principal + Interest = $1,500Taxes = $250, Insurance = $100, Association Dues = $25Total PITIA = $1875 Rent = $2300DSCR = Rent/PITIA = 2300/1875 = 1.23DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new deals.

Max Feinberg · Answer

Institutional investors are largely selling right now…not buying. I don’t think this is your best strategy right now unfortunately

Connor Zarefoss · Answer

We tried to rent it and got bait and switched on terms twice and now I’m running out of time. Had several rental applications too. I’m trying to dump it just to pay off the loan. Would sell at at 10+ cap rate at this point. I just need out of it

Any connections to hedge funds or buy & hold investors?

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