All Forum Posts by: Ray Taylor

Hello BP,

So I am stuck in a dilemma and could use some advice or maybe a creative solution. I currently have an offer on a house that is becoming a super rehab but the seller has been lowering the price 100% to cover costs. So I have a deal in the works, and I have another one that has come onto the market. My dilemma is that the second house is a better deal at the initial glance and I want both. I have equity in another home to make the second purchase, but I cannot do anything that will change my credit until the first house is closed. (without risking losing the loan) . I am in a hot Dallas area market that people are paying near asking price with limited inventory. 

Should I just wait and hope that it is on the market in 25 days?

Should I place an offer with financing contingency and deal with the financing issue if it's accepted?

Any other great ideas?

Ray

Does anyone see any issues with going this route as compared to just sticking with a hard money lender? It seems to be a less painful process for me. It will also always be open for the next project... saving me future credit inquiries compared to having my credit ran for every hard money lending.

Yes, I am tracking that I would only be able to buy materials with the card. I will have enough cash set aside to cover other purchases and payments for labor. Thank you for the information on the DTI info, this is exactly what I was worried about.

Hello BP,

So I am getting ready to close on my second property and have some rehabbing that is about to happen. I have some thoughts on how to finance the rehab without using hard money. Home Depot has a project card that allows you to borrow up to 55k at 7.99 APR. This seems like a good alternative to borrowing hard money as I will have more flexibility with borrowing more or less and only paying interest on what I have borrowed.

My concern with this process is how it will affect my current loan application to purchase the property. I have already locked in the interest rate. If I submit an application to for the project card will it put my loan at risk of being changed in any way?

Thanks for your time!

Ray 

Hello Chris, 

I know you said you are looking for software, which means I'm not answering your question. However, I don't think you need to spend a couple hundred dollars on software just to get accurate and up to date statement. I have recently added an Annual Financials spreadsheet to the file center. It compiles the monthly inputs to an annual report on its own. From what you have said this solves your needs.

Ray

@Jim Cummings thanks for the information. According to the agent, the bank did come down and agree to a short sale(not sure how much they came down tho). However, my offer only at 155k and split closing was not enough to be the most attractive offer. The market I am in is really hot which has left me with chasing everything that will cash flow even if the process is painful.. The good thing is that I am learn new things in the process. Thanks to everyone that gave me advise one this offer.

@Account Closed thanks for turning me onto the TREC site I have more tools now thank you. As for why I was willing to go through the trouble of a short sale is because the deal is so attractive. This house has a market value of about 240k and was listed for 150k pending short sale approval. Thanks for your response and I will look more into Subject to.

Originally posted by @Jim Cummings:

@Ray Taylor

Reference your: The terms expressed in this Letter of Intent will become null and void if not accepted within seven (7) days from the date of this letter.

I presume this letter is going to the Seller of the property! If so,  suggest you greatly shorten up the decision time to 1 -2 days MAX. The reality is when you receive an Offer, you have 3 choices: (1) ACCEPT. (2) REJECT. (3) COUNTER.  it doesn't take 7 days to figure out which one you'll choose.

@jim cummings, I went back and forth on a number of days multiple times.  I did the 7 days because I knew that the bank had not agreed to the short sale amount yet with the hopes of making some progress before the agreement. I do agree with you though, it doesn't matter either way, they can accept or decline in 2 days just as easily. Thanks for the insight.

So I am placing an offer on a Short Sale and I feel like its just too lengthy. Below is the letter of intent, I have tried to make it personal and cover all of the details. Should I split this up into multiple documents or stick with what I have? Any constructive criticism would be appreciated. 

*******************************************************

Date: 9/19/2017 

Dear NAME, 

The purpose of this letter is to express my intent to purchase Subject Property. I have outlined the below terms and conditions of the purchase: 

Buyer Information 

My name is Ray Taylor and I currently own property in the Terrell Area and think that your property would be a good addition. I am looking to invest into Single Family Residential Properties that meet my criteria to perform as a cash flow property. I believe that your property is just this and do not want to sit on the deal and will do everything in my power to expedite the process. I know that when someone is in the position to need to short sale time can be of the essence. Knowing that this is probably the case I have outlined my maximum timelines that it should take to close the deal. However, I do believe it can be done faster than the twenty-seven (27) days outlined if the need is there. I look forward to closing this deal with you. 

