All Forum Posts by: Account Closed

House Bill 532 becomes effective on 4/6/2017 which allows candidates to do their prelicensing education online. So you'll have to wait 3 days. Bad news for you is they're now requiring 20 hours of post licensing eduction. Pretty sure this still has to be done in person, but I might be wrong. Good luck!

@Crystal Smith 

I see what you're saying.

I posed the question because I already have my secured line of credit deployed. Hence wanting to find private money to keep buying REOs while I wait for another flip to sell. In my current circumstance, I won't be able to "offer cash" from my line of credit until I sell a house. I guess I need to find a way to bridge the short term financing "gap" and find solutions for the long-term problem (and I think you've suggested a decent solution).

Thanks.

@Judah Hoover

 I think that's a solid option. The issue I guess, is that it doesn't necessarily allow me to use all the capital I have access to, because as soon as I use the line of credit from the bank, I'm stuck again. The other problem is I'm only paying 5% interest on the bank loan (no points, small admin fee ~$600). Private money lenders will probably want at least 6% (probably more like 8%). 

Thanks for your reply. 

Disclaimer: I am not an attorney, nor am I an accountant.

Be very very careful when doing this.

There are some weird accounting/ tax rules about transferring property to C-corps (and S-corps).

With S-corps you also run the risk of messing up the taxes, and having the IRS treat the entity as a C-corp (which could be absolutely devastating). 

Definitely consult with an attorney and CPA.

Check out this article.

http://www.forbes.com/sites/anthonynitti/2014/01/2...

Also, maybe check out the last BP podcast with Scott Smith. He outlined a couple creative strategies for holding larger portfolios of rentals. 

@Michael Noto 

Yeah it's worked out really nicely. 

@Crystal Smith 

 So you're proposing I submit 2x concurrent offers?

One for cash only and one with private money financing?

How can I submit an offer for private money financing and NOT make it contingent on the getting the loan? I really feel like these banks won't go for that. 

Thanks for your reply. 

Dear BiggerPockets community,

Presently I've been financing flips/rehabs through a secured line of credit.

The current lending agreement allows me to borrow up to around $325,000 and my bank will allow me to use this money to finance the purchase/rehab of 2x houses at a time.

One of the advantages of having this arrangement with my bank is that I can quickly get POF letters. This has been extremely important because the competition for REOs has been fierce, and because it generally takes many offers to get one accepted.

It's worked out quite well, but I'd like to begin exploring private money (read: friends/family) in order to scale my business.

I have a couple concerns, however.

I'm concerned that a line of credit from a private money lender wouldn't be considered a "cash offer". 

I'm assuming that the seller (bank) wouldn't accept a POF letter from a private money lender himself/herself?

If not, will banks accept POF letters from a private money lender's bank IF I'm offering cash for the property? If so, I'm concerned about timing. If I have to ask my private money lender for a POF letter from his/her bank it's probably going to take a day or two at least. My private money lender isn't a professional lender, so I don't want to "harass" him for a POF letter everyday (since it takes 8-10 offers to get one accepted).

I've also considered negotiating a more traditional business loan. This way I can just use my current arrangement with my bank to obtain POF letters quickly. The problem here, however, is that I'll have to start paying interest before I have a deal lined up-- which isn't the biggest problem in the world, but I'd like to avoid it if possible.

Anyone have any thoughts?

Thanks,
Patrick 

@Chad Svendsen 

Does your agent find you off market deals? If so, how can I steer my agent toward looking in these areas as well?

Go Pack!

Originally posted by @Chad Svendsen:

It depends on the real estate agent and appraisal. If they (Fannie Mae) feel they can clean the house up and make a greater ROI then they will spruce them up. They usually will paint and new flooring. In my experience as an investor i notice they are not all that flexible on the list price if they clean them up. I had a couple of deals get rejected as they just did want to move enough off there list price.

 I've noticed this too, recently.

That's what I meant when I said "I'm getting priced out of the market."

Does anyone have any advice for purchasing SFRs at auction?

Presumably banks will offer the outstanding balance of the loan owed.

Deals can still be found by out bidding the banks if the comps justify it, right?