All Forum Posts by: Account Closed

@Rico D Williams I can't claim to be a credit expert, but happy to share what I know.

Credit is based on: https://www.thebalance.com/factors-affecting-credi...

- Bill Payment On-Time

- Credit Utilization

- Credit History Age

- Mix of Credit

- No. of Inquiries for Credit

Each time you get a new credit card, you are adding an inquiry to your report and decreasing your average credit history age because the new card is only one month old. So, immediately your credit will go down.

However, remember credit changes every month. So if you are getting more credit, you will have a better mix of credit (more cards or types of credit) and your utilization is decreasing overall.

Then, when you use the credit, you are starting to impact your overall utilization. If you use more than 20% of your credit on each card and in aggregate (across all credit) your score will start to go down. Once you go over 35% you score will drop significantly (as much as 30 -50 points) and it only gets worse as you get closer to maxing out the card.

However, once you pay these cards down to a lower dollar amount of utilization, your score will bounce back up, but it will take 1-2 cycles (months) for the credit information to refresh.

Let me know if that makes sense and/or if you have any other specific questions.

Thanks for all of the advice. As suggested by Randy and a few others, I have organized all of my showings in a two hour window. Credit scores of the applications have not been very good, but I believe I should have a tenant that will work of those who have applied. In the future, I will plan to use the pre-screen technique shared by Max. Last, I do explain to all tenants that I will take the combination of best credit, income, and cleanliness factors.

Max Tanenbaum would you be willing to share your prequalifier google form (via DM)?

Alan Jones I don't think you understand My post. This is a rental unit. I posted it for at $850 per month. Similar one bedrooms in the area rent for between $800 and $1000 per month. The problem is I listed it towards the lower end of the range and I have to many inquires to handle. Over 50 people have reached out by text, form, or call to request a showing. I already did 8 and have more scheduled. The problem is the three applications I got so far are not the best. Hence the problem, too much interest, but a lot is not qualified tenants. Question: what should I do to filter through the noise to find the qualified tenants and focus on getting them to come to the showings and apply?

I just listed a 1 Bedroom in my Triplex and I got a tremendous response in less than 24 hours from posting, but a lot of it is junk. Here are the stats.

Listed Price: $850 / Mo

Market Range: $800 - $975 / Mo

My Unit: Above Average compared to market

And, here are the results so far:

Inquires to rent: 48 (in under 24 hours)

Showings Held: 8 (So far, more scheduled)

Applications 3 (So far)

The only problem is all of the people that applied so far have credit under 650 and the person above 650 has an income of 2.7x of rent. Looking for any advice or feedback on how to best handle the situation.

@Brian Johnson it is going to be hard in the current interest rate environment to get a lower rate than 4.75% unless you do a variable mortgage like 3/1 ARM or 5/1 ARM. That is a risky proposition considering interest rates are likely to go up at least twice this year. Your best bet is looking into 3/1 or 5/1 ARMs at local banks. It may be possible to do a piggy back as I suggested above where part of your mortgage is regular Amortization as you have now, then part of the loan is a HELOC that is interest only. The only probably is the HELOC will be at a higher interest rate so in the long run you will not be gaining much.

Therefore, my recommendations are to either do a 40 year loan as mentioned by Hai or look into a variable rate mortgage, but both options are expensive or risky if you plan to hold the property in the long run

@Ernesto Correa. This depends highly on what area of the country in which you live and what banks are available. Typically the most you can get from a traditional bank is 80% LTV. However, some credit unions and community banks in certain areas of the country are willing to go up to 85% or even 90% LTV.

My recommendation is to look up community banks and credit unions in your area then go to the rates page. Often times on the rates page it will say the LTV of the rate and then you can just assume the greatest LTV is the most they will loan to. The higher the LTV the higher the interest rate.

@Brian Johnson there are a lot of factors at play. It depends on your credit and current interest rate to see if you would be able to get savings. Can you share for the community a bit more information about your current range of credit and the interest rate and principal on the loan. Once we know that, it will be easier to make recommendations. 

However, the most basic recommendation I could make would be to get a Refi + HELOC. Refi at the lowest rate you can get and find out how much HELOC you will be able to get. Often times you will be able to get a HELOC with interest only then you can self amortize by paying extra.

@Eric Piercey nice job on taking steps to do your first flip. Here are some thoughts about your questions. First some general observations from my experience flipping houses:

1) It is usually a 9 month journey - It is very difficult to finish a flip if major renovation are needed in under 9-months from purchase to closing wire. A lot of people say it can be done, but there are lot of things that get in the way that you cannot control. For example, once you find a buyer it takes as much as 60 days from the point the AOS is signed to get to the closing table with an approved buyer then as much as a day to get the wire in your account. Also, if you need to get permits, the inspection process can delay you as much as a month and in some cities multiple months. All listed above does not even include the actual rehab part, which has its own delays.

2) Taking on a lot of leverage is risk - No matter if you are going to get a HML or work with a company to get you credit. If you are not putting a significant portion of cash down into the deal you are by default leveraged with debt. The risks are that if things go wrong and you don't have reserve capital you could either have bill collectors going after you or the HML company foreclosing on you before you finish the project and all of your money gets tied into the house. This is all the most pessimistic possible view, but be aware that leverage and debt have risks. The benefit of using unsecured credit like WCAP Financial offers to help you get is that they cannot foreclose on your property, a HML can.

Ok now to your specific questions.

1) Are my interest calculations correct based on reuse? - No. 9% per year is 9% per year. You can play tricks on the numbers to say x% per project, but if you are paying 9% in a year then that is what you are paying. However, I do agree the more projects you do per year then you are paying less percent per project. 

2) How accessible is the credit line? - using a company like WCAP Financial, you will be getting access to personal and business credit cards and lines of credit. It is as accessible as the credit cards already in your wallet. There are ways to do cash advances or pull cash out, but they can be complex and you should defer to an expert to help you navigate through the process or you could be faced with big cash advance fees. Lines of Credit are a bit different since you can write checks on them, but the interest starts immediately, so you don't get the benefit of 0%.

3) Are my numbers realistic? - Its hard to say in abstract, best to look at a real deal and run real numbers. Also, keep in mind HML is not just 12% - 15% it also includes points and fees that can be as much as another 3% - 5%. Last, keep in mind the 0% credit card offers only last for a specific period of time.

If you have any additional questions, feel free to send me a DM and I am happy to talk through more of it with you.

@Bruce Wagner just an update. I have been using Build Zoom for a couple contractor hires including a roofer and have had good luck. Thanks again for your help.