All Forum Posts by: Jeff Cichocki

@Emerson Harbert, the key to getting a good agent is to have them help pre-screen themselves for you. I've gone through a lot of agents over the years. It seems to me that it's usually the broker who pushes the agent away from me. They have a hard time understanding that the average homeowner is buying a new house once every 13 years. I want to buy 13 houses this year. Albeit that they'll likely make less commission per deal, they'll make a lot more money with me as a client than they will with any other home owner. And, I want the relationship to last years. But, like I said, the broker usually pushes them away. They see all the offers flowing that aren't getting accepted and they think it's a waste of time. They don't look at the total dollars that those offers end up bringing to their agency. Not sure why they don't see it.

As for HM, @Odie Ayaga is right. there are a lot of varying factors that play into getting a HML. These varying factors also vary from HML to HML and can even vary from state to state. The best thing you can do is to spend some time doing some research on HML's to determine which ones you want to work with. Get referrals to them if you can. We are not all created the same (even if our programs look the same). Find a good one to work with; even if their not the cheapest. You will find tremendous value in having a great lender on your team that cares about your success.

Good Luck!

@Scott Brown, Unfortunately, you're talking to the wrong people. Pre-approvals & proof of funds letters are given out all the time. The reason they are given out so much is that they are basically worthless. A pre-approval letter says nothing more than... "We like what you told us. If it actually turns out to be true when we finally get around to actually underwriting the loan, we may actually give it to. But, we don't have to."

If you want one, go to my website and grab one. Mine is based on one I modified that I got from a bank. I'm a legit lender and I will stand behind every single POF letter that is sent out. Based on what I said before, I can easily give them out and stand behind them, because I never have to commit to them. No lender or bank does. If you want one from someone other than me (don't worry, I won't be offended - Lol), just google it. Lots of websites to pull them from. Everyone who gives them out will confirm their legitimate.

Good luck!

@Sho Firecomm,

There's no right or wrong answer as to Flip or BRRRR. It all depends on what you want. Flips are great because they generate bigger chunks of cash. BRRRR is great because it helps you build up monthly income. Which is more important to you? My business partner & I do both. Because there's two of us, we an do two strategies at the same time. Doing both at the same time may be more than your time will allow.

The correct answer is whichever you are the most passionate about and fits your goals.

Good luck!

@Nayeli Sanchez,

Find a HML that also has LT financing options. There are many of us out there. Part of the reason we offer it so that we can pre-qualify your property for LT Financing. It's not a perfect science, but it's a good indicator when I can look at the property today to see if you would qualify for LT financing if the property is all fixed up.

Some LT Lenders let you take cash out when you refi (don't take any more cash out than necessary - the higher the LTV, the higher the risk of problems down the road). Most LT lenders will require you to have some liquid reserves. Some will let you use the cash out to meet the requirements.

Your situation if different than many of the people who will read this post. Each person needs to look at their scenario independent of the answers given. What you qualify for, someone else may not. Sometimes, it's not you, but the property that doesn't qualify. Again, you need to run this past an HML who also offers LT financing as well to get your exact answer.

Good luck!

@DeMario Drummond,

@Odie Ayaga is correct. You won't find a HML that will lend on something you want to live in. They also aren't going to let you go for 3 years. The interest rate over that long of a period of time would cause an an extremely high likelihood of them having to foreclose. Also, because HML's are for non-owner occupied properties, if you have your "friend" rent it from you and you end up moving in any way, they will foreclose on you as soon as they find out. And they will find out. All HML's get inspected periodically. You living in the property is a direct violation of the terms of the mortgage & note and grounds for a foreclosure. If that's what you were insinuating when you referenced your "friend", don't do it.

You may need to try to find a private lender who is willing to do this deal with you. You may very well be able to find someone at the local REIA's or MeetUp groups. Texas has very favorable foreclosure laws for lenders. They may be willing to take the risk.

Good luck!

Hey @Slawek Pajak, 

Unfortunately, I highly doubt you'll find a HML who will do the deal without points. It's how they get paid. In addition to the points, most lenders have hard costs that they incur to do the loan. They usually pass them on to you the borrower as well. Not sure how you'll be able to get out of all the fees. They are there because those costs exist and lenders want to eat too.

You should look for either private capital or maybe find a hedge fund that will do it. If you can find one that is willing to get it's money back in the way of higher interest, it may work for them.

I'm not sure if you realize this or not, but new construction is a lot riskier than most other loans. The lender is putting up capital against a structure that isn't worth what they lend until it's complete. I've heard of a HF (sorry, can't remember their name) out of NY that will do new construction, but they take daily draws from your account to pay the interest. Because NC is so much riskier, they do that to help offset some of their risk.

If you find a way to do what you're asking, it would be great if you came back and told the story. I think that a lot of people who also build NC would love to hear about it.

Good Luck!

Most title companies are owned by attorney's. If they're not, they are affiliated with one. 

I'm not a fan of having the title company handle the coordination of the note & mortgage.

