All Forum Posts by: Mark Elkins

You will have difficulty finding someone to give you a 2nd position note.  I can look for you but you're better off with a first position note depending on your existing financing.  

If your credit is good, 680+ I might be able to get you the cash unsecured.  If you must have a second position you might consider partnering on the deal

Anyway, I would be happy to explore opportunities for you.  Call me directly at my office 630-912-3906. email will work to but perhaps not as fast a response.  [email protected]

Has anybody got any experience buying a short sale from Truman Capital?  I just spoke to a rep at Fay who says Truman doesn't do them.  He was specifically talking about short sales after there was a sale date set.  He also said that 60 days is too short despite their asking for paperwork 37 days prior.  He expressed an opinion that Truman would rather take the property back and keep it in inventory until they could sell it for a good price.  What can you tell me?

@Rob L. Great Stuff!  Thanks for the info.

@Jay Hinrichs   Just look for any lender who doesn't need your personal credit or guarantee to lend on the asset value.  I would look in Scotsman Guide to find the lenders that your broker/originator doesn't know about.  Otherwise, search the internet and ask other investors.

Now, please forgive my rant:

There was a time when I was told that these loans didn't exist and I believed it but, consider this, investments in your retirement account are FORBIDDEN to use recourse funding. The requirement for protection is obvious, the government can't allow people to speculate in real estate or other leveraged assets in any way that would jeopardize their IRA's to be attached for more than is borrowed or it would void the protection afforded to those types of accounts.

If IRA's can purchase property with lending that MUST be non-recourse than, non-recourse loans are available. If there is a party willing to invest in this type of leverage instrument, why would they limit themselves to only lending to retirement accounts?

I think the biggest problem with finding these types of lenders is starting to believe the ignorant and the arrogant deniers of the existence of these loans.  I'm not saying stupid, just ignorant of the facts.  What I think happens is that the largest employers hire and train the largest number of brokers and originators and they don't want them to sell non-recourse products so they don't teach them that they exist.  Not knowing, these people don't know that they don't know these loans are indeed available and they never look or try to get them.  When someone inquires because they read a comment like this one or in a real estate investing class, these broker/originators just tell them that these loans don't exist and never check their own presumptions.

Another myth that harms investors is that there is no such thing as commercial credit or you always have to sing personally for credit.  Really?  Do you think that Mark Zuckerburg needs to run down and sign the application or swipe his personal credit card every time one of his departments needs a new batch of laptop computers from CDW?  No! of course not.  It is also true that you or any small investor can get a non-recourse commercial line of credit provided you know how to shop for it.  I drive a Ford.  Not because Ford is my favorite brand, I drive Ford because Ford didn't ask for my social security number, bank statement or tax return when they lent me the money to buy the car.  Even the dealer had no idea that Ford Motor Credit would be willing to lend me the money with no credit check based on the credit of my company!

Here are some others, most folks know, you can get a mortgage 1 day after the discharge of bankruptcy chapter 7.  What they don't know is that in Chapter 13 or Chapter 11 you can get mortgages and loans WHILE THE BANKRUPTCY IS ACTIVE AND OPEN.  In many cases, you don't even need the permission of the court.

There are plenty of things you don't know.  If you think something is or should be possible, keep asking even after you are told no a few times.  My father was fond of telling me that "If you're not getting the answer you want, it's because you are asking the wrong question!"

@Chris Mason Thanks for the Fannie 30YF info, I'll check it out.

I hope this helps!

Holler if you need me.

Best regards,

Mark

Keep in mind that a conventional mortgage is a recourse instrument meaning that when properly administered by the lender, the buyer (you or your company) is responsible for any balance beyond the salvage price of the property. By salvage, I mean the foreclosure sale price or short sale price, which will generally not cover your litigation costs and fees and whatever the lender and their attorney tack on and will be below the balance of the loan. A non-recourse loan is limited to recovery of the value of the property. If you are going to spend the additional amount required to have a low LTV you will want to have the additional protection of non-recourse. I consider it to be only fair.

I hope this helps!

Holler if you need me.

