All Forum Posts by: Steven Goldman

I agree Jay. When you hit bottom  you can only go up. The damage was in fact done in a shorter period of time, but the last 8 or 9 years of monetary policy was very destructive.(Covid did not help)In many cases money was injected into the commercial market at a zero rate. As PPP loans were forgiven. Not to mention the EIDL loans which were also extremally low interest.

Chris VanAckeren:  Most non-traditional lenders and banks will not lend to a property titled to a trust. I would not use a living trust, revocable or irrevocable, unless you do not intend to refinance in the future. You are seriously limiting your lending options. Finding a home for a property titled to a trust is one of our biggest challenges. Good luck and keep moving forward!

Having lived through several periods were interest rates reached very high levels I can share with you my observations. Low interest rates cause inflation! Inflation causes the Federal Reserve to increase interest rates to slow economic activity. To end a recessions it often requires  the Federal Reserve to lower rates. However, this time things are considerably different than the last three. First, we had economic expansion from June 2009 to present 14 consecutive years of growth. The growth was attributable to low interest rates permitting unfettered access to capital. The long period of expansion prohibits the federal reserve from significantly lowering rates again. Most economist believe such a stimulus would almost certainly cause a rapid return of runaway inflation. This is the new normal.  These rates are closer to historical interest rates. These rates should cause housing prices to moderate and then fall. Of course that depends on the area of the country you live in. Good luck and keep moving forward! Time waits for no man.

Quote from @Gabriel Garcia:

Thanks, Nathan. I am very curious too. I have had several properties where I’ve done a cash out refi on, but had conventional loans on them (vs commercial) for past the season period.

Hi Gabriel: If you wish to refinance inside of 6-12 months most lenders will lend up to 75 percent of the Purchase price and rehab. costs. Most HMLs especially on a 4 plex will want at least 6 months in order to use the appraised value. The refinance can take up to 30 days or more. You can start refinancing with a 6 month seasoning lender at the end of the 5th month from date of purchase. Sorry to be the bearer of bad news. If you find a shorter seasoning lender please share it with the members! Good luck and keep moving forward. 

Hi Mike, I would focus on Ohio which is devalued compared to other places you mentioned. You are going to use your HELOC for the down money and closing costs? Is it a armed interest only loan? I would be careful about using an armed product for your down payment if we hit a rough patch the cost of the money may increase dramatically. How are you going to finance the balance of the purchase? Good luck.

So Marco provided Wilson with the solution to problem. Sell the property. Wilson's experience is worth dissecting as a post mortem as a learning experience for the rest of us. If Wilson is from West Palm Beach Florida my first question is, what made him think managing a out of state rehab.  without prior experience was a good business plan? For you newbies, it is hard enough to find the property, borrow the money, execute the construction. Than find a tenant without adding the element of it being out of your footprint. Out of State investing is for experienced investors and it is best to start with a turn key property and get the lay of the land before you tackle a out of state construction project.

All of the money made in a real estate transaction results for the initial purchase. If you pay too much, or underestimate the rehab. or fail to control the contractor, you will get a terrible result. 

Quote from @Kaitlyn Beard:

Quote from @Jay Hurst:

Quote from @Kaitlyn Beard:

Hello all, 

I am 3 days from closing. I had an issue with my 2021 tax returns and my CPA had to get them amended to be fixed. The underwriter said the 2021 tax return cannot be used as legible since its been amended. Keep it mind I already have thousands invested into the house I am 3 days away from closing on. My lender said I could co-borrow with someone who would be a potential partner. I have someone interested that I am really good friends with and share mentorship over finance over REI. For an official partnership, are there any partnership proposal documents you guys have to make this be presented as professionally as possible? Any recommendations or help would be nice. Time is ticking until closing!!! TYIA :)

 @Kaitlyn Beard   Yes, you have to wait 6 months after tax returns are amended to be able to use those returns to qualify. I guess the bigger question is why the LO did not know the income was not going to qualify earlier then 3 days before closing. For a primary residence you can get a non-owner occupied co-borrower to add income to the file. or, get a bridge loan (which we do) for 6 months so you can use the amended returns to refi at that point. 

or, of course pay down debt or put more down to have the debt to income ratio's with you current tax returns work. 

 My LO ended up apologizing on his behalf, but he was fair and helpful enough to help me find a solution. I ended up finding a co-borrower who has been wanting to get into real estate, so we have the house now. 

Great example of being able to adapt to the challenges. All too often we hit a stumbling block and are unable to find a logical solution. Thank God it worked out for you!

Quote from @Andrew Postell:

@Emilio Mejia based on what you stated you will need to sell your properties at a loss or get with private individuals to lend you money. Granted, I don't know what "destroyed" translates to for credit...maybe it means you went down 50 points, which wouldn't be too bad...but maybe it means you went down 300 points. Regardless, even the most flexible DSCR lenders require a credit check, even if the loan won't be on your credit, they will have minimum standards from you personally. So any institutional investor will have some type of score minimum. Certainly check with some but if your credit is a no go then private people for lenders or sell those properties any way you can - even at a loss.

 Tough Love Andrew.

Ditto, add references and pictures of recent work. It is really important that you use a thorough contract that includes the scope of work as an attachment. Read J. Scott on estimating rehab. costs. He explains the intricacies and pitfalls of advancing funds to contractors. Finally, written change order's for any work which deviates form the original scope of work. As the developer you must keep your contractor honest and under control or suffer the consequences. Good luck!

Emilio Mejia   For newbies who might be reading this post; This is a common situation which occurs if you overrun your budget or use your credit cards for rehab money. It demonstrates the necessity of good planning, estimating and execution so that the project moves quickly and within budget. It also reveals how important it is to anticipate shifts in the market as they can make a home run into  a strike out if market conditions go against you. The solution is a DSCR loan that only requires a single guarantor. The trick is networking sufficiently to have a partner who is willing to lend their credit into the deal to get it wrapped up. While this may be a solution, without more information it is impossible to know if that would work in this case. Building a human network which you can draw on to fill in the gaps in your own finances, or knowledge, is essential. Good luck and keep moving forward.