All Forum Posts by: Brian Wilson

Afternoon BP!

Bottom line up front: 

I reached out to a local bank, sent an email inquiring about loan services for REI. Loan officer responded saying that they didn't feel it would be a good fit, and that this is not how they form one on one relationships. The rest in detail is below.

Fairly new at all of this, and recently reach out to a bank in my local area to inquire about their loan products for REI.

Sent them a contact us form through their website and received a voicemail 2 days later from a loan officer. She stated that she sent me an email yesterday and decided that she would call today since she had not heard back. I never got said email, and honestly got more of a feeling that she never even sent one at all. 

However, after looking her name up on the banks website I reached out to her via her company email with the subject referencing the voicemail. In the email I thanked her for calling me back the other day after she hadn't heard from me and I appreciated this level of customer service. I then went on to tell her what we were looking for, and wanted to see what they as a lender offered for these types of projects. I asked what they typically looked for when lending and what parameters they typically operate on (70% LTV/ARV, etc.).

I also stated that we were looking to form a long term relationship with a local bank that is a good fit for our business. 

I received the following email from her today:
"We do quite a bit of real estate lending. However we require the whole relationship with our customers. I appreciate you looking into what we can do however I don’t think that this would be a good fit for how we develop one on one relationships."

I want to respond, because I don't like the sound of that. However, I feel as though she has this perspective because I didn't call her and wanted to get an initial inquiry of the information (what programs they have) so I can discuss with my business partners, prior to setting up any meetings or further discussions. 

Have you ever run into any issues of this nature when looking at potential lenders? All advice, comments, speculation welcome.

Thanks!

@Chris Crull

Like Jacob said, it depends on your goal. 

Regardless of size of the property, you still gain the equity pay down over time. And if you buy with the intent to hold long term, you'll eventually reap those rewards. The good thing about stagnant markets is they typically aren't as volatile as markets with better opportunities to capture appreciation. 

If you look at my local market: Kc, in regard to say San Fran post 2008, San Fran took a larger drop in home values. But since the market turning around, it has also appreciated at a much more significant rate. Kc dropped 8-10% in value on average for areas impacted the most (avg) and only 3-5% for other areas (if I remember correctly) from 07-09. Median home price went from like 164k-158k during that period. 

However, median home prices in certain areas of Kc are close to if not higher than pre-crash now. But Kc is crazy stupid hot right now. So this is somewhat speculative.

If you're looking for cash flow and couldn't care less about appreciation I'd say go for it. If you want to capture appreciation, I'd be more hesitant on buying in that type of market.

My biggest thing is know your market and what rents are the "recession proof" ones. For example 750-1100 for some markets will never go away. So if you can get yourself a property that can take a 10% shift and still cash flow within your "recession proof" price range, I think you can weather any storm that comes your way. 

Good luck!

@Quamal Burton

Ultimately you need to decide to do what YOU think is best for you. I will say though, that everything is a trade off. I spent the last year educating myself, all the while at my previous job (defense) I hated it. The job was originally my dream job that I worked so hard to achieve. Only to turn out, I liked the IDEA of the job more than the actual job itself. 

So here I am a year later, in between jobs (was supposed to deploy, mission shifted, blah blah) so I'm back in my home town where I wanted to invest. I had the choice between going into a guaranteed career field that paid more money for the first 6 years but wasn't advantageous to my investing long term for various reasons. So I took a step back and thought, what do I find INTERESTING that's relevant to real-estate that I think I'd be good at. Fast forward after 6 months of applying to over 45 companies (called, emailed, followed up regularly) I only heard back from 4. I wasn't applying for jobs that needed any real experience. I applied for apprenticeships and internships. I got 1 yes. I made the choice to pick a w-2 that would ultimately make me a financially free man in the next 7 years, a wealthy man in the next 15 years, and the potential to build legacy wealth over the next 30 years. But I'm taking a huge pay cut now, and in a whole new industry. So I'm starting from the bottom again.

