All Forum Posts by: Connor Feist

Quote from @Caroline Gerardo:

Check the condo occupancy rate (51% owners?) condo lawsuits? HOA has reserve funds and master policy covers? Your possible resale depends on the financial condition of the HOA.

Rate range for the hard money loan you seek depends on your FICO, the property desirability to lender, and your experience. 10 -13 range. 

Some auctions are cash only. 

 Thanks Caroline, appreciate your input.

Quote from @Scott Wolf:

Quote from @Connor Feist:

A few questions below:

Does anyone have recommendations on short term lenders that I could tap for acquisition capital (likely between 60-80% LTV)? The property would be a condo in Florida that I would expect to flip in a few months. If I can win the deal at an attractive price I would expect my hold period to be 2-3 months (minimal rehab needed based on preliminary pictures).

Seems like the seller (gov't) won't be paying any buyers agent or closing costs other than providing a clear title. I'd like to negotiate with my realtor a lower fee on the buyside if I guarantee them a 3% fee on the sell side - is this off market for any reason?

Does anyone know what market rates are for short term (less than 1 year) loans around $300-400k today?

Lastly, if anyone here has experience with purchasing residential real estate via auction processes - please let me know of your experiences. I'm planning to walk the property with an agent, appraiser and general contractor ahead of participating in the auction.

Thanks all.

Depending on experience, my firm is offering rates starting at 9.99% with 1-3 points and up to 80% LTV

 Thanks Scott, I'll PM you to discuss further.

Quote from @Jaron Walling:

@Connor Feist Have you purchased RE before? There are levels to these things. 

 Yes, lol. Which level are you on?

@Wayne Brooks This is a property that was seized by the government and is now being held for auction.

Being that you're from Florida, do you know the best way to find public information about an address (backed taxes, liens, etc.)? Any leads would be very helpful.

A few questions below:

Does anyone have recommendations on short term lenders that I could tap for acquisition capital (likely between 60-80% LTV)? The property would be a condo in Florida that I would expect to flip in a few months. If I can win the deal at an attractive price I would expect my hold period to be 2-3 months (minimal rehab needed based on preliminary pictures).

Seems like the seller (gov't) won't be paying any buyers agent or closing costs other than providing a clear title. I'd like to negotiate with my realtor a lower fee on the buyside if I guarantee them a 3% fee on the sell side - is this off market for any reason?

Does anyone know what market rates are for short term (less than 1 year) loans around $300-400k today?

Lastly, if anyone here has experience with purchasing residential real estate via auction processes - please let me know of your experiences. I'm planning to walk the property with an agent, appraiser and general contractor ahead of participating in the auction.

Thanks all.

Hi all,

I'm planning on participating in an auction process in about a month on a condo property in Florida. I was wondering if anyone in this community had recommendations on short term lenders that I could tap for acquisition capital (likely between 60-80% LTV). If I can win the deal at an attractive price I would expect my hold period to be 2-3 months (minimal rehab needed based on preliminary pictures).

Does anyone know what market rates are for short term (less than 1 year) loans around $300-400k today?

Additionally, if anyone here has experience with purchasing residential real estate via auction processes - please let me know of your experiences. I'm planning to walk the property with an agent, appraiser and general contractor ahead of participating in the auction. Seems like the seller (gov't) won't be paying any buyers agent or closing costs other than providing a clear title. I'd like to negotiate with my realtor a lower fee on the buyside if I guarantee them a 3% fee on the sell side - is this off base for any reason? 

Any thoughts or experiences would be very helpful!

Quote from @Jeff Ballus:

Looks like the video didn't link, just search for "Pace Morby's FAVORITE Note Deal | Creative Finance Masterclass 17 w/ Pace Morby" on youtube.

 @David M. Agree this is inherently more risky. I work in energy private equity and am familiar with deal diligence, legal documentation, unique structures, etc. Where deals are "hairy" and "difficult" there is usually an opportunity (a challenging opportunity, that is). The challenge is structuring away from your risk in the most simple form for the other party to understand. Thanks very much for your advice on contract deeds and lender prepayment. 

@Jeff Ballus I was just thinking along the lines of "If I'm a buyer, I want to be 100% positive that when I purchase the home from this person offering seller financing, I need to make sure they aren't going to default on their mortgage and my ownership gets muddied up."

I think this can be handled with a personal guarantee in the promissory note and/or pledged with an LC or collateral. I can also provide comfort to a buyer via a rep that the mortgage is in good standing.

Thanks for the Pace Morby info - I'll look into it!

@Travis Timmons 

Fair points, Travis. It's great to hear thoughts counter to mine - that's why I posted!

You're right that the buyer universe is much smaller with the baggage and with 20% down, 7% note and 5 year balloon it may not be a homerun. I've thought about 10 year balloon, or even 30 year fixed, but not sure I'd want to own a note that long. Also agree (and prefer) that lawyers be involved at every step of the way - I just need to diligence appropriately on the front end. 

I'd bet there's a 1031 investor out there somewhere that would bite on $1k/month cash flow and slightly lower than market rate plus the depreciation benefits. Especially if they can refi me in 3-5 years. I think that may be the lynchpin in the deal: the ability to refi in 3-5 years and/or what the ultimate exit is for the buyer. 

@Rick Pozos - speaking of marketing, do you have any advice on where I could/should list a unique opportunity like this? Everywhere from facebook to craigslist to zillow? 

Any advice on best practices to screen-out folks who are just wasting your time?

Quote from @Jeff Ballus:

Hi Connor,

Solid, comprehensive analysis! I'm pretty sure there is a way to structure the deal where:

You seller finance the "purchase" and keep the current mortgage in place.

The buyer takes ownership in principal but the agreement is written in such a way where the purchase is triggered at the exact time that your original loan is paid in full. Its basically a future dated purchase and sale agreement.

The bank does not need to know, there is no transfer of ownership until loan is paid in full.

Double check with a solid real estate attorney here but I'm pretty sure this is possible.

Good luck!

Thanks, Jeff! I enjoy the strategic element of doing deals. I haven't explored this yet but imaged there was a structure like this out there somewhere. 

Have you done a deal like this before? Ownership in principle is an easy enough concept to understand. Not sure how to handicap a buyers desire for more teeth - any thoughts?

Quote from @Greg Scott:

Two questions and a thought.

You said the property has appreciated since purchase, but you still have less than 20% equity. Was this a 5% down FHA purchase? Understanding your true equity position and the loan covenants are important.

Why are you wanting to sell?  From your comments it seems like you think this makes a good rent property for someone else.  Why not for you?

In terms of the due-on-sale clause, in the past 40 years we've generally seen a declining interest rate environment.  A lender would never want to eliminate a loan in good standing at 5% to replace it with a 4% loan.  Today's interest rate environment is a bit different. If a lender can force a 2.875% loan to pay-off and initiate a new loan at 7% loan it really helps out their bottom line.   I expect to see lender behavior change.  Even if they do not foreclose, they might send out some threatening letters.

Thanks, Greg. It was 5% down but conventional, not FHA. Purchase price was $420k and comps are ranging from $490-530k ish. Maybe buyer can pay towards the higher end with the right structure.

Only reason I want to sell is to access the equity in the home. Refi doesn't make sense and HELOCs are 75% LTV at best for a rental property in my [limited] experience. $12k/year in cash flow is great. Getting 100% of my equity out and owning a cash flowing note is even better.

Agree on the lender positioning in todays environment. Gotta get creative!