All Forum Posts by: Lee V

well those at 62k were the ones that were sold in the previous 3-4 months. Here is Stockton, banks are listing very low to get mulitple offers. For example, one house down the street that was bought for 64k, were listed at 52k. This house is actually listed the same price as homes that are not REO. I am not going to do the deal with them if they are not willing to go 62k or under, just looking for thoughs... thanks!

Alright guys....

I got a REO that the banks wants 67k. They will not go lower. It was originally listed at 79k. The home in itself probably needs about 7k of work to bring it to brand new, quick sale condition (it already has new baths and carpet). To used it as a rental, you'll probably just need new appliances and paint.

The problem with me accepting this offer is: pulling comps from the last 6 months, most homes were selling for 62k.

I counter at 62k with the comps but the bank rejects sticking to 67k (they said it had something to do with a reverse mortgage...blah blah blah).

Even at 67k, the house seems to be a pretty good cash flow.

Here are my numbers:

HML for $53,600 (found an HML who said they will be willing to lend at 80-90% of loan amount)
Payment is interest only for 1 year, loan due at 1 year.
I estimated the payment will be somewhere around $536


Rent will be at $1100
-$536 HML payment
-$150 tax and insurance (estimate)
-$200 per month to put in reserve incase of vacancy etc.
Positive cash flow: $214.

Am I missing something? My exit strategies are to refi at the end of the HML loan into a 30 fix mortgage or sell if the right opportunity comes.

The current AS-IS value should be around 75k. ARV values, including new kitchen, cosmetic work, and landscape, should be easily appraised at 90-100k.

What do you guys think? Should I be worry because of th recent sold comps in the areas are low? The market here in Stockton is pretty bad, but I believe now is the time to BUY AND HOLD.

Here in Stockton area of CA, many realtors are going that exact route with all the foreclosures. It started about a year ago, when homes were price as low as 20% under what they were going for. These homes were getting 15-20 offers on them. I lost the bid to one deal in which it was listed at 125k, I bid 155k, and it ended up selling for 170k. That is crazy! The sad thing is that house, is now really worth about 100k, so missing out on it last year was a blessing.

I have a questions about changing the percentage of an LLC. Currently, I own 75% of our company and my partner, my wife now, owns 25%. We want to make it a 50/50 ownership for loan and other purposes? How do we go about doing that? Are there guidelines?

Hi Curt

Thanks for the reply. I am talking to a lender today who might just get me into a situation where I can complete a deal like the example you gave on here. My question is, do you ever keep these loans longer then you have too? The HML that I am working with has a 1 year prepayment penalty, and gives your a 5 year balloon type loan amortized over 30 years.

Also, do you buy and hold these properties or do rehab just to sell?

Hey Jon and whoever else is experiences with hard money lending.

I talked to a HM lender today, and here is how he does his lending:

He only requires you to come in with 15%, which sounds really good.

The hard money loan is set up for 7 years term, 8-10% interests.

He said that all the cost, fee, points, etc, runs about 8% of the loan amount. (which i thought was very high).

The crazy thing is..... in the loan contract and during escrow, some type of trust fund is going to be set up so that whenever you do sell, or refi, or even pay off the loan..... the lender will recieve a 10% additional fee at the end of the term. (im new to hard money so I have never heard of this before).

For example, if i get a house under contract for 100k, I'll need to come in with 15k, 8k for the associated fees, and then I have the option to keep this loan for up to 7 years at 8-10% interest. When I sell the property, they get a 10% payment of the loan amount, so they get 8500.

Is this a bad deal??????

Does hard money loan appear on your personal credit report?

Curt.... so after you do all the work and get a re-appraisal, from a lender, say at 95k, and they refi you at 75%, $71,250. Do you get the cash left after you pay off the HML? Or do the bank usually just refi the 56k or whatever that you owe to the HML?

Also, HML usually lend you 70% of the homes value right? So you have to be able to find a deal in which you get to purchase a property at or below 70%, including all initial cost right?

Do you guys usually have HML lined up first before you make offers ?

Do you usually get a pre-qual with a traditional lender before you make a purchase with HML? Does banks, look at your personal credit when doing a refi?

Sorry for all the questions.

Thanks for all the info on here, very exciting and interesting.