All Forum Posts by: Chris Policicchio

@Olivia Tati Hi! I would strongly recommend checking out Damion Lupo at EQRP dot com. I had a SDIRA for two years, then switched to a qualified retirement plan under Damion.

@Olivia Tati Hi! I would strongly recommend checking out Damion Lupo at EQRP dot com. I had a SDIRA for two years, then switched to a qualified retirement plan under Damion.

I do not know of Highlands Residential Mortgage.  I would think if you can find a private lender who will give you a 30 year term, that's gonna be pretty hard to beat.  The thing with banks, as I'm sure you know, is the hidden fees, terms, and lack of control you have.  Plus, who knows how many times the loan servicing can/will change hands (not that it matters that much, but it's still a PITA for you deal with).  If a private lender is offering you a 30 year mortgage, I would think they'll be a lot easier to deal with.  They can still sell the note, though.  

Hi @Blaine Cox To answer some of your questions directly - you can set the loan(s) up however you'd like.  In other words, if someone lends you $100k, they can provide all of those funds at closing or some at closing and some during the rehab, etc.  Repayment can be structured however you like, too.  You can make principal and interest payments or interest only payments.  You can structure payment frequency too.  So payments can be monthly, quarterly, or one payment at the end.  I guess it depends who you are borrowing from and how much.  But, IMO, I'd offer to make monthly interest only payments.  For example, this means, if you are borrowing $100k at 8%, the total annual interest would be $8000.  Therefore, $8000/12 = $666.67.  So that's what you'd pay your lender.  Also, the lender can charge points or not.  1 point = 1% of loan, so on a $100k loan, that would be $1000.  The point, based on my experience, is usually paid up front (at closing).  But, you could ask your lender to pay this at the end.  

Definitely handle all of this formally.  In other words, make sure there is a promissory note and mortgage (or deed of trust).  It depends on where you live.  So having an attorney get involved is likely.  That investment (to create the docs) is usually covered by the borrower.  How much that will cost will vary greatly, so it should be less than $3000...but it really depends on the attorney you find and the loan terms you want (i.e. lawyers charge by the hour, so typically each email, phone call, meeting, cost money).  

I've been a lender on a decent amount of deals, but I've never done a revolving line of credit.  I'm not sure I'd see the value.  I've worked with repeat lenders and typically what happens is that once a deal closes, the borrower already has his next project lined up and we roll right into that.  So it's kind of like revolving credit.  

Finally, you do NOT need to buy this property in an LLC or other entity. If can definitely be in your name. If you are just starting out, I would not get too bogged down in your personal name vs. an LLC. Using LLCs or other entities have some tax advantages and protect you from various things, but there are also advantages to doing things in your own name. I would recommend a project or two in your own name before spending the time, energy and money to setup an LLC. If you already have an LLC, then it probably makes sense to use the LLC.

One final thing, if you use a private lender, make sure when you pay the loan off that the mortgage (or deed of trust) gets satisfied.  This is an official step that must be done with the county.  

Anyways...I know that was a lot.  I'd be happy to chat further if you want.  Just DM via BP and we can chat!  Good luck!

Hi @John Mano!  Congrats on your son's upcoming graduation!  That must be exciting!  I think you have a lot of options in and around town.  The price point might be a little difficult if you want something that doesn't need some work. There are many neighborhoods and pockets around downtown, that it's hard to make a specific recommendation (without specific requirements).  Stanton Heights, East Liberty, Highland Park, Regent Square, etc. are a few options.  But $200k might be a bit difficult.  Are you working with an agent?  If not, I could recommend 1-2 that I'm sure can you help you (much more than I can).

Hi @Anthony Martin! I’m not a wholesaler, but I recommend PV Settlement as the closing company.

The mortgage is really just an agreement between you and the lender (who in this case is the seller) that says the lender can take the house if you fail to honor the promissory note.  You record the mortgage with the county, so if/when a future title search is completed, the mortgage will show up.  For example, if you have this loan with the seller and sell the house (without the former seller being aware), and try to take those sales proceeds but NOT payoff the mortgage, the mortgage prevents this from happening.  B/c when you (re)sale this property, b/c of the recorded mortgage, at that closing, they'll need a mortgage payoff statement.  That mortgage gets paid off and then satisfied with the county.  

So, in Allegheny County, for this deal, you'll need a mortgage and a note.  I'd be happy to share what I have used in the past.  I will DM you.  And don't worry, this seems overwhelming at first.  But the nice thing is, once you get these concepts down, it's really straightforward.  But the first time going through it can be confusing.  

Regarding your friends and family loan...IMO, it's best to secure that too, for them.  So you would have a second mortgage and note.  Even though I'm sure you'd do the right thing, if unpredictable, bad things happen, it's better to have them protected.  Recording and satisfying mortgages only add a few hundred dollars to a deal.  From a legal and (possibly) tax perspective, it's best, IMO to do it the right way.  

Let me know if you have more questions! 

Hey @Kris Rudge  I have a few questions...What do you mean "pay the homeowever $5k when the contract is written up"?  Do you mean at closing, the seller will receive $5k and then the seller is financing $60k?  Then it looks like you are making interest only payments to the seller (@6% on the $60k for 12 months).  That should all be secured by a mortgage.  In other words, you'll have a note and a mortgage.  It looks like the seller would be in first position and the private lender would be in second position (unless the private lender is friends or family and they said they don't want/need this loan to be secured).

Regardless to all of my questions, whether the seller is financing the loan and/or the private lender is financing a portion, it should all be secured via a mortgage (or possibly two).  But that shouldn't matter when you go to refi.  If/when you go to a back to refi, they'll ask you if you have any mortgages/liens against the property.  Doesn't really matter what you say, b/c they will check!  As you go through the process and close on the loan, there will be a title search and if you have recorded mortgages against the property, those will show up. 

S&T Bank is local and investor friendly.  I'm going through my first refi with them currently.  They don't require a seasoning period, per se, but they will point out that having a renter in place for 3/6/9 months etc. helps make the overall application look stronger.  

Hopefully I interpreted your questions correctly and didn't ramble too much!  

Thanks everyone for the feedback.  @Steve Hiltabiddle the link worked btw!  @Ryan Howell I don't know what the property is worth...I didn't get that far into the process.  I know it's cash flowing well now and there's one vacancy and an opportunity for some additional improvements.  Thanks again!

Hello BP'ers!  I need a little help/advice.  I've done a decent amount of private lending, but I've always been in first position.  I have an opportunity to lend to someone I trust, but I'd be in second position.  The purchase price is $350k.  In 1st position will be the seller, who is financing $250k.  I'm being asked if I can lend $85k.  ...so the buyer/borrower will only have $15k in the deal.  So obviously being in 2nd position and the buyer only having $15k in the deal isn't great.  Like I mentioned, I trust the buyer and I have lent to him before.   Ignoring the $15k for a min, what can I do to protect myself in 2nd position?  I read a bit about options/agreements where I could make payments to first position if borrower stops payment, but some of the threads were hard to follow.  Does a personal guarantee buy me much?  Anything else I can do?  I'd appreciate any/all thoughts.  Thanks!