All Forum Posts by: Mark H.

Elva,

Portfolio loans don't follow strict underwriting rules like Fannie Mae or Freddie Mac rules. This flexibility can make them easier and quicker to get approved. It depends on the loan decision maker, who you can talk to directly in most cases. If you have your personal financial statement and balance sheet handy (and I strongly recommend you do) then the process is a breeze, maybe a week.

I have obtained a commercial loan for my LLC even though I haven't reached yet the 10 conventional limit on my personal name. Commercial lenders look positively at an established business credit history and might give better rates/terms that way. By the time I reach the 10 conventional loan limit in a few years, my LLC will have an established track record to get bigger commercial loans. Good luck.

Texas Trust Credit Union offers portfolio loans. A few regional private owned banks do so too, but their products and requirements vary a lot. Also make sure that what they tell you is accurate, I had a loan rep once give me inaccurate info and then change the story a day before closing - very disappointing! Good luck.

The last few auctions in Tarrant county had an increase of out-of-state investors, especially California. They wasted money like there was no tomorrow, essentially paid full mls price on foreclosure s that definitely needed fixes. Local investors, new and old, found it quite disturbing. I personally decided to avoid auctions because of that. Some long time property managers around here refuse to work with them because they don't account for fixes and vacancy, and some of them go bankrupt the moment the market slows down. My property manager has seen it happen multiple times, especially with the young investor crowd from California, who fantasize too much about appreciation. Later on, reality will hit them hard.

I got tenants into their fourth year of their lease, they always pay on time, never got HOA violation letters, care for the property like an owner would, and don't complain unless it's legit and very rarely. In return, I recently put a new A/C and new floors for them. I also pay for the annual A/C checkup.

This month another great tenant of mine is moving out after three of years of exemplary tenancy.

Yes, great tenants do exist out there, and I do what I can to keep them for as long as possible.

I recently got screwed by a local small bank, so don't assume a small bank is necessarily better. I recently purchased a foreclosed property for cash much lower than market price and titled it to an llc, and needed a commercial equity loan for 80% of market value, NOT of the purchase price (BRRR strategy). I called over 30 local lenders and only 3 said they offer that, all others said they use purchase price. I selected one of the three lenders and a week before closing the loan rep said 'sorry, you can only get 80% of PURCHASE price', in other words 30k less than agreed upon!! The rep had 6 weeks to learn the bank lending rules, but only did so when it was too late for me to have any other options. I needed the funds for another purchase. The manager admitted that the rep screwed up giving me incorrect info but essentially said take it or leave it. Unhappily, I closed on the loan, and have been talking with the other two lenders about future loans.

Talk about a lender ruining a relationship from the get go... At this point I have difficulty trusting local lenders. Thorough research and due diligence is not always a guarantee of a good outcome, all it takes is one loan rep who gives you the wrong info.

On a side note, I've had a very positive relationship with a big lender of Fannie Mae loans (7 loans so far and an 8th coming up soon), but this lender offers no commercial loans for llc's, thus I resorted to local lenders.

@Helen Zhang : bankruptcy protection means a temporary delay of the foreclosure sale. It's a well known delay tactic owners in default use to prolong their free stay in the property. Every month I see some title reports with multiple bankruptcy filings every time the property was up for auction sale in the past. I call these "serial filers", they seem to have mastered it to the point some even live like that for multiple years!

@Helen Zhang : I recently purchased a foreclosed property in Texas from auction.com by the courthouse. Three weeks later I received a Substitute Trustee's Deed.

I offer $1000 cash for keys, and deduct from it the cost of what I consider intentional damage. It worked for me, the occupant had something to lose and thus left without causing damage.

I have seen another investor buy a property and it turned out 10 minutes earlier the owner filed for bankruptcy. The investor got the money back almost a month later.

The first place I lookup property managers is Narpm.org

Good luck!

I am not rich, I don't have a million in the bank, and I recently opened 4 unsecured lines of credit with 4 credit unions, totaling 90k based on my employment income and credit score. Each credit union had its own criteria, max amount and rate policy. Some offered only 5k, others offered up to 40k, they were all different. So it's possible in some cases. I am not claiming that everyone everywhere can get that, but sometimes it's possible  even for a middle class person who is not a 1%er but with a good credit score and credit history.

Great info on this thread!

If I buy a foreclosed property at auction for cash without prior access for inspection, with the risk of someone living there (previous owner or squatter) requiring eviction, and further extensive renovation after that, what insurance could I get?

All insurance firms I checked refused to cover property I dont possess yet due to illegal tenants. How do investors get coverage in that scenario? Im sure this is a somewhat common scenario out there.

Good luck on the exam, @Nathan DeWitt, and enjoy your journey into REI.

Out of curiosity, how did you chose the Southeast US as your first step?