All Forum Posts by: Mark F.

@Aaron Bry It might be worth checking with the lender who financed your loan to see if they'll do an FHA Streamline for a lower rate. Interest rates have probably dropped a bit since the beginning of the year. You won't be able to get rid of the PMI, but if you can get a lower rate, it might help get your expenses down. Streamlines are awesome because you don't need an appraisal and there's very little qualifying compared to what you went through to get the loan.

@Denise Lamkin If you know you're definitely going to move in 5 years, a 7-year ARM can be a great deal because the rates are usually a lot lower than a 30-year fixed, the payments are low, and you'll be out long before the rate starts adjusting.

However, the downside is that you risk a jump in your payment if you stay longer than expected and the closing costs can be higher on such a loan than a comparable 30-year fixed. If you're planning to stay only a few years, the higher closing costs might cancel out the benefits of the much lower rate and payment. 

A good alternative might be a 10/1 ARM. You still get a lower rate than a 30-fixed, and there's enough margin in the deal for the lender to keep your costs lower.

If the closing costs on the 7/1 or 10/1 are prohibitive, it might make sense to just go for a very low cost or no cost 30-year fixed. The rate won't be the lowest available (that's why the costs are low), but if the rate and payment are lower than what you have now, it can make a lot of sense. 

@Nitin Dhiman Unless something has changed that I'm not aware of, there's no rule that you have to own a primary home in TX to cash out refi a rental in TX. In fact, the TX 50(a)6 rules don't even apply to a rental at all; they apply only to a refinance on a primary residence in TX where you're taking out cash or took out cash at some point in the past. 

I would check with a few other lenders. It could be that you're running into a lender guideline overlay, which is when banks add their own guidelines on top of the standard Fannie Mae guidelines. 

Hope this helps!

@Sean C.  Love the quote: "Harder I work the luckier I get, right?".  So true! The luckiest people in the world are typically those working diligently and consistently to create their own opportunities. Thanks for the good reminder!

@Tzvi Balsam  I would follow up in a week or so on the guy who's mother passed away. Keep in mind that he might be grieving and having to deal with the huge hassle of having to handle the estate. He might be stressed, which is why he was a jerk. This actually is a great opportunity for you to build extra value in your offer. You're not just buying the house, you're rescuing him from the stress and hassle of dealing with the estate. You're making his life better by taking that house off his hands. If you talk to him again, you might want to ask him something like this: "What would it mean for you to get this house sold quickly?".

Sometimes you catch people at a bad time, so good follow up is your best friend. Only a certain number of people are going to be ready to go on the first contact. It's a good bet the majority of your closings will only come after multiple follow ups. 

Again, let me emphasize this: make sure you are really good at follow up. Most people give up if a seller doesn't move forward on the first interaction. This is a big reason why they either fail or are never achieve a whole lot of success. You may need to have several conversations over weeks or months before a seller finally moves forward with you. Keep good notes on all your contact and make sure you set up a good follow up system.

@Tzvi Balsam @Ron Olivera  Taking your first calls can be nerve racking, but keep practicing. 

I would always advise answering the phone whenever possible. If you're in the middle of something, set a time to call them back. If you let it go to voicemail, they may not leave a message. Even if they do, it may be very hard to get them back on the phone. Always pick up if possible. 

Once you have them on the phone, you can ask them to describe their house to stimulate conversation. Stick to open-ended questions: "tell me about your house", "what upgrades have you done?", "what repairs have you done?", "what repairs or upgrades need to be done?", "what do you think the home is worth? why?", etc. Most people are more than willing to talk about their house and it helps break the ice and gives you important information about the house. 

Understand that only a small number of leads are going to turn into deals. If you get people wanting too high of a price or are just jerks, just move on to the next one - you're one lead closer to your next deal. 

Also, you want to try and find out why they're selling. People don't just sell houses for the heck of it, there's a reason for doing so. If you can uncover that reason and incorporate it into your offer, you're showing them far more value than just your offer price. That can help neutralize the issue of price because they can see they're getting so much more out of the deal than just the dollars you're handing them for the house. 

@Terry Brennan  You might need to find a portfolio lender. They keep loans on their books instead of selling them to Fannie or Freddie and often have more flexible guidelines. I would call around and ask a few questions up front to save time:

• Do you do portfolio investment property lending? Meaning, you finance using your own money instead of the traditional Fannie/Freddie financing?
• I can't show enough rental income on my tax returns yet because I haven't owned my rentals long enough. Can you use lease agreements to document income? 

Worst case, you may need to wait until after you file this year's tax returns to start buying again. Hope this helps!

@Account Closed  What kind of property are you buying? If it's 5 units or more, then it falls under commercial financing. Residential financing is for 4 units or less. It sounds like the person you talked with either didn't completely understand what you needed or they were using their own definitions. They might consider any rental loan "commercial" even though that's not an industry-standard definition. 

If you're buying a residential property (4 units or less), you want to ask for a non-owner occupied residential mortgage. The vast majority of traditional mortgage lenders offer these. You'll likely need at least 20% down and will need to verify that you have at least 6 months PITI (principal, interest, taxes, and insurance) in the bank as reserves (over and above your down payment).

Hope this helps!

@Rafael Frias  The most important thing to remember when dealing with sellers is this: their goal is not to sell a house, it's to accomplish something else by selling the house. If you can find out why they're selling, you can make your offers much more powerful.

I've been selling mortgage financing over the phone successfully for over ten years now and this is the approach I would take:

1) Get them talking by asking open-ended questions about the house. This helps you uncover important information you need about the home and getting the seller talking helps you build rapport and trust with them.

2) Listen for clues and hints about why they're selling. It could be an off-hand comment about taking a job in another city, needing extensive repairs on the house, not having money to pay the mortgage, etc. Jot those down and ask follow up questions about them later.

3) Once you built some trust and rapport, you can ask outright why they're selling in several ways: Why are you selling? What will selling this house mean for you and your family? What are your plans once the home is sold? You've lived here for so long, why sell now?

4) Once you know the "why" behind the sale, incorporate it into your offer. Your offer shouldn't focus on the number of dollars you're going to give them in exchange for the house. It should be about how you're going to make their life better (meaning helping them achieve their true goal) by taking the house off their hands. 

Hope this helps!

@Cody Hahn  I say absolutely. I don't know why people feel like they need to be cagey. It's a good thing to tell the seller you're in business and the deal has to make sense for you as well. You don't need to tell them all the details of exactly what you do, but being forthcoming that you're an investor helps you come across as confident and competent and it helps build trust. If the seller feels like you're trying to hide something, your deal is dead no matter how motivated they are.