All Forum Posts by: Tony Tran

BP,

I'm currently working with a partner on a deal. We made a conventional financing offer on this property, but the Seller and/or their agent came back and said they will only take cash. Long story short, they just a quick sale. 

I brought up the idea to my partner to use let use this HM loan as a bridge until we get a conventional loan. He liked the idea, but fear that we may default on the loan. I agreed that this is a realistic probability, but nothing to be fearful about. And very unlikely.

I suggested that because the HM I'd at 11%, 2.5 pt, interest only, 1 year term is approximately equivalent to a 4.75% fixed for 30 years. And this is pretty true for the first few years for conventional financing because interest payments are higher initially than the principal payment.

The partner is still a bit edgy about it. Any suggestions on calming his nerves?

- I went over Plan B, Plan C, etc. And still a no go.

Tony

Are you the seller or buyer?

What an epic way to end a move-out! Just kidding...

@Mark Gagner 

I agree. I live in LA and notice the influx of international buyers as well. 

@Brian Burke 

Must be. Swimming with sharks is not biggie. My appetite is huge, I am always hungry...

It will be interesting to see if this influx will affect the market further. 

Hi BP,

Since I started investing in my current market (that is, for a couple years now), financing has never been an issue with many Sellers. Not until lately, out of all the offer I made (even though the listings say financing OK), the Sellers want cash! It is weird to see more of an influx of more required cash deals. I know, I know...cash is always KING, but what is going on that I am not seeing? Or is it just an "outlying" that I came about.

The reason why I am bringing this up, is because home prices are steadily increasing, rent is increasing, Obama cutting FHA cost, rates are still low, etc. These factors should steadily push the Buyers into a "financed" market.

What is going on? Has there been a shift in the market that I am not sure about?

My current markets: GA and SC metros

Thank you,

Tony

Yes. There is a termination form to complete (at least for the state I am working in). Best to document all talks using email records if you want to cancel, etc.

7% is not bad if you think about...it is a bit high, but not bad at all. Many other lending types are more expensive.

HML - upwards of double digits

Cash-out refi's - closing cost plus approx. 70% LTV

Tony

@Jonathan Napper 

There is some missing information. What is the condition of the property?

Let's look at two scenarios...one at very good condition (no rehab) and one that needs rehab).

Scenario 1: No Rehab

You may be able to get away with it because it is still 30% FMV and there is no need for repairs. They may need an appraisal and proof of upgrades. In the end, it comes down to the HML underwriting.

Most people would call this a bridge loan, or "temporary" loan. For a bridge loan, there are other type of lenders that will be willingly support this.

Scenario 2: Rehab Needed

If rehab is needed, the HML may not without "skin in the game". This is because they are fronting the majority of the cash. In this case, it would be all. You may be able to luck out and get it 100%, if not, I would be creative in how to fund the deal.

Hope this helps!

Tony

Hi there! Welcome to BP.