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All Forum Posts by: Sarp Ka

Sarp Ka has started 19 posts and replied 51 times.

Quote from @Patricia Steiner:

@Sarp Ka

This isn't new.  My firm has several lenders who can seamlessly close in 15 days on 'traditional' mortgages at/below market rates and we've been doing so for a couple of years now.  It requires a solid FICO, that you get pre-approved with all current financials held in file beforehand, with the complete contract package submitted upon execution which starts the clock; insurance must be arranged within three days for lender underwriting. 

Since my firm is an investor private client boutique, I do not share resources outside of my client base. Lenders desperately need/want business especially in this interest rate environment (right now, the main source of mortgage loan business in Florida is rehab financing as a result of the hurricane damages) and one way the big players differentiate themselves is by streamlining the process. Those who have figured this out have earned my firm's business; I'm not willing to be held hostage by 'process.'

Best.  


 So what would you recommend me to do? Hit bunch of lenders and ask them if they are willing to close in 15 days?

Quote from @Patrick Roberts:
Quote from @Sarp Ka:
Quote from @Patrick Roberts:

Am I understanding this correctly that youre expecting to get a $700k property for $500k because youre paying cash? Or are you using an SBLOC to bring $500k and then bringing another $200k in cash out of pocket? I also doubt very seriously that any brokerage/custodian is going to allow this kind of loan with 401k assets; it's likely going to need to be a 401k general purpose loan, which is highly regulated (as someone else mentioned). 

Every market is different, but paying cash doesnt necessitate a huge reduction in price - it might, or it might just make the offer more competitive than other bids that require financing. 

I recommend you speak with a lender about reviewing whether you could qualify for a loan prior to making an offer, as I've seen these kinds of things blow up. I've received apps in the past where this was the exact situation only for the borrower to not qualify and be stuck. 

What I've had clients do in the past is make an offer without a financing contingency where they tell the seller that they are getting a mortgage to close the deal, but also provide proof of assets to show that they can/will close by liquidating the assets if the loan gets declined. A smart seller/listing agent will likely require a large EMD to tie you to performing on your offer, so be prepared for that.


 No, in this particular case it's not 700k property being sold as 500k if it's offered cash.

Cash offer in my case helps with 30-40k. So I'm basically trying to explore if i can borrow money in an alternative way than conventional loan. Even 600k loan at 10% interest costs $165 a day. Holding this for 1 month (hoping that's enough to refi) that's $5k.

So my aim is to save money overall by making a cash offer and close it soon. Then refinance it.

I just don't have that amount of "cash" but i have enough as collateral.


 I guess Im not really understanding what youre looking for. If you want to close with cash, it sounds like youre going to have to liquidate your collateral or borrow against it, which will likely be more expensive that a mortgage. If youre wanting to make a cash offer, all I can say is that Ive never seen a competent seller/listing agent accept a cash offer without proof of funds, meaning a bank statement or similar document(s) showing liquid cash for closing. I cant speak for what this seller will or wont do, but my suspicion is that an offer accompanied by a balance sheet or list of collateral and not liquid funds wont fly - it wouldnt with me. The whole point of a cash offer is speed and certainty - if you can bring a pile of money to the closing table today, I dont have to worry about you not getting the money to close. If you cant close the deal without borrowing money or selling stuff (which both frequently take time), then its not a cash offer until those funds have settled in your account.

If you are going to borrow money, a 15yr or 30yr mortgage is probably going to bring the lowest interest rate available. Most margin loans and SBLOC are Prime + or FFR +, and the ones Im familiar with are 8-13% right now.

The only other thing I can think of is that if you're a HNW with a good relationship with your private banking team, maybe theyll give your a personal line based on your net worth and assets with them. 


 I'm finding it a little hard to understand why it's more expensive to do this way?

Assume that i got margin with IBKR their calculation shows 5.4% and costs 21.8k per year for 400k.

So assuming property is 700k with conventional loan and 670k with cash offer.

I manage to find another 270k (this is what I'm asking) without paying any origination fees. Let's say at 13% interest. That's 35k per year.

35+22k is 57k per year.

Assume that i can refinance in 45 days. That's 7k loan.

So this is overall costing me 577k to purchase instead of 600k.

My question is where do I get a loan like the one I mentioned above. The one that's short term and don't cost me a lot to initiate/originate. Just like my margin accounts.

