All Forum Posts by: Chris Potter

Johnny,

The difference between a DOT and contract for deed is that with a DOT you take title to the property and with a contract for deed you don't, it's that simple. A contract for deed benefits the seller a thousand times over but adds that much more risk to the buyer's down payment. A DOT is recorded and that's your security. In a contract for deed you could record the contract, but it doesn't secure your down payment the way a DOT and title to the property would. As a buyer I would never go into a contract for deed situation. Those are usually done on land deals and some sellers that talk buyers into it with buyers that don't have as much experience. Borderline predatory in my humble opinion. I would definitely stick to my guns on this one and demand seller finance or walk away. Just my two cents for whatever it's worth.

 @Jeet Sangha, I don't know if Zions bank will do HELOCs on properties in CA you would have to call them....my properties were all in Utah 

@Cody L. That's a beautiful property you purchased.  I am looking forward to buying some larger MFH in the next couple of years.  I am curious what your strategy will be if interest rates stay high until you have to refinance when your rate lock expires?  That's been my only source of anxiety on large MFH since all of my properties I own are super low interest rates fixed for 30 yrs.  Say worst case scenario if your interest rate doubles when your rate lock expires, have you run the numbers to see if you would go negative on cash flow or if you would still be okay assuming rents don't increase much?  I know it's an unlikely scenario that rents don't increase in 5 more years and that interest rates won't be that high, but I would assume you will have a plan in place if this happens.  I'm curious how many investors with MFH that have rate locks expiring in '23 and '24 will be in a bind having to refinance at these high interest rates?  I guess anyone that purchased more than a couple of years ago have a lot of equity so the principal is is moderate and rents have increased tremendously.  I purchased a lot of RE in '09-'12 and I don't recall seeing very much MFH properties in trouble.  Maybe this is something you won't think about until you are a couple of years from your rate lock expiring?  Either way, congrats on getting to the point where you could make this deal happen.  That's a deal that if you hold long enough you could retire off of that one deal I'm sure!  

@Daniel Kokodoko I just completed my second HELOC (Zions bank refers to them as HECLs) on a rental property. They were both with Zions bank which is a Utah/Idaho bank. They stopped doing HECLs on investment properties through COVID, but started doing them again the last 6 mo or so. It wasn't too hard to get them done, but I have really good income and very low DTI. The HECLs they do on primary residences are great because they are no fees so I did that as well. The HECLs I did on my rentals have fees involved, but definitely worth it. I think my fees with origination, appraisal, title fees were between $2500-$3500. One did a drive by appraisal which saved me about $650 and the other drive by appraisal came in so low that I requested a full appraisal which I had to pay for. My rentals have 1st mortgages at 2.875% so that's why I went with the HECLs in 2nd position since there is no way I will be refinancing those first position deeds of trust anytime soon. Another credit union that will do these is Goldenwest CU. I don't know if you have those in CA but they are in Utah. I would imagine most CUs will do them. I would shop around and look at all the fees, rates, etc. The other nice thing with Zions bank is that they gave me 6 mo promo rates at 4.5%-5% on these HECLs and then they bump up to maybe 1-2% above prime? I haven't really paid much attention to what the rates will be because I imagine most banks are pretty similar. I think these took around a couple of months each to get these done and that was with Zions already having most of my documentation from my primary residence HECL. Last thing I will mention is that Zions bank will only do 3 HECLs for one person so I'm now tapped out. I hope that helps, good luck.

I'm looking for a very knowledgeable escrow officer in Las Vegas that someone could refer to me?  Must be someone that has a really good searcher that can help me out with complicated title issues that could arise due to foreclosure.

thanks!

@Avram Shabanyan, my properties are not held in a 401k or IRA......

@Rico Nasol,

thanks for the information.  It sounds like the loans you are getting are similar to my local bank.  I would consider rates like that for the right deals and I may have to.  I guess if a deal is good enough the rate really shouldn't matter.  Living in Utah, our cap rates are lower so the equity really has to be there to get really good cash flow.  I'll look into LimaOne and Finance of America and maybe shop more of my local banks for a little bit better terms

@Marcus Auerbach,

thanks for the info.  I would consider a loan on my portfolio at 4% interest for 7-10 years with a 25 yr amortization.  Would that be with a local or national bank?  Have you got any that you could refer me to?  My portfolio is well over 1M.  My local bank will only do a 20 yr am with a rate around 5%.  I haven't shopped other local banks but just curious if that is a product that a local bank might consider.  Thanks

I'm getting close to maxing out the (11?) loans that I am allowed on my personal credit. I continue to find single family and TH deals that I want to hold long term. I have an option with a local bank but they want 25% down (won't allow a bridge loan to brrrr my money out without a 6-12 mo seasoning period) the rates are much higher than freddie/fannie loans (5%), and I believe they will only do a 20 year amortization.

I'm not super familiar with portfolio loans but I assume that's when you package multiple SFHs and THs into one large loan? I am looking for advice or options to get either a portfolio loan or a type of commercial loan where I can take some of my properties off my personal credit to free up some spaces for new low interest loans. My current loans are around the 3.25-3.625% on my SFHs that are on my credit. I would be willing to sacrifice a little bit on paying a higher interest rate, but not 5%. I also need a 30 yr amortization. Even though my properties cash flow, I have pulled out most of my cash so a 20 yr am wouldn't be ideal.

I've also considered adding my wife to my business and showing the income to her so that she could get 11 loans. Any advice on any of this would be much appreciated!

I'm getting close to maxing out the (11?) loans that I am allowed on my personal credit. I continue to find single family and TH deals that I want to hold long term.  I have an option with a local bank but they want 25% down (won't allow a bridge loan to brrrr my money out without a 6-12 mo seasoning period) the rates are much higher than freddie/fannie loans (5%), and I believe they will only do a 20 year amortization.  

I'm not super familiar with portfolio loans but I assume that's when you package multiple SFHs and THs into one large loan?  I am looking for advice or options to get either a portfolio loan or a type of commercial loan where I can take some of my properties off my personal credit to free up some spaces for new low interest loans.  My current loans are around the 3.25-3.625% on my SFHs that are on my credit.  I would be willing to sacrifice a little bit on paying a higher interest rate, but not 5%.  I also need a 30 yr amortization.  Even though my properties cash flow, I have pulled out most of my cash so a 20 yr am wouldn't be ideal.

I've also considered adding my wife to my business and showing the income to her so that she could get 11 loans.  Any advice on any of this would be much appreciated!