All Forum Posts by: Max Gradowitz

Venmo or Square Cash App.

Are you surprised by the fact that a hard money lender will require you to have a little bit of money in your bank account and would require a down payment?  Dude, I think you are grossly underestimating the costs of buying a home. You really need to talk to a loan officer to get an actual idea of how much money you need to save up in order to get a mortgage.  Buying a home costs quite a lot of money upfront. You need to save up for a down payment, loan fees, and closing costs.  Hell, if you don't even have a few thousand dollars in your bank account, how are you going to afford to put deposit down immediately once your offer is accepted?

The lowest down payment loan program is FHA, which requires only 3.5% down if you qualify for it. Loan fees will be at least 4 or 5 thousand dollars. Then, the title/escrow company will charge a thousand or two to do their job and you'll pay some portion of that depending on what the normal split of escrow costs are in your market. Even on a very inexpensive home, you are looking at probably at least $7,000 in upfront costs. This is BEST case scenario, assuming the house price is really low, your loan fees end up on the lowest end of the loan fee spectrum, and you qualify for the lowest down payment program available. Be prepared to pay more just in case.

You can ask for assistance with these costs from a seller, but in a competitive market an FHA offer asking for a lot of closing cost contribution will put your offer at the very bottom of the list.

Hard money lenders require a high down payment because they lend to more risky borrowers. I normally see anywhere from 25% to 50% down payment, depending on the riskiness of the borrower. If you don't want to pay a huge down payment, stay away from hard money lenders.

What I would be most concerned about is if they don't leave.  I know you think they are great people, you found them through family/friends, etc.  Well, that's great, but if for whatever reason they don't leave, you will have to evict them from your own house and will have to find a temporary place to live in the meantime.  You can get sued if you do anything wrong regarding these eviction procedures, or at least have your eviction take considerably longer.  I'd recommend discussing the risks with an attorney and at the very least having a plan in place to deal with the worst issues that could arise with leasing your primary residence short term.

Be sure to provide proper notice (probably 1 month in advance of the lease end date, but check your state laws about proper notice) for them to leave and it would be a good idea for you to have a neighbor check to confirm they are moving out in the days prior to your returning.

Yes, anything over 4 units will require commercial financing.  I haven't looked into commercial financing terms in a while, but 25% down seems right.  I think amortization is more like 10 years, but you might be able to find longer amortization.

Also, in my area I don't think there are any "banks" that will do loan servicing for a loan that isn't theirs, or at least not that I'm aware of.  Licensed LOs that do hard money lending oftentimes do loan servicing or at least know of companies that do loan servicing like this.

Using a good property manager is the best money I've spent on my units.  They screen tenants, place them, listen to their complaints, fix issues with the property, evict if necessary, etc all for a small monthly fee.  I do nothing except sit back and collect checks.  I have a busy day job, so I'm not trying to deal with tenants all day.  The tenants don't even know my name or number, it's awesome.

Have a lawyer draft form your LLC and draft your operating agreement before you purchase any properties. For financial reasons, you may choose to purchase in your personal name first then immediately transfer to the LLC, as opposed to buying in the name of the LLC, but either way you will want to be prepared with the LLC and operating agreement in place prior to any property purchases.

If you are a real estate agent in CA, you should have access to the standard CAR contracts.  There is an assignment agreement included in those. 

I think it is tonight. But my schedule has not allowed me to make the last few meetings.  Connect with @Gene Hacker to confirm time and date and location.

Are you looking for a mentor for investing advice?  Or are you looking for someone to fund a purchase for you?  The latter will be difficult if you have zero experience, but either way I suggest attending the local RE investor meetings that are put on every month.  There are plenty of investors from Bakersfield that attend the monthly meetings here in town.  Feel free to message me for more info on the meetings, local investors/lenders, etc.

Depends on what the seller is comfortable with.  Some prefer a large (normal) deposit of 1 or 2 percent of the purchase price with some contingency in the offer.  Some prefer a small non-refundable deposit (maybe only $200) with no contingencies in the offer.  Whatever you choose to go with, make sure your contracts are written properly to protect yourself accordingly.