All Forum Posts by: Scott D Burrows

@Michael Backer

Couldn't agree more with @Chris Mason and he knows his stuff. 

Pick up the phone book and call EVERY small bank (typically they will have less than 10 physical locations) and credit union in your state. 

Guarantee you will come across an investor-friendly bank. 

Also, not sure if my friend @Diana Muresan might be able to help, but she is licensed in all 50-states and if she has the ability to do this, she will be able to lend to you. 

Good Luck,

Scott

@Diana Muresan

@Jeremy Lee

I would second what @Will Gaston mentioned regarding a pre-payment clause. 

If no pre-payment penalty was specified, they would just proceed as normal, and if he offered to pay it off, they would have to accept. 

If there is any information that I am missing, please feel free to share so we can help as thoroughly as possible.

Good Luck,

Scott

@Constance Grandelli

I was wrong on the monthly interest it would be around 350-400% APR (annual).

So, around 30-40% interest per month. 

Sorry about that. 

-Scott

@Constance Grandelli

Looks to be around 10-13% a day (350-400% over the course of a month). 

Guessing this person doesn't have amazing credit or they would just get a credit card. 

Good luck and let me know how it goes. Interested to see what you come up with.

-Scott

@Larissa Pacifico

I have worked with Jonathan Surak before and he was very knowledgeable about investors and what we are trying to do. 

Let me know if you need anything else.

Good Luck,

Scott

Ítalo Mendonça

I would second the advice given by @Don Konipol .

Another piece to add, I would possibly do an interest-only loan, if you are still interested, but request collateral from the flipper as well (what he is doing is high-risk, with high-risk comes high reward, but you have to make sure you get rewarded as well for taking on his risk).

Collateral would at least give you the peace of mind that you will get paid, as long as he doesn't go bankrupt in the process of losing the home, hopefully not happening BUT if it did, you could at least get something for your money. If he is not comfortable with this, he is taking on more than he can chew and obviously has surpassed his tolerance for risk. 

In summary, here are my recommendations:

• Interest-ONLY loan (10%-12% is going rate for flipping, but only allow interest to be paid, I would allow early re-payment without penalty-you're doing this because you want to make sure that while he has it you are being compensated and then get paid back once it sells).
• Request some form of collateral equal to the money being lent (whatever this might be, needs to be at least worth half of what you are going to lend, if not more).
• Proceed with caution, if he doesn't like your request for collateral, walk away, he is in over is head and is biting over more than he can handle. 

Good Luck,

Scott

@Chris Mason

Did not know that.. great info. 

@Gabriel Graham

You could try to get your start in fix and flipping. Hard money lenders don't have to adhere to Fannie Mae guidelines because they're using private money. 

However, while you can get hard money it may not always be advised. High interest rates and high fees make it mostly prohibitive and I know that Chris does not recommend any. A strategy I would go with if I was going to get into flipping right now would be to target houses that are 70% ARV, secure hard money financing and flip homes, until I built enough of a cushion to start buying and holding.

Also, highly recommend trying to "house-hack" a fourplex if possible, if you can get approved for FHA financing. @Diana Muresan could help you with your questions, I have used her before and recommend her to investors looking to utilize conventional financing for investments. 

At the time being, my recommendation is to save money, determine your strategy and call EVERY local lender in your phone book. EVERY one, don't be discouraged when they only tell you what you can't do, just keep asking and keep calling until you find the lender that will give you a shot. 

Another option: Find a house that is cheap and the owner is will do seller-financing. Typically, if you come in with earnest money and a good offer for money down (typically 20-50%) they will listen to your offer and you may be able to snag your first deal this way (I have used a personal loan to secure deals ( I recommend Lighstream- Received a $30K loan @ 11% at a 3YR term- non-amortized).

Anyways, good luck and feel free to reach out. 

Good Luck,

Scott

@Laura Williams

I agree with @Jay Hinrichs . If you have any passive interest in real estate at all, I would advise syndication ( basically you fund part of a large investment, typically in Multi-Family, with a certain rate of return and portions of the profits). 

1031 out of properties is fine, but if someone doesn't have experience or want to take the time to analyze deals and ensure that their numbers are right on the smaller deals, it will be difficult in the larger deals as well, although not impossible. If you are 100% confident in your analysis abilities go this route, otherwise stay away from this option. 

Selling them all is a little naive as well. What happens to the profits from these and also what happens to all of this profit, it would impact your income in a very negative way, especially considering your current tax bracket (this would be a way to take 30% losses on $1MM+). In other words, some are saying to guarantee a 30% loss (on the taxed income) by selling or a $300K loss, GUARANTEED LOSS, with little respect to what you actually owe on the homes. Again, I don't think this is the right way to go. 

I would highly recommend working with Jay and find out ways that you could syndicate larger, passive real estate investments and determine a strategy to at least break even on the properties, with possibly selling one or two properties OVER TIME, NOT at once. Keeping one would probably help you out during tax time anyways, especially since at the tax bracket you are in, makes more sense to have some passive losses to offset your high-tier income. 

In conclusion, here are my recommendations: 

1. Syndicate large, multi-family real-estate deals (talk to Jay about how to do this, he knows his stuff).
2. Find your biggest "loss-vehicle" and eliminate it, either by selling or correcting/minimizing issues through some additional investment if needed.
3. Sell off house by house over a period of about five years, to minimize any one years impact on your taxes.
4. If you have someone that you TRUST, consider 1031 process. If you don't, stay away from this, just because you can sell and trade up, tax-free, doesn't mean that it will benefit you- might just benefit the person facilitating the transaction or fees that they can charge, commissions, etc. BE CAREFUL. 

Anyways, good luck and if you need anything or want to brainstorm, feel free to reach out! 

Good Luck!

Scott 

@Jay Hinrichs

I was referring to refi- or rental investment products that they have (not great, product and are interest-only.. BE CAREFUL WITH INTEREST ONLY LOANS).. which I don't normally recommend. But, definitely would recommend it, rather than paying the 10+% she was being quoted. 

Also, she didn't mention if she would be flipping, refi, etc. Hard to know what she was wanting to do in post. 

Another option could be to go conventional, if it is multi-fam and do a Homestyle Loan, owner-occupying while doing repairs, finance 100% of renovation and purchase and then sell in two years, etc. 

Sorry for the earlier post, I do believe that I was responding to the wrong type of request for financing.

Just trying to help.

Another route to go would be to get a line of credit (RDC Capital offers $1-$3MM LOC at 18 mos), commercial LOC basically... a lot of local banks that are less than 8-10 locations will be able to help you with this, if you have a solid business plan/strategy.

Another route to go could be to use some business credit cards and use PLASTIQ or VENMO to pay your contractors (at a 2.5% premium). Cards I have and recommend are Chase INK, AMEX.... Capital One is NOT A BUSINESS CC PROVIDER. You could easily get access to $40K in funds going this route, or more. 

If it shows on your social when a lender looks you up, it is not a business credit card. 

Anyways, there are other routes to go as well. HELOC on your own home, commercial line of credit, business credit cards, business lines of credit, etc.

If you have any questions, will be more than happy to refer you to someone. 

Good Luck,

Scott 

@Satha Palani

Completely agree with @Account Closed (she is also licensed to lend in all 50 states). Very knowledgeable and knows how to make conventional loans work for investors (Just make sure you have 6 months of reserves for your property and she should be able to help you). 

Good Luck!

Scott