All Forum Posts by: Jamison Schweitzer

Thanks Martin - i appreciate that information and validation.  Unfortunately this was a little while ago and I'm just now reviewing and comprehending what happened

Minna - This was through a local bank. I did borrow money over the purchase price to do some repairs but there wasn't a construction loan. I just borrowed 65k against a property value of 85k (76% LTV)

I've sent an email to the banker asking him to explain. I'll let you know what he says

Hi Minna - Thanks for your reply.  This isn't in regard a loan that I'm paying off, this is a new loan in my name created to purchase the house.  I'm not sure why they would have tacked on anything to my brand new mortgage.  Unfortunately the bank presented this at closing and I didn't have a full understanding of what was going on. Lesson learned, don't sign until you are comfortable. I felt rushed and didn't want to delay closing.

Can a bank just tack on as much as they want to the mortgage?  I don't understand why they would do this. Now I'm left over leveraged. 

Hi everyone - I recently purchased a property and at the closing table I noticed that the amount on the mortgage was significantly higher than the promissory note.  I've never experienced this before. They've always been equal. I talked to another investor who experienced this as well, at the same bank.

I have a couple questions: 1) Why and how can a bank collect more than what is owed to them in an event of foreclosure and 2) does this inflated amount recorded on the mortgage lock me out from accessing the equity in the property, if for example I'd like to add a 2nd lien, cross-collateralize the equity or cash out refi someday?

In this specific case I bought the house for 45k, my note is for $65k, the mortgage is $81k and the property appraised for $85k.

Thanks in advance for your comments!

Jamie

I have a duplex in Cedar Rapids and I use AMMT property management. I've been pleased with their service.  Lucas Burrington, the owner, also provides leads on investment opportunities every once in a while so that's a bonus! :)

I should also add the the property is valued at $89,000 (after repairs)

Hello BP community!

I have just purchased a house with conventional financing and I'm reviewing my loan documents.  I noticed that the amount on my promissory note is different than my mortgage. I was wondering if someone could explain why there is a difference.  Let me give you some details regarding the transaction:

Purchase price: $45,000

Financed repairs: $20,000

Promissory note: $65,000

I pledged $13,000 of equity from another property I own as collateral

$0 cash down

Mortgage: $81,000

When I asked the loan officer about the difference he responded by email saying "That is the mortgage amount due to discounting 20%. Your loan is 65,000."

I've done deals just like this with the same bank although I worked with a different loan officer. In each of those deals the mortgage matched the promissory note. This is a smaller regional bank and a commercial loan.

Can anyone help me understand this?  I appreciate any help you may provide!

@Quinn Jacobsen Portland. As far as CR goes, there are no-go pockets in my mind but there's obviously money to be made.  Just do your research and find your comfort level.

Are you new to the game or do you have some property of your own?

Hi guys - I'm a rental investor here in town too. I've found a couple of my deals through relationships, one for sale by owner and others by MLS. I'm focused primarily outside of IC however because finding a good deal in the local market is really tough. I've got duplexes in Washington, Riverside, Cedar Rapids and Iowa City and I've done some flipping on the west coat, pre-bubble burst . ;)

@Mark Reiland you've got some property on the market right?   :)

@Quinn Jacobsen When you say next "project", are you up for a significant rehab?

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $95,000
Cash invested: $1

Bought from an estate well under market value, put close to $30k into improvements (and paid myself to do the work). It is in a small town outside a larger city. Good rents with lower purchase price.

How did you find this deal and how did you negotiate it?

MLS. Negotiated via realtor

How did you finance this deal?

100% bank finance since I purchased so far under value. The property assessed for $148k. Market value around $160k. The bank financed $118k.

How did you add value to the deal?

Renovations yielded higher rents

What was the outcome?

Very happy. Property cash flows around $675 a month.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Financed at Great Western Bank - Melissa Schooley - North Liberty, IA

Hi everyone

I have an opportunity to purchase a duplex and two mobile homes on two parcels and I'd like to run my analysis by you all to see if I'm thinking clearly...  and I'd love any advice regarding owning/managing mobile homes.  Thank you in advance!!

Here is the data:

Approximately $200,000 to do the deal

$190,000 purchase price

Loan 75%LTV $142,500, 25 year at 5% ($9996 PI annually)

Partner Cash $35,000 for @40% equity (family) :)

My Cash $21,840 @60% equity

Annual Rents $30,660

Vacancy 5%

Taxes $2070

Insurance $1812

Prop Manage 7.9%

Snow/Lawn $75

NOI: $20,000 approximately

Repair costs are minimum as most are newly remodeled $500

Acquisition costs . $2000

Reserve account $7500

The property is in a small town in Iowa near a decent sized college town.  There is one very long term tenant, one vacant newly remodeled unit in the duplex and two occupied mobile homes in average condition. Both 1970, 14x60 ft. attached to land.

My analysis, for my portion of ownership (60%), based on 15 year holding period

PreTax Cash flow $6052

Annualized ROI 13.39%

IRR 34.82% (includes net sales proceeds of $203,535 at year 15)

I've got the property under contract because I felt it to be a solid deal.  Do you think so as well? I appreciate your time and advise!

Side note, although the mobile homes cash flow, the bank will not finance them but will finance the duplex and 2 lots.  It's not a problem because the full $190k of value is in the duplex/land so in effect I'm buying the mobile homes out of pocket for very little.

Jamie