All Forum Posts by: Andrew Postell

@Robert Rainey I would highly suggest Training Pro.  They are very good and would recommend them comfortably.

@Derek Rocco were  you working directly with the sellers or was there a 3rd party involved in between you and the sellers?  It sounds like the sellers were at least open to having some discussion.  I would suggest, if possible, to do some sales 101 techniques.  What I mean is why is the seller selling a great property?  Whatever their reason to sell is what we need to focus on.  Understanding their position on this could lead to  you getting more deals closed.   You may not always be able to even speak with the seller and even if you DO know their motivation you still aren't guaranteed to close the deal but I believe it would lead to a higher success rate.  Hope this helps!

@Assaf Furman based on how you are describing this scenario is sounds like this incident should be reported to the Consumer Financial Protection Bureau. That is the federal agency that handles these sorts of things and this scenario sounds like it should be brought to their attention. 

@Paul I. I feel that there is something here we are missing - why are you closing on a higher than normal interest rate?  It is extremely unlikely for you to refinance right away to get a lower rate.  Rates have been increasing over the past several weeks and are likely to continue.  If you feel that you could refinance to get a lower rate - why not just go with a lender that has a lower rate right now?

@Shane M. this is certainly a question for your tax professional but I have seen many people setup a business entity for this purpose.  

@Chris Dayao there is a lot to answer but these are very good questions. Please forgive the length here but this is the exact information you need to know. If you are buying a property with Hard Money it is normal for the hard money lender to order their own appraisal. If they do NOT have an appraisal on the home then I would highly recommend ordering one for your protection. Most hard money lenders who deal in investment property financing understand that the After Repair Value (ARV) is critical for them to get their money back. The hard money lender only wants to be in the property for a very short time - some are as long as 18 months - but the reason for this is because they normally charge 1% fee up front and a 1% fee when you are done. Sure, the 10%-14% interest is good but in realty they make most of their money with their fees. The faster they can get their money back the more money they can make in the year by lending it to someone else. If they are experienced with investment property lending they should have an appraisal done because of an EXTREMELY important rule - if you are to refinance out of the hard money loan you can only refinance 75% of the ARV. For example, if the home is worth $100k then the most a conventional loan can lend you is $75k. So if you bought a home for $50k, put $30k in renovations to the home, it appraises for $100k your payoff to the hard money lender will be $80k. But you will have to bring $5k to closing because the most a conventional loan can lend is 75% when you refinance (when you purchase they can lend 85%). So if you don't have $5k to bring to closing then the hard money lender won't get their money back unless they FORECLOSE on you. Remember that their loan balloons after 6-18 months, which means you owe it back in full. The entire loan amount. And that's why we refinance out of that home or flip it. When you refinance the conventional lender will also order another appraisal (remember it's a different bank to get the conventional loan thus they need a different appraisal) but if the value is unknown until you refinance it could lead to trouble. However, there is ANOTHER very important rule for you to know - you CANNOT do a cash out refinance on an investment property until 6 months has past AND you are once again limited to 75% of the ARV. Now these are conventional loan rules, which means a bank could be more strict than this if they wanted to. You may hear different banks say "We need you to own the home for 12 months before we can do a cash out loan" and so forth. So it's important that you find a lender that has no "overlays" - those are the extra rules a lender will put on top of the Conventional Guidelines. Conventional loans are the loans with really low rates and they are fixed for 30 years, etc. (They are also governed by Fannie Mae and Freddie Mac if you recognize those names). That's the loan type you want first. Is there another solution where you could get 80% of the ARV? The answer is yes! Those are called "Portfolio Loans". Portfolio loans are loans that come from the bank's private money (money that is not governed by Fannie or Freddie). So since it's their own money, they can lend it up to 80% if they wanted to - and their are portfolio loans out there that do that - but a portfolio loan might have a significantly higher rate, may only be amortized over 15 or 20 years (which would make your payment higher) or be a Variable Interest Rate. You may have to interview several banks to get what you need with a portfolio loan. As far as your personal name vs. LLC - a conventional loan will require you to put it in your personal name - but you can change it to your LLC after closing. A portfolio loan allows you to close in the LLC. I know that was a lot. Feel free to private message me for more information on this subject.

@Jazmine S. a good lender should be able to advise you on your credit BEFORE you officially apply for a loan.  I would highly recommend to speak with a professional on this to properly advise you on your credit and which direction to take on it.  There are numerous factor that will impact your score.  Your "available credit" does impact your actual credit score but opening anything new will bring it down.  Some banks will even pay for credit counseling if you need it.  Feel free to private message me if you need more information.

@James Rodgers the answer to your question is that if you are buying a primary home - as in the home you will live in then you just need 3.5% of the After Repair Value for your down payment.  On an investment property you would need 15% down minimum.  Closing costs should be taken into consideration somewhere in the process though.  Sometimes the seller can pay closing costs and sometimes the bank can pay them.  But you will need 3.5% and 15% minimum respectively.  Hope this helps!

@Jeff Moore the main issue is finding a lender that will put a HELOC or Line of Credit on one investment property. Most will not entertain this strategy. Placing a HELOC on your primary house is what most banks will do. I have seen a Line of Credit against several properties (usually with a total equity amount of $1,000,000 or higher) but on a single investment house that is the unicorn that we are all looking for. What most investors will do is only put down the minimum amount they can on a property so they can keep more cash to buy more homes. If you already have purchased this property then a cash out loan might be your best bet. Keep in mind that cash out loans also have an entirely different set of rules for you to be aware of. Hope this helps!

@Theo Z. I am following you on the math but I think it's really a philosophical investing question that you need to address. What I mean is that some investors feel that as long as they cash flow on a property then it doesn't matter what the payment is because someone else is paying it. Others feel that they always want cash in the bank to find more deals. Some people believe that they only pay down their properties with the cash flow of other properties. And some people just get really stressed out when they have debt. Numbers aside, what is important to you? If you said, "Andrew, the numbers ARE what's important to me" then logically you should never have debt. But I think there's a threshold in there for you where a certain amount of debt is reasonable. A private loan has a lot of benefits - it's not on your credit report so it doesn't affect your DTI, it's probably more flexible if something really drastic were to happen to you and you needed some breathing room for a few months. So there are reasons to keep it besides just the rate of interest. Hope this helps some with your decision making.