All Forum Posts by: Joseph Coleman

I do highly recommend www.mortgageeducators.com 
I used them to pass my MLO exam. It really was not that hard compared to other types of tests. 
I personally got my MLO test completed but did not apply for the license - as my goal was for education purposes. Although this education is almost 100% focused on legal requirements and regulatory agencies. Your state RE regulatory agencies will be the best resource to determine the requirements for an MLO license. They usually have a phone number you can call. 

Hi Julius! Thank you for your question. BiggerPockets has some great articles on the topic of hard money to checkout. e.g. Guide to Hard Money 

Pros: 
-The underwriting by definition is based on the asset and not on the investor. Although some lenders still run a personal credit score 
-The funding process can be much faster compared to traditional lenders. 

Cons: 
-This industry is not nearly as regulated as consumer purpose mortgage lending. Be careful of lenders that charge for upfront fees or give unrealistic expectations during the initial underwriting process - lenders cannot provide accurate loan estimates until they receive detailed information about you and your property. 
-The interest rates and fees tend to also be higher but it's still much cheaper than bringing on an equity partner. 
-You typically need to bring MORE MONEY to the table but if you can find a property at a significant discount (e.g. 50% of the ARV - Costs) there are lenders that will fund 100% of the purchase and renovation. Those situations are rare. If you find any let me know : )

A couple more notes: 
-Hard money is best for investors that have liquid capital but want to get a little more leverage to scale. It is not intended to be used for a down payment or for investors that have no money. 
-The real reason why Hard Money can be so powerful is that it allows to you ADD VALUE to a property and participate in an arbitrage situation where you take a property from one market (typically off market properties that do not qualify for traditional financing) and taking this property to the much larger MLS market (where most of the buyers are). Once the property can be purchased with other types of loans like conventional or FHA it increases the value of the property because there is more demand for these types of properties.
-Hard money is a tool that allows investors to improve properties, improve communities and bring more functional and livable properties to the home buyer market. 

@Houston Anglin is your primary goal to decrease your DTI and increase your credit score by decreasing your credit utilization ratio to get more access to capital?

If so, I would talk with a broker that really understands the DSCR and conventional loan options.

The reason I say this is because most "private lenders" that offer DSCR loans do not report to the major credit bureaus so it's unlikely it would help improve your credit utilization ratio or credit score. 

The order in which you use a loan also matters. Depending on your situation it may be better to get a conventional loan then get a DSCR loan or vice versa. You need an expert on DSCR and conventional loans in your State in order to see which one is best for you. Also, it would not be a bad idea to involve your CPA. 

OneBrokerage is a great lender that understands both sides of this. You can see if they lend in your state by searching the BP Lender Finder tool. 

@Gabi Katan Many lenders are starting to create portals for investors to buy notes directly. 
e.g. 
https://alohaprivatelending.co...
https://www.fundthatflip.com/r...

Can you share a little bit more about your experience?
Have you invested in notes before?

I think other folks on BP would be very interested to learn more about your journey. 

Hi Everyone! I was reading through the Class Action Complaint put forth by Judge Andrea Wood recently and wanted to get some opinions on,

1. Is it true that the NAR is effectively operating as a cartel?

2. How do you think this legal process will conclude?

3. Would prohibiting price fixing by the NAR be a good thing or a bad thing for buyers and the real estate industry as a whole?

Background:
In the Class Action Complaint (linked below) the Judge accused the NAR of fixing prices and states,

"For decades, home buyers across America have been unwittingly paying too much for, and receiving too little from, services offered to them by real estate agent members of NAR.Despite agent representations (which NAR permits and encourages) that such services do not cost home buyers anything, home buyers in fact pay a hefty cost for these services—namely, supracompetitive commissions at levels fixed by the Defendants, which in turn lead to higher home prices paid by buyers...

as part of their membership, brokers must also agree to follow NAR’s rules, practices, and guidelines. These rules, which include a requirement that sellers set aside a portion of the purchase price for buyer-agent commissions, prohibitions on modifying the commission, and permission to filter listings by commission, all enable NAR, its co-defendants, and its members to maintain buyer-agent commissions at supra-competitive levels unrelated to brokers’ experience or the services provided, steer home buyers away from lower commission homes, and drive out discounters—among other harms."

The way that this reads, it sounds like the NAR is essentially being accused of operating as a cartel. If this is true, it makes one wonder why an anti-trust lawsuit has not come up before. 

https://webassets.inman.com/wp...

@Arthur Iskhakov 

You must cover the assumption gap. There is a high likelyhood that this loan can be assumed if you meet the original underwriting criteria. Unfortunately there is a lot of misinformation out there on this topic. I would refer to an expert like assumption solutions when dealing with a loan assumption. 

@Craig O'Boyle is the president of the company and recently appeared on one of the BiggerPockets podcasts as an expert on this topic. 

-Joe

@Benjamin L. I cannot think of any negatives. This is not advice, but when I am inquiring about financing for myself I apply with about 5 lenders on the same day so that I can compare the rate and terms on the same day. I also provide the same loan details to each lender so that I can compare. 

The CFPB has detailed info on the lending process.
Check this out! 
https://www.consumerfinance.go...

"Getting multiple Loan Estimates won’t hurt your credit, so long as you get them all within the same 45-day window." - CFPB 

@Anne Grello I know how that feels! Every offer is an opportunity to learn and it is far better to lose a property than close on a property that you paid too much for. 

When your offers get rejected, make sure to put in a backup offer! A lot of homes fall out of contract for reasons that have nothing to do with the property. Your agent may not even think about putting in a backup offer so you may need to stay on top of your agent and tell them ahead of time if you do not get the property to immediately start working on a backup offer. That is how I got my most recent property. 

@John Anderson I would recommend connecting with a great broker (who has access to conventional and non-conventional products) like Ty Coutts (above) or DSCR lender to walk through your scenario. For more DSCR loans they actually prefer or require the properties to be in an LLC.

Ultimately you are probably best off comparing DTI based and DSCR based loans to see what works best for you, which is why a broker could be more helpful for you.

Hi Jason, 

Can you share a little more about what you are looking for help with?

e.g. Are you looking for hard money lenders? 

A few thoughts in the meantime, 

-We know the classic rule of thumb is to pay 70% of the ARV after Costs. In this case, that would make your purchase price $311K. But you mentioned that the ARV is conservative. I don't see this being a deal breaker but using debt on a deal like this could be prohibitively risky because if it doesn't go as you expect, the debt service would amplify your losses. Once you add your debt service (~10-14% including points) this looks much less attractive.

-Most Hard Money Lenders (with relatively low rates) will go up to 75% LTV, which means you need to put up about $100K.

-Have you exhausted all of your other funding options? Can you not get a conventional loan due to damage?