Property Description 

The subject property is located at PROPERTY totaling approximately 3025 of rentable S.F. herein described as "the Property". (The exact legal description to be supplied in escrow). 

Purchase Price 

$155,000.00 

Earnest Money 

Deposit $10,000.00 upon opening of escrow, and an additional $15,000.00 upon expiration of the contingency period, at which time the earnest money deposit shall be nonrefundable. 

Duration of Offer 

This Offer is valid until 5 p.m. on 26 September 2017 at which time both buyer and seller shall have completed a Contract of Purchase, otherwise, this Offer shall be deemed rejected. 

Contingencies: 

A) Inspection Buyer, at its sole and unfettered discretion, shall be allowed a seven (7) day period from the opening of escrow to review all documentation, obtain third-party reports, and otherwise approve the property. If buyer determines that for any reason the Property is not suitable for buyer's use, such purchase agreement shall terminate, Buyers earnest money shall be returned, and neither party shall have any liability or obligation to one another hereunder. 

B) Financing Prior to opening Escrow, Buyer shall have obtained a loan pre-approval detailing terms acceptable to Buyer. Buyer, at its sole and unfettered discretion, shall be allowed a fifteen (15) day period from the waiver of contingencies to complete the application, provide the lender with all documentation, and obtain a loan commitment, at terms the same as the application, or otherwise acceptable to Buyer. If buyer determines that for any reason the loan terms are not acceptable, such purchase agreement shall terminate, Buyers earnest money shall be returned, and neither party shall have any liability or obligation to one another hereunder. 

Closing Date 

Fifteen (15) days after waiver of contingencies. 

Opening of Escrow 

The opening of escrow will be the date that signed escrow instructions are received by [Title Company] along with the earnest money. 

Closing of Escrow 

At the closing of escrow, the seller will provide proof of proration. Taxes, rents, homeowner association fees and other income and expenses pertaining to the Property will be prorated as of the close of escrow to provide a clean and clear title. 

Confidentiality 

All aspects of this negotiated agreement shall be held by Buyer and Seller in the strictest of confidence. The confidentiality requirement shall not be in effect once closing occurs. 

Broker 

Principals of the Buyer are licensed real estate brokers in Texas and are acting as principals only. Seller and Buyer shall split all brokerage commissions 50/50.

The intent of this letter is to serve as a description of interest to purchase the property and is not considered binding on either party or to be used instead of escrow instructions. The terms expressed in this Letter of Intent will become null and void if not accepted within seven (7) days from the date of this letter. If you accept this proposal, we will proceed to enter into a purchase contract within five (5) days of acceptance or the date the bank has approved your short sale whichever is later. During this period Seller agrees to discontinue any third-party sale negotiations.

Sincerely, 

Ray Taylor 

*************************************************

So I have been following this topic for a while and really appreciate the good insight. I'm not sure who it was but I completely agree that "Real Estate" is local and "Credit" is national.

With this being said everyone would have to evaluate their own "Real Estate" markets to see with they are in a bubble. This would mean this thread needs to become more narrow (specific region) or just create other threads to talk about each area. I would be very interested in anyone's insight on the Dallas area, as we have been headed up for a while. But growth plays a big role.

Back to the "Credit is national", I really don't know what the best indicators of this would be. I feel like one thing that would help paint the picture of when more foreclosures will happen is the rise of credit card defaults. Most people start to max out their credit cards before they are going to foreclose on the primary residence. So in my eyes, once the number of credit card defaults becomes significant this will probably mean more foreclosures are inbound. I think it is important to note that the pullback is not likely to be as significant as they were in 08, due to LTV being more reasonable in today's market. Take a look at the below Figure that show credit and SFR defaults.

Link: Loan Delinquency