All Forum Posts by: Doug Smith

 Not without a hard core buy down with a 5-year pre-pay. One of my loan officers that focuses on residential asked me to come along to a presentation to a large real estate shop in Tampa. One of his topics was showing a redacted Loan Estimate from a builder-owned lender that was offering $18K in closing cost assistance, but they had $15K in points and a $4200 "builder fee". @Chris Seveney, you and I are pros that explain the options to the people we work with and can see through the BS shell games. I always preach to my loan officers to not give the store away and make a reasonable profit, but to not try to make your annual revenue goal on one deal. Make sure the customer is profitable and never ever gouge a client. If your customers know that your giving them a great deal and looking out for their interests, they come back to you time and time again. Although we can buy a DSCR rate down into the 5's, it's been my experience that it rarely makes long-term sense for the investor and their goals. Hope all is well with you in the Great State of VA.

Not usually. I am not familiar with them, but that's not a normal occurrence. 

I'm in Tampa as a lender since 1996 and personally as an investor since 2007. When I first started investing, we had luck at the foreclosure auctions, but then every Tom, Dick, and Harry took a Carlton Sheets course and decided they were a real estate investor with absolutely no background or experience. They started overpaying for properties and it became a complete waste of our time even putting in bids as these inexperienced investors would start the bidding way above what the property was worth. I really love working as a lender and mentor to real estate investors, but there is so much bad information out there. Case in point, several years ago, I was speaking at an IMN conference and was approached by a newer real estate investor that had paid thousands of dollars to a guru that also happened to be at the conference...in the audience taking notes. I had the opportunity to speak with him and he had absolutely no idea what he was doing and had overstated his experience to his flock. I agree, Chris, experience is key. As a lender, I do love working with investors...particularly in my home market of Tampa...and we are still lending there, but I think too many private lenders and gurus are enabling inexperienced investors and, in turn, they are loosing their shirts. We do require some experience and, if someone doesn't have it, we recommend that they do smaller, safer deals or get a more experienced partner for a few deals to cut their teeth. Even on BP, I see some really, really bad advice. I've met some great people on here, but I am with you. I see more and more inexperienced investor that read a few blog post and then try to go it alone. I love working with investors and advising them, but for newer investors, that advice is often "don't do it" until you really understand what your doing. They then find someone that doesn't tell them no and then they lose their shirts. 

35-year lender and 15+ year investor in the Tampa market here (I, too, live in Riverview). My kid was an infant when I started investing, now we're looking at colleges. I did four things when I first started that helped a great deal. First, I found a partner that had different skill sets than I did. I had financed a bajillion investment deals working primarily for banks, but didn't have actual experience investing. I handled the money and the partner was plugged in and knew the logistics. Second, I didn't DIY it. We hired a good GC to help with the project. Third, I didn't quit my day job. I see a lot of investors try to go all in out of the gate before they are financially ready. That will kill you. Finally, we did the math and watched our money. You expect what you inspect, so make sure you're getting a solid scope of work with the contractor up front, a good ARV from a competent, experienced agent, and you stay on top of it. Honestly, the kid thing wasn't a big deal in the grand scheme of things. Now that we're looking at colleges, I wish to showed more interest in the investing side. Good luck to you. Let's meet up for coffee off of 301 and you can pick my brain. Good luck to you!

35-year lender and 15+ year investor from the Tampa Bay area here, so I know the market and I've either built or flipped scores of homes in the area. I've financed thousands over 35 years, so I think I'm qualified to answer this one. The 203(k) loan is a bit more strict with respect to DIY that you might think. The three most important things a lender looks at when lending to an investor are not capacity, credit, and collateral (don't get me wrong...they are important). To lenders, the three most important things really are 1) experience, 2) experience, and 3) experience. I did my first single-family flip with a partner more than 15 years ago after financing deals for others for 20 years prior to that. Even with that background, I made a lot of mistakes in my first 5-7 deals. Good lenders know this. If you're a new investor looking to DIY it, the lender will likely have heartburn over the complexity of the project you're describing. They might, or will likely, want to see you hire an experienced, licensed, and insured/bonded GC to handle the project. Regarding your question about building an ADU, we do that all the time. Here again, we typically want to see that a licensed GC is leading the charge on that...whether it be with a 203(k) loan or some other sort of financing. As you gain experience, there are other programs that are less stringent, but a new investor putting 3.5% down tackling a tri-plex with an ADU DIYing it is going to cause lenders heartburn. PM me if you have more questions and I wish you well in your real estate adventures!

