All Forum Posts by: Account Closed

I never even heard of airbnb before this thread so pardon my ignorance.  But I was having lunch in Palm Springs Saturday with a property manager that is active in the area and is familiar with both airbnb and vacation rentals.  When I mentioned this thread his immediate response was it's the hosts responsibility to vet the guest, and further, if the rental is less than 30 days you simply call the cops to get them out if they don't leave.

We also got into how some CC and R's prohibit rentals less than 30 days but, as was pointed out, is pretty much irrelevant to the host-guest relationship.

If you're on top of things as a host it seems easier than being a CA landlord.  Not sure why his turned into such a drama.

At the REIA's. Talk with the private lenders, either they identify themselves as a group when prompted by the club moderator or it says on their name tag. Then talk and get to know them during the networking time (too bad there isn't more of that). Then go find a broker to originate the loan, if one is required in your state, it is in mine. It's work and it's a process.

 Mostly gut rehabs, none yet with room additions or new construction.  Although, I am doing one right now that is down to the studs and adding sqft, I hope the guy isn't getting in over his head, I've known him for years so I'm not worried, he's very successful and will pull it off I'm sure, even though he hasn't done anything this extensive before.

It's hard to find a deal that needs only cosmetic and still pencils.

I lend on purchase price. I lent based on ARV for a while but it was a hassle to do draws so I stopped. The draws were nothing formal, I simply had escrow hold back funds after closing until I authorized release, still thought it was a hassle.

Turns out, for my market, when I do the math on past loans, 100% of purchase price is almost 65% of ARV. So, since the distinction between Loan-to-Purchase and Loan-to-ARV is blurred anyway, why not just lend based on purchase, is the way I look at it.

The amount of skin in the game varies depending on the deal and my relationship with the rehabber.  I've been doing mostly 75%-90% of purchase price, sometimes 100% but rarely.  I give a little discount on the points if they will go for 75% or less, that way the loan becomes marketable to trust deed investors under the new CA legislation.  It's funny, you'd think every flipper would want the max loan amount, but not all do, some will go for lower ltv's if you give them better terms, they're happy and I sleep better at night.

 I haven't been following this Dodd-Frank thing because I don't get involved with seller financing, but, so I'm clear, if the rmlo messes up, the lender faces all these penalties, not the rmlo, right?

I worry about builder loans for the same reason, that's why I don't do them.  I can't tell you how many builders I've talked to that went under when the market crashed, i'm sure that's true for you too.

It sounds like you are doing it right the way you vet the loans.  I don't work through brokers, I am the broker (for myself and two other trust deed investors only)  that way I can control things better.

I'm curious, since you lend in other states, is there any state where you can make say 15% working through brokers?  Lending rates are so regional, I've often wondered if returns are better outside of my SoCal lending area.

Deals are getting harder to find that's for sure, but I've been able to find a couple of good flippers and I give them good terms so it's been okay ... I keep my terms below the hml's so I get the cream of the crop flippers.  I've even had hml's ask me if I have any deals i can't handle because they have money but few deals.

I originate my own trust deeds here in SoCal.  Had to start foreclosure a few times but never went all the way, borrower always came through.  Foreclosure fees are limited by statute to about 1% of loan amount plus publishing/posting/tsg etc costs, comes out to about $3k, more if it's a really big loan amount, borrower pays upon reinstatement/payoff/trustee sale. There are a bunch of foreclosure trustee's around, any one can give you a quote.  Recouped principal and interest every time, except once when I only got principal back.

The key is to find a really good borrower (flipper), treat them right and they will treat you right, it can be a great relationship if done right.  This, to me, is the absolute most important part of this business...interest, fees, terms are secondary.

No really bad experiences ... yet.  Mostly the problems come when borrower stops communicating.  Irony is most problems can be worked out if we put our heads together, but when they stop communicating everything turns to do-do and not much can be done.

I've only done flipper loans, no keeper loans, and no ground-up loans.

Keep ltv low and 1st position only. Lot's of folks do 2nds ( gap funding or whatever you want to call it), they are going to really get whacked one of these days, if not already, these are generally the ones that raise their hands at the REIA's when asked who are the private lenders, usually about a third of the crowd.

Risky business if you don't know what you are doing, safe if you do.  I'm fairly new at this compared to some, but getting better every day (isn't that a beatles song).

Good luck.

 You're usually right K but I'm not sure I'd give the 30/60 day notice at all. I can just see in court the tenant claiming either they didn't get the 3 day notice and were proceeding under the 30/60 day notice, or they were confused by the mixed notices and choose to follow the landlord's direction under the 30/60 day (but of course never leave and never pay, only to buy time). UD judges can be pretty nutty sometimes.

Reminds me of a movie I saw about how President Kennedy handled the Bay of Pigs incident, he got two separate messages from the Russians and choose the one he liked best and denied receipt of the other...it worked.

@Nixon Vayupak 

It's true.

Check out CA Business and Professions Code 10131.1.  It applies to both "property sales contracts" and "promissory notes" when you do 8 or more in a calendar year.

Solution: Do 7 or less, or get a license.

I'm not an attorney and this is not legal advice.

@Melanie M. 

If you're using the standard CAR forms it's form "NODPA", not the standard "RPA-CA", not all agents know this, in fact probably most don't.  If you don't have access to CAR forms there are others like form "156 Equity purchase Agreement" from firstuesday.us.  I know this will sound weird and don't let it scare you, and I don't think it's ever actually happened but CA statute provides for criminal penalties for using the wrong form under these circumstance ... I know, hard to believe.  I'm not an attorney and this is not legal advice.

You may already know this, but if you do buy it make sure to use the correct purchase forms, there is the possibility of harsh penalties if you don't.  This only applies if you don't intend to live in the property, it's currently owner occupied and it's in foreclosure, which sounds like the case.  Looks like a super deal by the way...rare for LA.  I wouldn't let this slip by.