All Forum Posts by: Steven M.

Thanks Bill...some good points worth noting. I always am under the notion if there is a small chance of a permit needed, I will always err on the side of caution and would get one even (if I know others would likely tell me they could get away without one). I don't need a surprise costly city/county "Stop-Work Demand" or be liable for something or have a "gotcha" moment lingering over my head as ever possibility. Not worth it. Thanks for the tips!!

Thanks Karen...I like the name of your company! Very clever and spot-on!

Josh- I live in Los Angeles. I would be hard pressed to find many here who will disagree with me that GENERALY speaking, you won't cash flow postively anywhere in California. It's too expensive. Even if you could it will be out in the middle of nowhere and likely a dumpy property in a low populated area. California is a negative cash flow state as is most major cities in the northeast are as well. For all intents and purposes you won't be able to locate property out here where you meet all expenses. Property values are too expensive here and rents won't meet expenses. The rare exception was if you were able to grab underwater property during the housing crash and buy at big discounts. But those days are over. Unless you are willing to nurse a negative cash flow property and wait for appreciation you are out of luck in CA. Additionally, California is not a landlord-friendly state to invest like, say Texas. I know many people who go there to invest from CA and own many rental homes. It can take six months to evict tenants in California as it is a pro-tenant state.

On the other hand, in Texas for example, you can evict someone in 72 hours. It's a pro-landlord state and most savvy investors flock to states like Texas to invest. Think "RED" states vs BLUE states. It's a cash flow postive state and is pro-business. You also want to invest in states where there is a big migration and influx of jobs and companies, lot of job growth and population growth, pro-business and low cost of living. So I encourage you to look at places like Dallas/Ft. Worth and Houston for starters. Go where the jobs and companies are going!

For what you can buy in L.A. a typical 3b/2b house, you can buy three or four of them in DFW (my sister owns 8 homes in DFW, bought them over the past 7 years, all cash flow positive, homes go for about $90-$125k range, and are nice/decent). I have a name of an agent in DFW who deals solely with out of state investors. Email me if you want and I will send you her info.

Good luck!

Does anyone here have a good and reliable source / listing for locating RELIABLE home rehab contractors in the Los Angeles area (projects in northern L.A. County)? Thanks in advanced for any direction you can offer.

As a former home builder and land developer in Los Angeles County, I am quite astute to knowing how and where to submit plans and pulling building and land-related permits and all the fees required to do such work. That's all given. I have no questions doing all this. However and ironically, doing an existing home rehab is something new for me (it's easier to start from the ground up with a new house than doing a rehab, IMHO). My question is what kind of subtle or minimal event would trigger the need to pull a permit in a typical rehab other than the obvious? The obvious of course is a new electrical panel box, new home wiring, yard fence higher than 4', new plumbing and HVAC, new room addition, a new roof or a foundation fix....I get/know that much. But I was wondering what less not-so-always obvious and subltle things might trigger the need for a permit that might be easily overlooked when assessing a home rehab? Future projects are in Los Angeles County (not city). Thanks for weighing in.

Oh by the way, what might be a few chief bullet points where there could be fraud in seller financed Note buying, if any?

Thank you to both of you VERY VERY helpful tips and considerations.

I agree I'd never buy a Note on a non-recourse basis. Good point!

Under the SAFEact I THINK it only applies (correct me if I am wrong) that it applies only to loan originators (in this case the original Seller Financer/property owner who made the loan originally). Since I would be purchasing an existing Note /loan that I did not originate, doesn't that rule exclude me from the law (and making the 'more than 4-5 loans' law without a license)?

Thanks!

I have an interest in buying and investing in seller-financed Real Estate Notes, (performing only notes, residential only). What are some of the bigger "red flags" or issues/downsides to purchasing these Nore (other than the obvious of borrower's poor credit, undesirable neighborhood, poor payment history, borrower's initial low down payment/equity, etc)? I'm aware of the general concept of buying these at a discount, etc. Any insight you can offer is appreciated. Thank you.

Most of the borrowers Ann never don't take it to the full 8 years, usually it's 2-4 years before they pay off the entire loan (interest only, non-owner occupier). Thanks.

Originally posted by Ann Bellamy:

.

Brandon has answered your question about having cash for a refi.

As to hard money lenders refinancing, two things:

First, you should not refinance a sub-2 using hard money. Hard money is expensive and is for short term needs. It is something you might use to buy and property, and then once it's fixed up and rented, you would use conventional bank financing to refinance into permanent financing. Hard money is temporary, and will sink you over the long term.

There are of course always exceptions to these rules.

Hope this helps

@Ann Bellamy - Ann-
Yes there are exceptions to rules:

My partner owns 17 single family rentals beyond 50 miles outside of Los Angeles. They are long term buy and hold situations; purchased them via short-sale and foreclosure. He uses a very well known hard money lender here in L.A. to first purchase the property with a short-term 65% LTV loan to clean the place up for rental at a 13% APR and then after that is all done he gets the house refied down to at 9% via the same hard money lender/broker with an interest-only 8 Year loan term where he rents the property out (positive cash flow or breakeven). Conventional Banks won't loan to you if you own more than four properties. Either go to a HM lender or don't buy the house. You have not much choice if you own muiltiple properties (assuming numbers work of course). As you know, dealing with banks is nearly impossible if you are a real estate investor.

The 9% program he's in ( with a 2 year min) works because he bought the property at below market price, rents support this cost and he has many others to offset any possible month to month losses he may incur (i.e., repairs, extended vacancies, etc). These borrowers do these deals in expectation of rising real estate values...and prices are rising in So CA at a 9.4% clip in the past 12 months.

So to the contrary, you can use hard money lenders for longer term refi'ing if numbers workout. The hard money lender is The Norris Group in Riverside, CA. A highly reputible and very well-known licensed(!) CA hard money broker (direct borrower to lender, NOT a pool funding of lenders). They have $25-30 million out in the street in refis, rehabs and construction loans (they do all title, loan servicing, escrow, property inspection, apraisals, etc). There are others like this company out west in CA and AZ.

What I found is that those in the HM business, it's very geographic. There are far more hard money lenders and creative HM programs the further west you go into Texas, AZ, Nevada and CA, than the east (and also south like GA and FL).

If you have multiple properties and/or own properties in high rent areas, looking for appreciation more than high cash flow, using a HM lender for long term financing at 9-11% APR interest-only loan is worth it (and most lenders would love to earn this today) for several years.