Hey Don, I wish I can help in Fort Lauderdale, but we just financed a property there where one of our good investor clients purchased an investment property. The realtor held herself out to be an "investment specialist", but not only was clueless, but missed a lot on the property which cost our client a great deal. I wish I had a good one in SE FL, but we've yet to do a deal with an agent that I felt knew their stuff. On another note, I was just invited to attend a meet-up where an "investment specialist" realtor gave a presentation where he explained how lenders look at evaluating rental properties. The newer investors in the room were capitvated, but most of what he presented was absolutely wrong. The moral to my story is that there are very, very few good agents that are knowledgable in investing. Few have backgrounds in the field. I have a couple of absolutely amazing ones in Tampa, but I know none in Fort Lauderdale. I wish I did. If you find one, I would love an intro. From a lender's perspective, good project managers, agents, and contractors make or break a deal. Fort Laurdale is definitely a hole in our game. Good luck with the search! I'll keep my eyes open for you.  

We just closed on a deal where an experience investor was spec building several homes, but the contractor greatly under-bid the job to get the deal. We had to refinance the original construction loan based on the new scope of work. This is something we've done a lot of, but to advise you, I would need to know more. Why was there a funding gap? What was the original lot purchase price? Did you pay for that completely and, if so, how much? If not, what did the financing stack look like? How much was the original construction budget and what has that grown to (minus the lot price? How long ago did you purchase the lot? What is the realistic "As Completed Value" and how did you arrive at that figure? How close are you (both in $s and time) to completing the project? There's a lot we would need to understand to give you proper advice. Thanks so much. 

Hi Kristin, Yes, I'm a lender, but I've also either built or flipped scores of homes over the past 15 years.Many of those we got from wholesalers in the Tampa area. We've met many, many wholesalers over the years, but there's been only one...ONLY ONE...who we found that we could trust. Everyone else that we've met has either A) never brought us a property after we first chatted , B) got super greedy and priced themselves out of having a great repeat relationship, or, more often, C) took us for fools and lied about ARV, the Extent of the Rehab, or some other important factor. On the front side, just be honest with people. "Through my business, I'm built very strong relationships with several investors and I really feel as if they would love this home." With us on the back end, we really appreciate honesty and trust. I suspect the same is true on the front end on the A to B transaction. Good luck in Houston!

My undergrad was in accounting. I did the CPA route and even worked as an accountant briefly before realizing I hated it and I went into lending. That being said, even I have a practicing CPA do our taxes. Laws change constantly. Asking that question of us in the peanut gallery is dangerous for you. You wouldn't remove your own appendix, so you probably would want to hire a pro to answer the question properly. 

I'm sure there are individuals that don't have experience with lending that have money burning holes in their pockets, but I don't know of an experienced lender that will do that. The risk increases exponentially when there's no skin in the game. Past also predicts the future...meaning that it's rare that you see someone with poor credit where it's an isolated thing. It's been my experience that credit issues are usually a pattern, so the legit lenders I know (including us) will look at someone's past payment history. One thing that was only mentioned briefly was experience. Most people don't understand that mistakes and defaults are inversely proportional to the operator's experience level. Heck, I had been lending for more than 15 years and had done thousands of loans before I did my first personal flip...and even I made mistakes over the first few deals. Most legit lenders I know, including us, are going to look at both cost and ARV in addition to other factors to determine how aggressive we'll get. We love to work with all the borrowers we can, but we also have to protect our investors.