All Forum Posts by: Miguel "Mike" Perez

I doubt bank lost it unless you have evidence to the contrary. The home just isn't as much of a priority to them as it is to you so they are probably not responsive to inquiries. Even if they lost their paperwork, the county would have everything necessary to reproduce the paper trail and confirm the bank's position. I would start by resetting your expectation. It sounds like you grew up in that house and it may seem like YOUR house, but on paper (wherever that is), it is the bank's house at this point. Whether they choose to claim it is a different story. If you want to keep the house I would contact a real estate attorney and explain your situation. Your most likely recourse if you wanted the house would be make an offer to the right person at the bank. Maybe if crafted and presented properly they will go for the equivalent of a short sale and get some money for the property and get it off their books because right now it is costing them to pay for taxes each year. This adds insult to injury for them since they are being paid for the thousands of dollars they lent out and are now having to pay for money they are not getting. If the bank decides to put it on the market then you'll have to compete with other potential buyers. Also keep in mind that an investor may already be aware of this problem property (from the bank's perspective) and might be working on making an offer to the bank as well. I wish you a speedy and fruitful resolution.

My mortgage broker says to budget about 3% of sale price. I like to be conservative so I budget 3.5%. Keep in mind I'm doing REI in Florida. I suspect each state might be different. Hope that helps.

Welcome to BP.

Not sure the message is coming across as clear as possible but it sounds like you are a student (or student-aged) wanting to break into real estate with about $50k for a down payment and want to get into a property for about $150k including repairs.

Then there is some stuff about a she who had a bad experience creating credit issues. Maybe a parent or spouse?

There are some deals out there for you, of that I am sure.  However, unless you have a very compelling opportunity and factors that show you will make payments on time today and in the foreseeable future, a lender is likely to pass you up unless you present the opportunity properly and show you can meet the obligation.

There are a couple of folks in the south Florida RE world that I would recommend you reach out to. 

@Lucas Machado: he has deals flying into my inbox pretty much daily and he also offer hard money lending

I would also look at a webinar I remember from Brandon Turner, a VP here at Bigger Pockets.

https://www.biggerpockets.com/webinar

It's not the one happening this week, but it will likely come back around.

It was called 12 Steps to Getting a Bank to Say Yes.

Although I think I counted more than 12 or I lost count. These are my notes and should not be taken as a substitute for attending the webinar.

Here are the notes I took during it.

You need to have these factors wrapped up before a lender will take a chance with you. At the bottom it does account for compensating factors.  For example, if your income isn't that high, but the property cash flows incredibly, this may overcome the fact that your income isn't as high as they would like to see.

12 Steps to Getting a Bank to Say Yes.

1. Property
   1. Property Type
   2. Property Location
   3. Property Condition
2. Loan Amount
3. Debt to Income Ratio (DTI)
4. DTI = Debt / Income
   
   1. Front-End
   2. Back-End (most important)
   3. Relationship between total debt and how much income
   4. All lenders are different.
   5. Usually have two (front and back)
5. Loan to Value (LTV)
   
   1. LVT = Loan Amount / Property Value
   2. Examples
   3. FHA = 96.5%
   4. 403k = 96.5%
   5. Conventional = 80%
   6. Commercial = 70%
   7. Most of the time pre-hab value is used.
   8. Hard money focuses on after renovation value (ARV).
6. Credit Score
7. Repayment Source
8. Income
9. Rental Income
10. Experience
11. Cash Reserves
    
    1. 6 months of payment is preferred
12. Recent Credit Changes
13. Compensating Factors
    
    1. Outstanding performance on one factor can sometimes compensate for minor deficiency in another.
14. Present the Deal Properly
15. The 5Cs of a Perfect Loan Proposal
16. Confidence
17. Clarity
18. Concise
19. Convenient
20. Creative

I signed up a few weeks ago. Lots of deals come through. Thanks. Who should I connect with in order to have your firm as a backup hard money source?

