All Forum Posts by: Eric Y.

I'm certainly not your expert but here's what I see:

• Portfolio lender using his assets is probably a good option but it will lock him in bed with that lender.  With the lender that I use, there isn't any extra closing costs to using those assets where a cash-out refi will have costs.
• Cash-out refi: you can use that cash however you like with fewer strings attached.  With the portfolio lender option if something falls apart he could lose his commercial property AND the asset that secures it.  Cash-out refi carries less risk (I think......)

Perhaps talk to a commercial loan department as they tend to be more flexible. I currently am using a HELOC to buy property but I'm using commercial loans.

Also check your agreement for the HELOC. It may include a clause that you have to notify the HELOC lender if you'll be using it to buy other real estate.

I and many other folks I talk to around here use Kevin from BankOrion in Moline.  He has his own properties and understands creativity.  I don't think they necessarily have the best rates but they are who I have used for my 2 properties (one of which had a seller carry-back and construction loan too).    Also, no issues with sub-75k.  I once talked with him about a 14k property that I didn't execute on.

I have also talked with Blackhawk Bank and they seemed like a good option.  I believe their rates were a little better and their down payment requirements were a little less.  

I have have also heard good things about Vibrant.

All this, of course, depends on your financial state,  experience and and the deal.

That does sound nice.  Any hints on how to avoid running into due on sale clause?

I looked at a home that I found fairly nice but after some discussion with the homeowners I'm not sure there's a deal here.  I'm seeing @Brian Gibbons post about lease options but I feel like I may run in to some problems with that.

Here's the deal:

Asking: $89,900

Value: $85,000

Left on Mortgage: $85k 

Market Rent: $1100-$1200/mo

My guess on their PITI: $670

So, they are stuck in this house and motivated (as they have already moved out).  This is a retired couple and I'd like to help but I need to make a profit.

Some notes: Somehow right at the top of the bubble they refi'd to around $110k which is why they are so upside-down.  That may imply that there is more value in the property but I did comps as best I could from recent Zillow sales and I'd rather be conservative.

I have seen @Brian Gibbons talk about lease options and lease option assignments and I mostly understand how the numbers work there.  It's intriguing but I believe you run the risk of the original bank calling the loan.  It is Chase bank so I suspect that they would call it (ie: big corp = not very flexible + rising interest rates providing incentive.)

I do not have the resources to refi the loan if it is called.  The people I'm buying from don't have the resources either.  

So, should I just walk away or is there a safe way to do this?  Maybe go talk to the local Chase branch manager? 

Maybe a "master lease" without option?  I'm not sure there's enough juice to squeeze for that.

Maybe a "master lease option" with a mix of repair options: ie: if it's an expense above $1000 they have to pay for it otherwise I would?

I'm inexperienced compared to you but on my most recent purchase of a SFH, I put down about 6% with owner financing making up about 18% which gave my lender assurance I was personally invested, that there was a lot of room for them to recoup their money and helped me to have a lower DP.

Perhaps a different lender would feel differently than the one you are currently working with?

You say a 'specialized farm and ag lender.'  If it was a traditional bank then maybe they would be more open to discussion if you were to leave a large amount of your safety net sitting in an account at their bank for a certain time as a "hedge" against your possible failure while also giving them room to lend more to others (because of the $ they have on deposit)?  Maybe that's also possible with this lender?

Just sent you a PM with a local electrician.  BP wouldn't let me post his phone number and googling his name didn't work.

I haven't heard of him either.

Certainly, I'm not at this level so I'll just ask some questions.  

Would he be willing to seller finance the down payment for a loan?  Would you be able to cash him out in a year or two by raising rents?  Would hard money work for this too?

Would he come on board as a money partner who doesn't have to deal with tenants but will just get money over time from you? 

Do you have anything else of value you could offer as collateral for him?

Have you talked to local banks to see if they'll do cross-collateralization against some of your other properties where you have some equity?  Or can you take a loan against some of that equity?

You don't go into detail on rents or expenses and so it's hard to make a guess at what terms could work for you.

I hope it works out!

You don't say so I'll just ask: Have you tried other banks?  Maybe small community banks?

Did the current lender say what you would need to do to qualify for more loans?