All Forum Posts by: Bill Gulley

Hi, I believe the usury rate in Al for a private investor is 10% or 5% over the fed funds rate, which right now means 10%. That is the rate most common for installment contracts. In Al, if you have a real estate broker negotiate the loan for you your loan is exempt from usury laws. This is an odd exception, but you can not simply find a broker to do your financing deal and avoid the rate imposed. The Boker does not have to be a party to the sale transaction, but they must actually negotiate, originate and do the financing for you. This is an example of southern politics at its best! I would seriously doubt that one out of a hundred real estate brokers would really know what they were looking at, but oh well...
So, 10% is your limit. You can find all this good stuff in Al. statutes, financing usury limits. Also, check with a local closing agent, they should know what is being done locally.
I'd like for you to contact me so that I can direct you to some info on seller financed deals that you should consider! Good Luck, Bill

Hi, sounds like you might be in the right place at the right time! Section 8 can be profitable and easy, since your area probably has a waiting list. Check with the PHA and see how long the list is and what their housing supply is.

I'd suggest you do business in an LLC and expect to add more LLCs in the future, why, because it limits your liability and your tenant market, while they usually can't afford an attorney, many are eager to sue if they can. If all your eggs are in one basket, any one loss could hurt. Something you might consider too is doing Lease Options with Section 8 tenants. This can be done easily with your good tenants and the PHA will love you for it! There are some rules to follow, so it's not your average L/O deal. If you want to investigate this further, drop me a line! Financing needs to be in place to knock off a 100 units, how is that working for you? Good Luck, Bill

Hi, you did good! You're on your way, but don't quit your day job yet!

Selling off your rentals is something that makes alot of sence. Your installment/note income won't be as much as rent, but guess what, you're not spending time with the headaches either! That leaves time to go to auctions and buy more properties to flip and carry back another note!

Take time to map out your goals before you design the LLC so it will operate for you and be flexible in facilitating your stratigies. If you need anything, feel free to give me a shout, I have a great deal of experience in your proposed strategy. Good Luck, Bill

Hi Dawn! Can you restate that? ???? I know an attorney who might be in your area, if that is what you are asking..Bill

Hi guys, my point was to have the parent sign the lease as a guarantor. They are on the hook as much as the kids in there. My units were not low income, if you're going to do the college crowd I suggest you go upscale! They always fin another room mate, for a slight additional rental amount. I only had one unit damaged, I called daddy, who was a doctor, and he said "no problem, I;m sorry that happened, have it fixed and send me the bill" Now, how hard is that? Bill

Well Good Morning All!

Well, I guess this still isn't over! A sponsor is usually a non-profit or a PHA. In 1995, when some began in the real estate business, it was not necessary to have a "sponsor" for a LIHTC, and really even today it is not a requirement, but try getting a deal done without one. The only required parties are the developer, who can also provide the management and a tax syndicator. A sponsor can be a money guy as Dustin pointed out and was also referred to as the Project Owner usually in partnership with the Developer. As LIHTCs became more competitive, ruthlessly so, and as a requirement of obtaing an award of a project, local government entities had to sign off, approve and request that the project be approved. The needs analysis for the project must show that existing low income housing is insuffucient in the community. Well, who was in a position to declare such a shortgage? The local Public Housing Aiuthorities! While each state doles money out with slightly different political stratigies, showing the need for the project is a requirement. Thus the "sponsor" was born. Where no PHA exists, like rural areas, there is usually a non-profit corporation that provides Section 8 management under contract with HUD. These NGOs usually provide other social services, everything from GED programs to weatherization for homeowners. These NGOs or PHAs may sponsor a LIHTC project, maninly to administer the project for the Owner/Developer or maybe just for a small "donantion". The majority of funds come from the syndication (sale) of federal and state tax credits. These are coupons which are redeemed for a tax liability. Let's say Kraft knows they will have a tax liability. If they simply pay their tax it will cost them 100% of their liability, however they can purchase a tax credit from a syndicator (broker) for say 70 cents on the dollar. Kraft buys the tax credit and they redeem the credit instead of paying a dollar in cash, saving themselves 30 cents on the dollar! Now the Syndicator has to buy food too, so let's say his cut is 20 cents on the dollar, that leaves 50 cents on the dollar for the developer to finance his project. Now, for a developer/sponsor/owner to submit a LIHTC the developer must have control (ownership) of the real estate. Now enters the convention lenders, banks or other conventional sources of funding. Now these lenders have nothing to do with the LIHTC process being approved, they just review the deal on a commercial loan basis and make the loan required for the land and perhaps some incidental costs, like soft costs, in the deal that are disallowed under Section 42 Tax Credit guidelines. So any "conventional" lender that thinks that they do the deal, is a little shy of the big picture. They have very little to do with the entire program. So, there is the real life way it's done, with a sponsor!

