All Forum Posts by: Joshua Fulenwider

Check with your community banks.  I write business lines of credit all day long.  However, I do require collateral.  Lines of credit also have a lot of rules involved with them so make sure you talk to your lender and understand them before you sign.

Not sure about Ohio.  Where I am the rates seem very favorable on investment properties.  However, the 15 year term could spoil the deal.  It may be in your best interest to pay a higher rate elsewhere in order to get a longer term loan and achieve lower monthly payments.

@Tim Wilkinson I am not the best resource on the FNMA Homestyle loans.  But if they allow for compensating a contractor or handyman to do the work, how hard would it be to form your own company and bid the project yourself?

In Florida you may need a contractor's license.  If you do it just as a handy-man you may be able to get around this.

@Luke Carl I'm not sure if you've gotten this question answered yet.  This is referred to as an option to purchase.

A potential buyer can enter into a contract with the homeowner whereby the buyer has the right to purchase the property up until the predetermined option date at a predetermined price.  These are good ways to control property without completing a purchase.  

They are typically wiped out by a foreclosure.  If you are wanting to purchase the property you can contact the person that has the option and offer to buy out their position and then exercise the option yourself.

How many units?  How much are you wanting to finance?  If it is 2-4 I would pursue a traditional mortgage in order to get the terms you are looking for.  5+ units you may have to pick and choose what terms are most important to you.  

Where I lend, doing a commercial loan on 5+ units I could do 20% on an adjustable rate, but the rate would be over 5% and the I typically do 20 year terms.  

Or I could bend on rate and term but I would want more cash down.

If you find someone that will give you all three.  I'd be interested in hearing about them because I would like to finance some deals with them.

Hope this helps.

@Corey Reyment

http://files.consumerfinance.gov/f/201204_CFPB_HEL...

The link above takes you to a PDF circulated by the Federal Reserve. As a lender I provide this to every person applying for a HELOC. It's pretty basic but it can help people understand the terms and conditions that go along with a HELOC.

It will be easier to do beforehand.  If you wait until after, your borrower now has a legal and recorded interest in the property.  I believe they will have to sign paperwork allowing you to refinance.  I'm not sure on the method, it may be a subordination or they may even have to sign on the loan papers.  

If it were me, I would do the refinance first. It will save you headaches down the road.  

I would definitely make the land contract bigger than the loan.  Structure it in a way so you are never owed less than the amount you owe.  Are you structuring it with interest?  If so, make the interest higher than what you are paying for the underlying note.  If you aren't earning interest on the land contract, is there a reason?  Can you get interest?

@John Krohn since you are essentially financing the buyer I would avoid using a HELOC because it will be very easy to get upside down in the property where you owe more on the HELOC than the buyer/borrower owes you. This is because most HELOCs are revolving (meaning you can keep taking money out after you've paid it back) and the a lot of them have interest only payments or payments with minimal principal repayment each month.

I would recommend doing a straight 2nd mortgage or refinancing the whole thing first in order to get the cash out early.  

@Michael Ansley when deciding on the duplex you should also figure in vacancy.  You can do some research to find out what it is in your area but the short of it is, can you afford it if the unit is empty for a month? You should also keep in mind: taxes, insurance, management expense (unless you are managing it yourself), maintenance, repair reserve (for the big expenses), and utilities (this could be very low if the tenant pays 100% of their own).  If after figuring for all those items make sure you are comfortable with the monthly situation regarding the payment.  Talk to your lender and see what they qualify you for and this will also give you some guidance as to what you can afford.

My experience with condos is limited so I am going to let someone else weigh in on that part of your question.

@Jared Leonhardt seems like pretty good terms.  Ask your lender if it is adjusts to the current market rate or if there are adjustment caps (meaning it can only adjust by a limited percentage per adjustment period).  Also ask what is tied to.  Typically this is Prime Rate.  Then it would be wise to keep an eye on that rate when it gets closer to your adjustment period so you can anticipate the new payment.

Keep in mind, even after the ink is dry you can sometimes negotiate terms on the deal.  For example, I finance several deals on adjustable rates and some people come in and ask to have their rate adjusted back down after an automatic adjustment.  It will be up to your lender's policy whether they can do this or not.

The 20% and amortized for 25 years seems very favorable.  Also, only having an adjustment period every five years is a nice deal.  Typically, I finance on 5/1 terms.  Meaning it is locked for the first five years and then can adjust every year after that.

Also, check with them to see if they have a prepayment penalty.  If they don't you will be able to refinance at any time.  If they do see how long it lasts and how much it will be.

Hope this helps. Good luck.