Best regards,

Mark

This answer got away from me so there is more than you bargained for!  The first part is the answer to the question.  The rest will help some of you, others will have already gotten it through your experience! LoL!  I hope you enjoy it.

Here are two tips I have used successfully to keep tenants out of my remote office:

1) Make an arrangement with the local currency exchange to accept your payments and send them to you.  When I did this myself, I only had 2-5 tenants near enough the currency exchange to take advantage of this.  I expected to pay a small fee for this but they explained that if they did this courtesy for me, I would be inviting my tenants to cash their paychecks, buy money orders and conduct other business with them.  My tenants could pay in cash instead of buying money orders and the currency exchange would either hold the cash for me to pick up when I was in town or mail me a check!  BIG CAVEAT! You must explain that this is just a service and that these people do not work for you.  Tell your tenants to be nice to the currency exchange staff or they will lose the privilege of paying so close to home.  One of my tenants decided to rant and rave at the currency exchange staff when she was unhappy with having to pay the rent and blame them for her difficulties.  Thus ended my relationship with the currency exchange.

2) Some banks will accept deposits directly into your account from your tenants.  Open an account with a local bank that has branches in the tenant area and just let them deposit.  Each tenant will get a deposit receipt from the bank saying they made the deposit, in what form, on what date and time.  This requires that they make their deposits during banking hours.  You could allow them to drop their payments in the night deposit along with the proper deposit slips provided you trust them not to make mistakes on the deposit slips for which account and who they are making the deposit, however; if you want true 24-hour convenience to a few tenants, get them an employee, deposit only, card for the ATM.  I presume you don't care what time they make their deposit provided the money is there when you awaken on the 6th.  If this is so, then you will no longer have to worry about, I had to work late or early excuses about why they couldn't get to the bank.  Even bank holidays will no longer be an obstacle.  SMALL CAVEAT:  This convenience encouraged my customers to make deposits of whatever amount of money they had instead of waiting until they had it all.  For example, one of my tenants never missed a payment in 6 years of tenancy although he was late several times a year.  When he got the deposit card I started getting odd amounts from him.  The rent was $750 per month.  one month without explanation, I found a random deposit of $125 on the Friday before the end of the month, March 29th, before I could investigate on April 1st $227, Saturday,April 7th $350, Sunday April 8th $53, Friday April 20th $95.  This totals $800 or the entire rent plus late fee!  When he then paid me $550 on on May 4th and $200 on May 5th, followed by $250 Saturday May 19th and $500 June Friday June 1st, I was so pleased I never complained about the delay in rent.  Our relationship improved and he started to do chores around the building including gardening, lawnmowing, minor repairs all saving me money.  When Christmas came that year, I gifted him $250 in cash after his on time December rent.  He was over the moon!  I had saved well over $250 thanks to his labor and was glad to pay him for it.  He stayed a further 3 years and repeated the same pattern of odd sized payments 4 times and once getting ahead by 25 days earning him a rent discount of 10% that month.

He was not the only tenant that paid in odd amounts, only my best experience.  I tend to have some homes in the "hood" because of my personal mission to give back to my community and provide affordable housing to working poor people.  I find that there are only 3 kinds of people that pay late, those that don't have the money, those that think they are not getting the service they are entitled to get and jerks.  There are very, very few jerks.  When you get a jerk, you have to discard them quickly but it can be hard to tell between which feel they didn't get service and which don't have the money because the latter will complain frequently complain on rent day to delay things.  To remedy this, I always fix things at the first opportunity regardless of the timeliness of the rent.  Then only those without money remain.  For this group of people, consider their life and difficulty and communications.  When a tenant tells me they will have $750 tomorrow after work, I take them at their word.  If they are suddenly then difficult to reach, the general issue is pride and shame.  In all likelihood, they were either delayed in getting the money, got a different amount of money than they expected or some other, foreseeable issue they didn't consider, interrupted their ability to pay you to the full amount they promised.  Experience guides me here based on whatever they are telling me when I do catch up to them.  Know what likely happened, I explain it back to them so as not to insult them or shame them.  