Quote from @Patricia Steiner:

Price cheaper with cash sale?  That ship has sailed and it was never at the discount you're suggesting.  My investors acquire with cash as a routine investment strategy to secure properties quickly and eliminate competing buyers using financing. It also negates the need for insurance - although that isn't our MO.  You're not in the position to be a cash buyer...as a former wealth manager, it's simply not a good play for you for many of the reasons stated above and more.  

My recommendation:  Punt.  Use financing but streamline contingencies and shorten contingency periods. Also find a lender who can move fast - we have several that can close in 15 days and less.  

Hope this helps.  Value your money more.


 What kind of finance option that closes in 15 days? In Florida I've never heard things taking any shorter than 30-45 days.

Please share them, so I can use them.

Quote from @Patrick Roberts:

Am I understanding this correctly that youre expecting to get a $700k property for $500k because youre paying cash? Or are you using an SBLOC to bring $500k and then bringing another $200k in cash out of pocket? I also doubt very seriously that any brokerage/custodian is going to allow this kind of loan with 401k assets; it's likely going to need to be a 401k general purpose loan, which is highly regulated (as someone else mentioned). 

Every market is different, but paying cash doesnt necessitate a huge reduction in price - it might, or it might just make the offer more competitive than other bids that require financing. 

I recommend you speak with a lender about reviewing whether you could qualify for a loan prior to making an offer, as I've seen these kinds of things blow up. I've received apps in the past where this was the exact situation only for the borrower to not qualify and be stuck. 

What I've had clients do in the past is make an offer without a financing contingency where they tell the seller that they are getting a mortgage to close the deal, but also provide proof of assets to show that they can/will close by liquidating the assets if the loan gets declined. A smart seller/listing agent will likely require a large EMD to tie you to performing on your offer, so be prepared for that.


 No, in this particular case it's not 700k property being sold as 500k if it's offered cash.

Cash offer in my case helps with 30-40k. So I'm basically trying to explore if i can borrow money in an alternative way than conventional loan. Even 600k loan at 10% interest costs $165 a day. Holding this for 1 month (hoping that's enough to refi) that's $5k.

So my aim is to save money overall by making a cash offer and close it soon. Then refinance it.

I just don't have that amount of "cash" but i have enough as collateral.

Quote from @Anil Shah:

It doesn't seem worth it. First, are you taking withdrawal from 401K or loan? 401K loan is capped at 50K and with withdrawal, you have 10% penalty and tax implications. Selling your stocks also has tax implications and margin is only 50% as you mentioned, that too depending on your stock profile. The tax rate difference from from long term to short term alone won't make it worthwhile in my opinion- add the 401K withdrawal penalty on top. YMMV


 I never said I'll withdraw 401k. Just mentioning my overall wealth.

Hey there,

Let's say I have $1M worth of stocks including my 401k. I find a property that is worth $700k.

In theory I can make a cash offer to this property. When it comes to actual execution, I have to sell those stocks and then pay that towards the escrow. This can have huge tax implications.

Margins are an option but they are usually given at 50% of your portfolio (in this case 500k or even less after excluding 401k).

In case if anyone's wondering why I'm doing this, it's because some buyers sell it much cheaper when it's a cash offer with 15-20 days closing. After closing I will be going ahead with refi on conventional loan.

I already have cashflowing 3 properties. So I'm guessing I can get a DSCR loan; my basic googling shows that they cost around $10k to close; which seems very high for my strategy; considering I'd be holding this for 2-3 months maximum.

Getting HELOC seems another way, but I don't necessarily have that much equity that I can tap into. It's probably 300k maximum for the combination of 3 and I have to get them re-appraised. They also cost some money (like $3-4k per loan) so that's also excessive.

Is there any other way, that may be cheaper than these?

I have a SFH in a lot; would like to build another house.

Hello there,

I'd like to build a house in Miami. My land has enough space, and the zoning allows me to build a house. I'm not sure where do I go from here? Talk to an architect first and get the design fleshed out; or should I find a general contractor?

Either way, could you please recommend me people?

Even less than 20%? How is that possible for 4plex without FHA? (FHA has the self sustaining rule which won't happen in Miami anymore)

I spoke to few lenders they strictly only allow 25% down for the 4plex and not allowing 20% for 4plex using it as a primary residence. But as per rules, in theory I should be able to get a conventional loan with 20% down payment.

I'm wondering if there's any specific lender that would allow me to just put down 20% on a conventional loan.

Thanks