My only advice, is to really check yourself and decide what the best and most guaranteed path (of least resistance) to get to where you want to go.

Once you decide. Tunnel vision, close your eyes for the next 10 years. In other words pick a method and be consistent. Too many of us young guys want to build real wealth quick which is highly unlikely and makes us make short term decisions. When you start to think in decades, you're strategic, and calculated.  

Lastly, work hard, very hard. However, don't forget as humans we need breaks, so have some kind of work life balance that helps keep you "happy".

Good luck man!

@Alex Corral it would depend on what you define class B as. You can get into some A- B+ neighborhoods at 125k-135k ARV. As for the light rehabs in that price point, I think you begin to dip down into the C+ area. Still very doable in Kc just have to know what you're doing and have good management in place. Kc is just very hot right nowm from what I'm seeing.

@Austin Fruechting is actively investing here so I feel as though he'd have some additional input that could help you out.

@Angela Meraklis-Lyons

I'm so sorry to hear about your unfortunate circumstances. I feel as though speaking with a lawyer may be something to look into. 

On the building credit front, I would login into mint they offer a free service in regard to your credit cards and help you monitor your credit on a monthly basis. I had zero credit 2 years ago and with just two credit cards I've gotten up to a +770. So I'm certain at the very least you should be able to get back to the 720 range in a year or two. 

Maybe @David Dachtera could chime in as he had previously helped me on the topic.

@Joseph S.

It appears that you may be a little too emotionally involved in this deal. As others have said, rehabs come with risk. Everyone has different criteria that needs to be met for their risk threshold. It's personal to them. But you shouldn't let low ball offers offend you. The market will pay what the market will pay, in this case your market is investors. It's important to KNOW the value of what you have. If you know your value is at x then hold onto the property until you can get x.

I had a company offer me a job paying 32k when the market was paying 75k, I just laughed a little and said "no thank you, have a great day". It is truly just business. The company offered what they could afford to pay me. They didn't mean to slander me, just eyeing margins. Just gotta shake it off!

I'd list it with an agent.

@Russell Brazil is right. 

All markets are local. As someone just beginning to enter the REI realm, I've fretted over the potential of a correction as my cash reserves aren't very large. The one thing I've heard many successful investors talk about in summary is: buy conservatively (i.e analyze the deal as if a historically average correction were to happen), buy at least one product within your criteria every year (if available) that way you're following the average of the market, and your entire portfolio will not be bought at the top or bottom of a cycle. You can continue this process until you have a better understanding of your market and what the "typical" cycle looks like. That way, when the next "crash" or dip happens, you will know the signs.

Another thing I've often heard, you can't just sit on the sidelines and hope to show up to a crash and clean up. My impression of this as a new investor is that, relationships are formed and nurtured by relatively consistent business transactions. Networking is everything (especially as you get in to the larger product spaces i.e multifamily). Therefore, if you just wait and wait to buy product during a crash, lending will be more difficult to obtain, agents and other investors won't have a working relationship with you and therefore may not pass along any of the big deals, etc.

A professional mentor once told me "scared money don't make no money". He was talking about gambling, however this rule can be applied to REI and other informed business ventures.

Just the two cents of a newbie with a extremely conservative view on REI.

From what I've heard most investors haven't had issues with the note being called on properties transferred into an LLC. However, I could see (speculation) that if you acquired a property via owner occupied and transferred it into an LLC immediately after you moved out (after 1 year requirement), then you could be more likely to have you note called. At the end of the day your best bet is to just speak with a loan officer at a reputable local bank openly about what you're wanting to do.

ALCON,

I have attached the map to this post. It typically doesn't appear visible to others for some reason, so if you are interested in the map PM me and I'll happily send it your way.

I've also noticed you can't send files via PM without being colleagues for some reason. 

@Carl Mccrory

Pm'ing you with a zip code map that's been circulated around.