For example, "John, yesterday you said that you would be able to pay me the full rent of $750 when you got paid today and now you left your deposit card in Jane's car and she has gone to her mother's house for the weekend, is that right? Yes?  Okay John, because what happens sometimes is that people don't figure everything out in advance when they are under pressure to perform and they think they can meet a deadline that they can't.  Do you know what I mean?  Say a guy gets paid on Friday and has $750 rent to pay and his paycheck is only $950, right?  Well, say he already skipped last month's electric bill, needs to make the car payment and hasn't shopped for groceries in over a week, right?  Well that guy is in trouble he can afford to pay the rent, the car, the electric, everything if only he didn't need $200 last month when his kid was sick.  So now he gets his $950 paycheck, pays the electric for both months, fills a prescription and pays the car bill and figures out he only has $650 left to pay the $750 he promised he would pay today.  Now he is ashamed because he promised and doesn't want to go back on his word."

John says, "Yeah well, I had to take a furlough day I forgot about my check wasn't as big as I thought.

Then I tell him, "Look, John, these things can happen to anybody.  How much can you pay me today and still have a little cash left for the rest of the pay period?"

"I can give you $600 cuz my brother says he's gonna pay back the $50 I lent him last month."

"Okay, John.  Let's guess that your brother doesn't give it to you, just in case and let's leave a little cushion okay?  Go to the bank today and pay the maximum you can pay and still buy gas to get to work.  Will you do that for me,  I'm not hung up on the $750 you promised today, you have never missed a month before now."

"Okay, great! I'm going to work the late shift and go by the bank at 4pm."

"That's perfect John!  Just don't leave me hanging after we've had this talk. Just text me when it's done, are we agreed?"

"Yes"

"Great! do this and then put the rest in the bank as soon as you can."

Now sometimes that works and I get the full amount and sometimes I get whatever was left after he did his calculations.  I know that if I waited any more, he will feel like he has some extra money in his pocket this week which will diminish and delay me further.  I get what I can now by understanding him and since he has made the largest part of the payment, when he figures out he has $10 or $15 or the brother actually pays him back I get the rest.  

In any case, I remove the embarrasment of having to face me with less than was promised and he can make the deposits on his convenience.

I hope this helps!

Holler if you need me.

Best regards,

Mark

yes, the check is from the loc. The first home secured the LOC, the second home secures the addition because once you pay cash it is free and clear. At that point, only the first home is encumbered. You are forcing equity into the LOC with an additional property.

I hope this helps!

Holler if you need me.

Mark

The area is a poor, bedroom community along Illinois lakeshore.  The most prevalent housing stock is 50+ years old and there are lots of fused circuits that need upgrades.  It is distant from jobs, shopping, and entertainment. out of the way between Chicago and Milwaukee and not even close to the expressway.  I tend to think of it as a place to catch a fishing charter or visit the state park.

Not that it is a bad place, just be careful and don't be too gaga about the price.  I haven't checked in a while but at one point a 15 cap was standard in the neighborhood.  I would be careful with your numbers and don't count on Amazon coming to the area, the current bid is $2.5B!

I hope this helps!

Holler if you need me

Best regards,

Mark

The function of a Land Trust is similar to the function of an LLC for tax purposes and may be much less expensive for you in Massachusetts. You will still have the liability protection of not being an owner and only the property in the trust can be attached, protecting you personally. You have an added advantage of anonymity. This is exclusively how I buy property.

You will need a bank that will make a non-recourse loan or some banks will lend on these provided you put the property in the trust after the mortgage is attached.  Check Scotsman Guide for a lender.  The majority of Loan brokers and originators don't know what to do if your need is somehow unconventional, you are best served to look it up yourself. 

Thank your attorney!  He sounds smart! 

I hope this helps!

Holler if you need me.

Best regards,

Mark

A construction loan is a short-term bridge loan that you must replace with more permanent financing.  Since it comes with a higher risk, it costs more than regular mortgages.  Contact a broker or look in Scotsman Guide to find an appropriate lender.

Check your costs on the bridge loan to see if you aren't better getting a fixed loan on the free and clear property and adding an equity line of credit after repairs are complete or refinance.  Play with the figures until you get the right combination to maximize your profits.

I hope this helps!

Holler if you need me.

Best regards,

Mark