In the early days, I would let the title company relay my information to the attorney. Unfortunately, there were balls that were dropped and miscommunications that happened.

Today, I have my own paperwork that I repeatedly use over and over (we aren't just lenders, we buy as well). I have a set of docs that I had drafted just for this type of situation. But, if I didn't, I'd want to talk to the attorney directly. They shouldn't have any issues with that. You want to make sure that everything is documented properly. You want to make sure that the paperwork is balanced and fair for both you and your seller/lender. 

Depending on your situation, you may even want your seller/lender to talk to your attorney as well. But, be careful with this advice. Make sure that your attorney understands that they work for you. If not, it could easily go sideways. Unfortunately, in what attorneys view as them protecting the seller/lender, attorneys scare the wits out of them. Your attorneys role if they talk to the seller/lender is just to confirm that the paperwork matches what the agreement is.

Bottom line... Keep it simple. If this is something that you plan to repeat in the future, get a copy of the docs in word format from your attorney. If they refuse, hire someone on Fiverr to re-key it for you so that you can re-use it (make sure you understand exactly what every single word in it means though).

Oh... One last thing. Don't fill out the paperwork for the seller/lender. Either they fill it out themselves or they use your attorney. If you fill it out for them, you could get bit for practicing law without a license.

Good luck!

@Francisco Ramirez, Look up your local REIA's and MeetUp groups. Start attending. You should attend whether or not you need a partner. You may find a good deal there as well. However, at those meetings, you will find other investors who are just like you and you'll find some experienced ones as well. You may very well find your next partner there are well.

Good luck!

@Hunter McCook, it's possible I may be able to help, but if you are looking for someone local, the REIA's and Meetups in your area are a great place to start. I would also recommend checking out Dyches Boddiford. He doesn't advertise that he is a lender, but he is pretty well known in Atlanta as a private lender. If you reach out to him, let him know I referred you over. It won't get you any special treatment, but we are friends and it will help you break the ice with him faster.

Good luck. Let me know if you need anything else.

@Alfonzo Roberts,

While it's great that everyone is willing to share their opinion about finding the funding first, I respectfully disagree. I think telling anyone in this business to find the funds before even starting to look for a deal does a great disservice to them; especially when their new. If a new investor doesn't have anyone in their circle with the funds, they will run around in circles for a long time trying to figure it out. Most new investors are told to find private money because hard money is too expensive. But what if it's a great deal and their only way to get it funded is with hard money? Many new investors die on the vine trying to find funds for a deal they don't have. Many new investors die on the vine because their not out there working multiple things at a time. It's not easy being new. It's not easy to find funding when your new.

I'm not just a lender and I'm not saying this because I think everyone should only borrow from me. I'm not the best fit for every investor. I'm saying what I'm saying because I play both sides of the fence. My business partner & I are investors, lenders and we run REIA's. We also attend several others that our friends run both around our state and when we travel. My opinion is based on watching countless new investors come in with dreams of being successful only to have them crushed by well intentioned but impractical advice. I've watched a lot of investors at every REIA (mine and others) I have every attended flounder because of this.

The reason you need to do them both at the same time is because an investor (especially a new one) needs to figure out what kind of properties they want to go after. They also need to figure out what their lenders want to finance. Not all lenders will fund a deal just because the investor thinks it's a good deal. Most lenders have a taste for one kind of deal over another. You have to figure out if that lender is a good fit for what you're shopping for. You will likely need to line up multiple lenders. And then... You have to put the two together if you want to make the deal a no-brainer for the lender. A really good lender is your financial partner in the deal.

And, while it is important to create a relationship with a lender... Consider this from the lenders point of view... How can a lender give any kind of meaningful commitment to anything without the property being in place? It doesn't matter whether you are using Hard Money or Private Money; the situation is the same. The funds are only tentatively pre-approved. All the lender can say without the details is... "I think I like you and I think I like what you're about to do". A pre-approval is completely worthless because there's no meat behind it. If you've ever read a pre-approval letter from a lender, they are about as non-commital as can be. I've never seen a pre-approval from a lender that is worth more than the paper it was written on; mine included. All pre-approvals can be backed out of in the blink of an eye. The lender may like what you're trying to do, but hate the property. Then what? Most new investors stop looking for lenders to work with as soon as they find their first one (bad idea - they need multiple). Now they have a property under contract that they thought they had funding for, but no where to go. It really tarnishes a new investors reputation when they bail on their first deal because they didn't work on marrying the two together properly. Our reputation is our most valuable asset that we have. As both an investor and as a lender, I can't tell you how many times I've seen this happen.

Another thing to consider when your creating a relationship with a lender; especially a private lender... If you approach a lender and they like you and potentially want to invest with you, you have to get out there and hustle hard. If you don't find a deal fast enough, what do you think the investor will do with their cash? Every day you don't help them keep it busy, they are losing money. It's highly likely that they will have funded someone else's deal by then. This is why all investors need more than one lender in their contact list.

Sorry for rambling. Hopefully it sheds a little light onto the subject from a lenders point of view.