All Forum Posts by: Joel Owens

Paying a real estate attorney a few hundred to research for you is well worth saving you from a HUGE mistake.

You need to know what you are or ARE NOT purchasing.

Did you not see these units from the inside before purchasing??

Many times the seller will just say something like insurance inspectors are here to take a few pics etc.

If the adult is not there do not enter the property.Do not even step one foot in there.

Did you review the rent rolls,vacancy loss,turnover frequency,late pays,strength of the existing leases,etc.???

It sounds like to me you bought a second position. Many times a lender will try to foreclose on a second to see if a sucker (inexperienced investor) will buy it.

Many fail to ask if they are buying a first position or a second.

You said you know the property has plenty of equity even with the first.How do you know that???

The first could have 1 to 2 years of back payments accumulated over time from making a payment one month,then going for a loan mod,then going for a short sale,or filing a BK.

Over time they could be tens of thousands behind and then you add in penalties,fees,and interest,back escrow,and attorneys feed.

Now the principal balance on the first has ballooned up really big. This doesn't even account for additional liens etc. that can be added on after the second is bought.

Since the first is still on the property many liens can be attached.

Contrary to popular belief the the 1st and the second are 2 different loans with different payments and numbers.The asset manager on one loan has the duty to limit losses for that one loan while the other AM handles the first.

So the first and second positions have different goals in mind.

Many seconds are worthless.

Example had a customer call the other day.

4 bed 3 bath bought in 2006 for 160,000.1st 130,000 second 30,000.

Now properties are selling foreclosure for 89,000 REO. The first is owed about 152,000 with back fees. The second isn't going to spend 152,000 to get an asset worth 89,000 to try to recover 30,000.

They will just sit and wait,or try to sell the note off to a sucker,or sell the note off for a discount and tax write off the rest.

If foreclosed and they get nothing they can sell to an asset recovery company. Options available will depend on state foreclosure laws and collection practices.

Securities Based Lending - The Equity Alternative
Our loan program allows the borrower to use eligible securities (stocks, bonds, mutual funds and/or other securities) to obtain funds for any purpose including the purchase of real estate, down payment assistance or personal or business use.
Programs Highlights
Below Market Interest Rates – fixed rates from 2.5% to 4.5%.
Interest Only Loan - Quarterly Payments.
High Loan Values – Loan to security value ratios up to 80%.
Non-Taxable Event – As the securities are not sold.
No Income or Credit Check – The loan is based solely on the securities.
No Credit Reporting – nor is it reported to public records.
Borrower Retains All Market Appreciation - borrower receives the benefit of any dividend or interest that the securities generate.
Non-Recourse Loan – A loan with no personal liability.
Loan Proceeds May Be Used For Any Purpose.
Flexible Terms at Loan Maturity - refinance, renew, extend the terms or pay off the loan.
Prompt Response to Your Loan Inquiry – can fund in 7 to 10 days.
Criteria
Eligible Securities Include - publicly traded stocks, bonds, options and mutual funds. The securities pledged must be free-trading without any restrictions. They cannot be in a retirement fund, 401(k) or other restricted plan.
Simple Steps
Complete the Express Quote Form listing the names of your securities, their stock symbol along with the number of shares.
Upon receipt, a loan proposal will be drawn up to determine loan amount and interest rate. (Usually within 24 hours.)
If the borrower agrees to the terms, the next step will be to provide proof of ownership for each of the stocks, bonds or options included in list.
The shares are transferred to the lender, values will be verified and within days loan proceeds are transferred to the borrower.

Any interest??

To answer your question there are no upfront fees.
At funding there is 5 points

Ted did you fund any deals with this loan and get paid the points??
I was just wondering if you had success with it or not.

Thanks

Hey don't trust a REALTOR....I resemble that remark! LOL Just kidding.

It's true that some brokers/agents will make something appear rosy to get you to buy.

Even if you are just selling off the property for a quick 5k it would be wise to have a folder to give prospective purchasers about the property.

With the pool does it dominate the yard? Is it in the middle,off to the side,etc.

The corner lot is it fenced?? If not buyers will worry about people cutting through their yards. Is their a power pole close by? That can also make buyers nervous.

Corner lots also depending on if in a subdivision or side street can be nosy with stop and go traffic.

You have to make sure the external features are just as appealing as the external.

When I would drive around with real estate developers for site acquisition would would put every location through a process.

We would start out with say about 10 and then on the map have a checklist of positives and negatives.When we wittled down the list we got down to around 3 properties and they purchased 1 to 2.

Thanks Ted.

One more question. So then if I have cash buyers why wouldn't I just forgo transactional funding and assign my contract for an option fee??

I put it under contract at say 55k and option to them at 60k making 5k??

I know some banks won't allow assigning without their approval.I would think banks wouldn't be excited either about transactional funding to an unknown C buyer where the deal can fall apart.

I have found with my sellers listings they would rather wait on a direct buyer than give blanket assignment rights and if the buyer doesn't line up an end buyer the seller gets nothing.

I know many buyers will try to tie up for say 500 bucks or 1,000 but the seller would rather sell than get a measly 500 for 30 days of the property being off market.

Okay so Ted and others help me out with this.I have heard of transactional funding but have not dealt with it too much.

From a real estate brokers standpoint especially on the residential flip side to owner occupants almost all are using FHA to purchase properties.

I can go into my mls and look up types of financing for the closings and FHA runs rampant because of the low down payment compared to the higher conventional loans.

Most of the buyers are 3/2 to 4/3 bed and bath first time home buyers and were told for years you could buy nothing down so have saved very little.

So with transactional funding you are heavily compounding your money over and over again.If you charged 2 points and loaned out 15 times a month that is a huge return.

So say I had a buyer that wants a property really badly. They are using FHA.The bank is selling a foreclosure at about 80k and then reduces to 65k.

The asset manager explains they are looking for a cash buyer because they want a sure thing by the end of the year instead of a financed deal.

I already have the buyer lined up.Will FHA create problems and will the bank see transactional funding as a contingency based on the end buyer??

Thanks for the explanation.I run into tons of deals but need the capital to put them together.

You have to buy right so you don't tie up your capital long term.

Some asset managers at banks are not currently looking at FHA,Conventional,or VA.They don't want hard money tied into LTV conditions.

Rather than taking a chance on finance they want a cash buyer who can close with 100% certainty before the end of the year.

When next year hits I am sure the Asset Managers won't mind taking a risk on financing for a longer closing time.

Each deal is analyzed and evaluated based on it's own merits. To make a blanket statement and say YES and investor would do this deal doesn't make sense.

This is the same rational when people equate foreclosures to DEALS.A deal can be in the form of many different types of properties or seller motivations.

Also depends if you want to wholesale it,whole tail it,or sell retail,or keep it in your portfolio as a rental.