All Forum Posts by: Jerry Poon

1) It cost them 13K in interest payments, but its not really 13K is it? its 12K with the 1K fee subtracted and you almost certainly won't refinance within the year, so its actually 10k after you add back the first years 2K. Is there a pre-payment fee? That lowers their cost more and they can probably quantify the risk of you refi-ing in years 2-7.

2) The now 9-10K maximum cost is a drop in the bucket of their total theoretical revenue they stand to make over the term of the loan through the interest payments. And by doing this they lower the risk of the loan defaulting and make it more likely the loan--and the projected revenue they now have on their books--remains with them.

3) Again, in a low interest rate environment its probably better for them to lower their reset time. I mean, if they could reset every month they likely would make more money, but people wouldn't borrow from them. So from 10 to 7 is better for them. They love 5 year resets

Jonathan can you expand on what a reset time is?

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Originally posted by @Jonathan R McLaughlin:

@Jerry Poon you are trading 3-5 years of interest rate lock/security for the cash saved for the lower rate. Could be a good bet, but you do increase your risk profile. Alternatively, the bank gets a chance at a higher refi earlier and more than once. Why would they? Since they control spread over the rate, they have a little more flexibility to gain back profit on refi's. They also might be trying to match the general market and keep your loan with them? And in a period of low interest rates, probably good to move more loans to reset earlier so you don't get trapped holding too much low interest paper....

Thanks for the input!

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I have a few commercial loans with 10-12 years left on them. The rates are held for the life of the loan. I asked my commercial banker if there are any ways I can take advantage of the low rates. They said they could lower the rate for them by 1% in exchange for $1k and having the rate hold lowered to 7 years with the rate adjusting annually after that.

I would be saving $2k/year on my monthly payments. I would basically have to count on the interest amount increase to be less than $13k for the last 3-5 years on my loans. It seems like a no brainer to me. Do people see interest rates increasing drastically 7 years from now?

Also, why would the lender be willing to do this if it is such a killer deal for me? They would be making less money per month on me. I feel like I am missing something big here.

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Thank you @Mitch Messer!!

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I have a lead on a "subject-to" purchase where I would be taking over the mortgage of the seller. I just want to make sure I have all the closing costs accounted for so I can analyze it correctly. The last thing I want is to have a 10-15% CoC deal turn into a stinker because of thing I've missed.

This is what I have so far:

1. Closing costs (title, bank fees, etc.)

2. Inspections (general, piping)

3. Rehab

What am I missing?

Who usually takes care of and pays for the power of attorney paperwork?

On a related note, what are typical returns people look for in "subject-to" deals?

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I am working with an agent who mentioned to me that he, along with his partners, would be looking for investment properties for themselves. I am very sure that they would be looking for properties very similar to what I want. Would there be a conflict of interest, as they would obviously take the best deals out there for themselves?

1 Vote

Does anyone listen to the Real Wealth podcast? It is hosted by Kathy Fettke, and it is directly associated with Real Wealth Network. Their latest podcast had a conspiracy theorist on as a guest spewing hate, fear, and discord. The COVID-19 vaccine is going to have tracking devices? Really?! You would think that anyone asking for business would think twice about keeping personal political beliefs off their marketing material. After that, I am not sure if I believe my money will be safe in their hands.

3 Votes

so much broscience in this thread

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Originally posted by @JD Martin:

Your first mistake: trying to time the market. Of course timing matters, but everything is either a good deal, nothing, or a bad deal in every market. So your mission is to find good deals whatever market you are in.

There's no way to give you good advice without numbers. There are also usually alternatives to just pitching in the towel and walking away. Make a new thread with your numbers and location and I guarantee you'll get some good feedback. No one is going to see anything in this thread.

Words of gold. Thanks for the reminder. My margins in the deal were slim in a market of feast. It would have been a bloodbath in a market of famine. Most of my FOMO has now been wiped out lol.

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Originally posted by @Matt R.:

Originally posted by @Jerry Poon:

I rescinded an offer I made into an investment property. The news went from background noise to bad to apocalyptic in one single week.

There was no way I could move forward with all the uncertainty.

Was the deal in LA area?

Yessir. I figured worst case scenario if I closed was that either tenants would fail to pay rent and/or rents fall overall and any little cashflow would be wiped out; then I'd be underwater on my loan if home values tanked. Worst case scenario if I backed out was that housing prices would go up and I miss out on a deal. Oh well. We can always find more deals.

1 Vote

All Forum Posts by: Jerry Poon

Jerry Poon has started 39 posts and replied 230 times.

Post: Should I refinance commercial loans?

Post: Should I refinance commercial loans?

Post: Should I refinance commercial loans?

Post: Costs Associated with "Subject-To" Purchase?

Post: Costs Associated with "Subject-To" Purchase?

Post: If agent is also investor, would there be a conflict of interest?

Post: My Turnkey Experience with Real Wealth Network (RWN)

Post: What will be the impact of the Coronavirus crisis on real estate?

Post: What will be the impact of the Coronavirus crisis on real estate?

Post: What will be the impact of the Coronavirus crisis on real estate?