All Forum Posts by: Doug Smith

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.

Bulldozers have their uses provided the price and location are right. 

...and it happened in your neck of the woods. I won't mention names, but the offender is on your MLS!

Yep, Nate, that should have been how the closing agent handed over the check. The agent does a lot of business and I was shocked to see how she conducted herself. I've done a lot of loans over the years, but that was a new one to me. Hopefully nothing like that will happen to you and I in the Tampa market, but then again, this is the home of the Buccaneers and Gasparilla. You never know. 

Just PMd you. I do a lot of construction lending in the Tampa MSA and I've been investing for over 15 years. Love to connect. 

When I bought the home I'm currently in back in 2001, I was working at First Union (now Wells Fargo) and got the employee rate. People couldn't understand how I was able to get the amazing 7.25% rate I did. Rates right now are actually pretty good. It's real estate taxes, insurance, and the ratio of rents to property values that are killing deals in this day and age. 

So this isn't a question, but I thought some of you regulars would get a kick out of it. We also do consumer lending in FL and we had a closing in Orlando yesterday. The listing agent had been doing some inappropriate stuff throughout the process. Our closing went well, but instead of leaving a lock box on the house for the selling/buyer's agent or leaving a key with the closing agent, Long John Silver the Listing Agent buries the key in the front yard. Who does that? All is well. After taking 20 paces from the palm tree, then 10 paces North to the garden gnome, and some digging, they found it. I just thought it was too silly not to share. Happy investing everyone!

I don't know usury laws in SC, but you'll want to check the usury (highest interest rate) you can charge in SC. I'm sure you're fine and you're an individual, so I doubt if the state is going to come after you even if it is over the max rate in the state, but as the carpenter says "measure twice and cut once". Some states have really low maximum rates that you can charge. Keep in mind, you're talking about 20% for 90 days...that's 80% annualized interest. You don't want to give their attorney a defense if things go sideways. Does anyone know off the top of your head what usury is in SC? We don't do much business there and when we do, we're only 9-11%, so I honestly don't know. 

Hey Andy. I'm in Tampa as well. Personally, I would focus more on the long-term cash flow of the property rather than worry about your parents living standard. If we're financing rental property, we're going to focus on your credit, the amount of $ you're bringing to the table, and the cash flow of the property. Will the monthly PITI, HOA, maintenance reserve costs, etc be more or less than the rent that you would garner from an arm's-length transaction with a non-family borrower. You said it yourself in your post. Your parents will only be temporary tenants and you have to think long term. At the end of the day, don't get to "house crazy" as you put it. Real Estate Investing is a math problem...period. When you let emotion enter into it, that's when you lose $, so ingore the high-standards that your parents have and seek properties that cash flow positively and have a potential for appreciation. Let's grab coffee some time in Tampa.

Lenders are going to look at your credit and time in business for credit cards more than they are the form of the business. Sole Proprietor, LLC, S-Corp...for a credit card it won't make a difference. Bank lines (not credit cards, but lines of credit) will be similar. Bankers will be more concerned to see 2 years of your cash flow documented on tax returns, your credit, and your balance sheet than they will the business form. The requirement for income documentation will be the biggest difference between a credit card and a line of credit for working capital from a bank. When I was a commercial banker, we weren't as concerned about the business structure.