Dustin propably has not done a commercial, housing or mixed use development, I don't know nor would I be so rude as to put that question to him, but I have and what the young man has said is on target. His Masters Degree from a respected university deserves some credit as well as respect. Most "investors" have a micro environment inwhich they operate and conduct business, one thing about real estate, you don't need a degree to make money, but it certainly helps and I doubt Dustin will end up as a professional real estate blogger as the pinnacle of his career! Good Luck with that! Bill

Hi Dustin, I saw your post and came back. I thought the subject was pretty well covered and, wow, you really covered it. I wasn't too concerned about anything said, but I guess some feel they need to have the last word. What was written was irresponsible saying that an underwriter could then mark a box as if no other loans were outstanding, which clearly means they would not have been disclosed. Most banking loan officers or even worse loan brokers sometimes don't get it since many have come up through the ranks of the front lines in making loans. While many think by memorizing underwriting guidelines makes them an expert, there is a part that many miss, that is that they are GUIDELINES not laws or loan compliance rules that have the effect of law since the law provides rules to be established by regulators. I noticed too that you and I have our profile page filled out for the whole world to view, so the readers may look to education and experience in making such judgement calls. Gee, my user name ought to be a clue, don't ya think? I'm more disappointed than anything else in the constant defense of what could have been a simple error, but such insistance simply indicates an agenda. If someone wants to argue with another person who has examined more loans than they ever made in there lifetime, and make snide comments that's OK, my opinion in court is beyound reproach. So let's now be polite and simply say that we disagreed on that point. I have nothing to gain here, no image to build, no reputation that needs to be defended, I've made my money and I'm not in this arena to develop business. Dustin, it's up to guys like you now to carry on in this industry and enlighten others as to ethical practices and more sophisticated investing techniques, lead by example and if you see something that is not just right, point it out so that others will understand the difference and the reasons why things are done in the manner which they are. Good Luck to all and Good Night, it's been fun! Bill

Now, I keep saying there are no "secret" ways to do real estate transactions, and there you go saying there is a secret society! LOL! Let me say it this way, someone would have to be off the old rocker to attempt to do a multi-million dollar water front project in a major city with out taking advantage of tax credits!

There are all kinds of tax abatements and concessions the city will make, The economic development agency of your state probably has a list of funny money deals that could apply to a project like that. A secret society, not really, but almost. As I said way up there, it's political, there are only three main tax credit developers in Missouri, what does that tell you, and one is a friend of mine.
Have you ever heard of Bass Pro? Johnny Morris (owner of Bass Pro)doesn't put in a bass pro shop without tax incentives, he is putting in a museum within 100 feet of his main store in Springfield, Mo. that was basically funded with federal dollars.
I have no idea how much land there is available on the water front. but water means a desired location, unless it's a cesspool. If you have access to such a property, you probably have a gold mine! Banks don't make 15 or 20 million dollar loans any more, those are participations with several banks or insurance companies, hedge funds, etc. with one as the lead lender. They can't compete with syndicated tax credits. Finding the right syndicator is key, they take a slice for selling off the tax credits. I'm getting off this now, it's an exciting avenue for financing with many variable and I could go on for pages, maybe even a book. I think everyone gets the idea.....Good Luck with that!! Bill

I'm missing something here. I have purchased pre-foreclosures and dealt with the homeowner, caught payments up, assumed the loan, gave them cash and time to move on from a situation where they would have nothing two months later, so, feel bad, not at all, from where they were, they gat a heck of a deal! But buying foreclosures? The past owners aren't there, they don't own the property the bank does, so I don't see this as having anything to do with the people who lost the property, they are already gone! If that's how we feel about it, why not feel sorry for the guy who built the house 20 years ago who sold it for 65K when he should have held on to it and sold it 5 years ago for 139,900 held it, rented it and depreciated it, Isn't that hine sight? Buying these properties is almost a public service! Bill