All Forum Posts by: George Krajacic

Proposed loan of $125K would have 36% LTV ratio. If it is structured in the first position you should not have any problem getting a loan. Search on internet or go to local investor meetings to find private or hard money lender. If that does not work advertise in local paper, Craigslist or Penny Saver. I also Goggled "Joplin" to find population number for the city and I also found article below. It might be wise to double check BPO.

7 fastest shrinking cities - Joplin, Mo.

1-year population change: -1.3%

Change from 2000 to 2010: 12.3%

Typically, populations decline gradually. But in Joplin, Mo., the drop occurred almost instantly in May 2011, when one of the most destructive tornadoes in U.S. history struck the area.

Good luck,

George

You cannot approach private lender with 111% loan request.. The FHA loan is the best loan one could get. However, to qualify for the loan property cannot be larger than 4 units and the buyer has to live in one of the units. Also to get FHA loan one has to have decent credit, have 3.5% for down payment, have money for the closing costs, have number of months of reserve funds in the bank and have enough income to qualify for at least 25% of the total loan amount. Any other type of loans whether conventional loan from the bank or private loan from an investor will have more stringent requirements. Conventional loan will require 25% down payment, good credit score and required income. Private loan will be at least 8%, require 20% or higher down payment, and have higher closing cost with points and with terms of 3 to 7 years.

If you have to go with private money be prepared to have $9K for down payment and $5K for other costs.

No lender would make 111% loan because you would have nothing to lose. You would not have the skin in the game and that is risk lenders are not willing to take.

Good luck,

George

I don't think the Terms of Use are the same as the Posting Rules. Here's the link to the Rules: https://www.biggerpockets.com/rules  

@Carl Todd

I don't think the Terms of Use are the same as the Posting Rules. Here's the link to the Rules: https://www.biggerpockets.com/rules

I would suggest as others did use an attorney at least for the first loan. Also keep away from consumer loans because then you have to comply with Dodd- Frank rules. If one sticks with commercial loans Dodd-Frank does not apply. That means lend only on commercial properties or if you lend on residential properties 1 to 4 units make sure that properties are used for business purposes only. That means borrower is buying the property to fix and flip or if borrower holds the property, it must be rental and not used as personal residence. There is a form that you have borrower sign that states that he/she are buying the property for business purpose only and at no time are they going to occupy the property. It also advises the borrower that if he/she moves into the property the lender will immediately call the loan due and start foreclosure procedure. There are few other important forms that, by law, you have to have borrower sign. Consequently if you do not use an attorney get well educated on lending laws of your state. Also there are companies that provide "Document Preparation" services to the HML and if you use them they will provide you with right documentation.

Good luck,

George

You got excellent answers but there is additional important reason that flippers go to HM lenders, it is called "bad credit". HMLs usually lend on equity so they can lend on bad credit, no experience etc. Even flippers with successful track record might not have a good enough credit to qualify for a bank loan. As mentioned above the speed of getting a loan commitment might be extremely important. If one has established relationship with HML one can get loan commitment in a day, in an hour or even on the spot.

Hi Dustin,

To give any meaningful advice I would have to know your present financial situation. For example:

• 1.Are you saving any money at present?
• 2.If not, how short are you every month?
• 3.What is your monthly income?
• 4.What is your monthly rent?
• 5.Have you been paying rent on time?
• 6.What is your credit score?
• 7.Is mother able to help with the rent?
• 8.What is your mother’s credit?
• 9.What is mother’s income?
• 10.What price house you are planning to buy?
• 11.What would be the price of rental property you like to buy?

With above information BP members would be able to come up with effective course of action.

If you do not feel comfortable posting all that info you could email the info to me and I could suggest few available approaches.

Good luck,

George

Hi Dan,

I do not know Ohio’s lending laws and regulations but in California most of the private money loans are made thru the brokers just as hard money loans are. The reason being is by using a broker private lender can avoid usury law and charge higher interest rate. Broker arranging the loan charges points for the effort. So the broker can share portion of his/her points with you (0.25 to 1.0 point). However if you do not have a real estate licensed you are not allowed to discuss loan terms or be involved in any loan negotiations. So the best way to get paid discuss your finder’s fee with broker first and if you come to an agreement than introduce borrower to the broker. Since you are in Ohio above might not apply. The best thing would be to talk to few hard money lenders in your city and find out what are the rules for paying finder’s fees.

Good luck,

George

Hi Tracy,

If you put all the data on Excel spread sheet it would be easier to understand the deal and then analyze it.

Good luck,

George 

Hi Rich,

If you follow Jake's suggestions you should be able to get a loan as long as you deal makes sense. The fastest way not to get funded is by overestimating your ARV and underestimating a repair cost. Since this is your first project and we do not know how much experience you have, it might be a good idea to get signed repair contract by licensed contractor. If the project still makes sense by using general contractor that would assure the funding.

Good luck,

George