All Forum Posts by: Craig Grella

It seems to me banks are stuck using the lessor of two evil underwriting methods. The national banks handcuffed with the checkbox fannie/freddie credit based kind of stuff that has proven unreliable, and the local or portfolio lender who is faced with many markets around the country still declining in value. In general, banks are loathe to make a loan where the ratios are so uncertain even just a few months after close.

Throw in the investor component, and it gets even messier, because as Holdman pointed out, they are quick to walk (or should I say run?) from the property when the investment declines in value or stops cash flowing.

Even hard money has been affected. Where the hard money lender has been able to sell his take backs at a discount off retail and still recoup his investment, in a market with eroding value, he's finding his original 65% ltv loan is more like an 80% ltv loan now, and selling at 80% of retail price isn't exciting as many investors as it used to- because investors are regularly finding foreclosures and other auction properties at bargain basement prices.

I too used john maurer on a recent transaction. He's very good, very efficient, and reasonably priced.

I read Jeff's blog all the time - great mind for marketing. Another is a Heidi Cohen, her blog is at www.heidicohen.com.

I tested this theory with three accounts. Two were used to publish info about blog posts and some marketing info. The third was for engaging with a few people in a similar community and sharing other people's links. All three groups were started within a few weeks of each other and I spend nearly the same amount of time on each one.

In the first two profiles I have less than 500 followers and in the third I have more than 4,000. My first two profiles grow by 2-5 people per day, and my third profile grows by more than 30 people per day. On some days when i share an interesting post, pic, or article, I've gotten as many as 200 new followers. That one profile alone drives more than 5,000 visitors to my blog every month.

Just my two cents - and that's all it's worth.

I was on the other end of an escrow mistake on my last purchase and it was a pain to deal with. The title co accidentally sent my check to the person from whom I purchased the property. They cashed it - even though it was in my name and not theirs. It was a NIGHTMARE getting escrow and the bank to correct the mistake, even though they both admitted their mistakes. At one point, I contacted an attorney to help the process move along.

Send the check back and save the heartache which will come. Not if, but WILL Come, eventually.

Have you thought about wholesaling it to another investor or to a landlord at a lower price point?

You might make less than what you would spend on the staging, but you might sell it quicker too.

If you haven't closed yet, you could also assign the deal. Looks like you're getting it at a good enough price where there should be some great profit in there, even for an assignment.

If you're speaking to the owner or their rep over the phone don't try to talk about things you don't understand, you'll just come across as ignorant and no one will take you seriously.

If you are really worried about what to say, have a realtor do the talking for you, or split the deal with another investor. You can find one on this site or at a local REI club.

In the end, money talks, so no one will fault you for what you know or don't know.

The auction price is a meaningless number, your offer price needs to work with your investment parameters. If you need to make a certain return that will factor into your offer price. Try not to worry about comps or auction prices, unless of course they are significantly lower that what you are offering.

Good luck.

You might have to make an actual written offer to get into the property. Take the advice of a few other posters and make sure your offer has a clause that allows you to walk away if you don't like what you see. make sure it allows you to get back any upfront money you may have to fork over.

The one document I like to get to prove property income is the seller's tax return - at least the schedule that shows the numbers from this property. To this day, i've never had a seller turn down that request. They've waited ot the last minute to get it to me, but never ultimately turned it down. I also put in my contract that the offer is conditional upon my review of those documents. I ask for tax records because, in my opinion, they are better than some excel file the owner can crank out before your meeting.

if you are buying from a larger company or investment group that will not disclose that tax document you will get the income and expense sheets from them or their management company.

make sure you confirm these numbers the best you can. Since it's your first deal you may not know what the right number are for expenses, so make sure you check back on this blog for experts who might be investing in your area. If you need help, get a savvy broker in your area who can help you.

If you think you will be getting financing to buy the property I would start looking into that process now. Some of those lenders may require documents that you might not have thought to ask for. It would be good to stipulate those docs in your offer letter as well.

If the owner can't, or won't, provide those docs it doesn't matter - you wont be able to get it financed, walk away-unless you want to buy cash or setup some other creative purchase.

Good luck.

I'm not aware of any conventional MF lenders doing deal at 100% CLTV right now.

As previously mentioned, most of the conventional lenders are topping at between the 70-75% LTV range. Insurance lenders are even lower in LTV.

Private lenders are even lower in terms of LTV, but if you've got a great buy below value you might be able to get the money you need to get the purchase taken care of. Be careful with MF properties though. even ones that have positive cash flow can become a drain on investors that don't have sufficient reserves to carry the property if there are some renovations that need to be made, if a few tenants decide to move out, or if you run across what I call an "Oh S%!&" which seems to happen at least once a year on at least a few of your units.

Generally the courthouses wont have that kind of info. The courthouse is the place where the bank takes back the property by foreclosing on the property which was pledged as security for the bank's loan.

The ownership "proof" you are looking for would be under the tax records because as new owner, the bank will be responsible for making property tax payments. To find that info, look for the local or county property tax assessor's office.

To confirm the correct owner you can check with a local title company, and if you do end up making a purchase make sure you get title insurance that will cover any defects in title that might arise from claims in ownership.

As a developer you shouldn't have to pay a dime for any development estimates.

Contractors do this as a service to potentially get your contract to perform construction services for you. Subs will do the same thing. Even architects, who usually charge for prelim drawings and renderings, will usually offer free estimates for relatively standard residential jobs.

For land development your costs could vary depending on how complex your development is. Also, there's no way to tell what you'll get into once you start digging. You could open pandora's box and the development costs can double or triple in an instant. Check with other local developers or call your local construction lender and they can run you through some of the costs.

With the market as slow as it is, I don't know many contractors who would risk losing a job just to make a few bucks on an estimate.