I don't have an easy answer for you. Those numbers you listed are just the tip of the iceberg and if you know icebergs there is a lot more of it you cannot see versus what you can see. My advice is to analyze each property using the rental calculator or something similar. I use my own spreadsheet inspired by that calculator. That will show you the whole iceberg, and the answer will come easier. It's just like using the right tool for the job. If you need to drive a nail, but you don't have a hammer, you spin your wheels trying to find something else to use as a hammer. Sure you can drive a nail with the butt of a screwdriver, but it will take you 20 times as long and you will hurt yourself 90% of the time. Identify the right tool and apply it to this job. I recommend a thorough analysis. Be equally conservative on estimating income and expenses across all of them. Save your future self from having your personal life come tumbling down at the expense of your REI life and budget for property management because as a dad of 3 kids (regardless of special needs), husband of a career woman, and engineer at some firm that always wants more of your time for equal or less pay, you might want to have the option of calling in for assistance in the property management department. No shame in that. In fact I think it's silly to have the brains of the operations taking house calls from tenants or other similar activity. If you can do any of those options you listed, but need to pick one, then choose the one with highest cash on cash return or ROI as it is often referred to. If you don't have the money to do one of those options, you can always get it, but is it worth the price you'll pay? I'm not afraid of debt but it should be used wisely. What is your exist strategy? You should have a couple in place. Can you sell for a profit if you were to list it after PLANNED IMPROVEMENTS? Can you rent it and start getting ROI? Could you refinance for lower cost of borrowing? Hope that helps.

10% forced appreciation simply means you make improvements so the property appraises 10% higher if you were going to sell it in the retail market. This can be done many different ways but primarily it is done by rehabbing the property. Out with the old and in with the new on everything that needs to be replaced to make it seem like it was installed within the last year. Notice I said 'seem'. If flooring and walls can be refinished to make them seen new, then no need to replace them entirely. This applies to every corner of the lot so don't ignore the exterior because your potential buyer won't. How do you know how much to spend on rehabbing to increase it by 10%? That depends on your market, but in general it means replacing countertops, updating cabinets, and replacing fixtures and appliances to what retail buyers (middle class and first time home buyers working with agents) would be impressed with and would be willing to pay more money for. Many times it involves making modifications to a floor plan to tweak it so that it is more appealing to retail buyers. Today most buyers are looking for a modern open floor plan. If you have a property that is divided into individual rooms without line of sight into any other room, you will want to change that. You don't need to tear down the place, but you will want to open up a wall and put a breakfast bar between two rooms (living room and kitchen) if it makes sense. Consider taking out an entire wall as long as you do it right and not compromise the structure. Keep in mind that 10% is just a baseline and a very basic one. Many investors are looking to force appreciation by much more than 10%. For multi families 2-4, it is similar but focuses updating units with what modern retail renters are looking for. Your NOI will increase and your property will appraise for higher. However, a word of caution based on my experience. In multifamily buildings, my experience has been that updating units doesn't have as deep impact on appraisals which are based on comparable sales. They do make a difference but it seems to me that a single family property gets more bang for buck for improvements in the retail market from an appraiser's point of view. As an investor I give it a lot more value than what I have seen appraisers give it, probably because I see it as being able to command higher rent. I'm not an appraiser, but that's been my experience looking at the appraisals that have come back to me over the last year. For commercial properties (5+ units, or office spaces) it's based on net operating income (NOI). You can do do this two ways. Increase income by raising rents, or reduce expenses by cutting costs. You can increase rents on a whim but will your tenants stay and will you attract new tenants if you have high rents and outdated units? Not sustainably. So you can update your units and command more rent. You can also install more efficient systems, mechanical and employee-based, but those also cost some up-front investment. The higher your NOI is the higher the value of your commercial property. Does that help answer your question?

Check out that lead from @Account Closed and be sure to follow him.

I've had the opportunity to network in person with Nick and I've followed his guidance in several situations.

Paid off every time.

If you still need a lead for an investor-friendly agent/broker, I have one and he is sharp, professional, and super responsive.

Good luck and keep at it.

Originally posted by @Wayne Brooks:

Apparently, you don't realize what a "certificate" is?  When someone doesn't pay their taxes by June of the next year, a certificate is sold to pay those taxes.  When the certificate is "redeemed" (paid back by the owner) there is interest and a bunch fees added to it.

Very apparently.

Thanks for the response.

So it seems like once the tax bill receives that huge bump from the cert, then that tax bill remains inflated indefinitely?

I get adding on the 20% in additional fees for the year the tax bill was not paid, but then it seems like the tax bill now takes on a new ceiling and keeps that 20% for years to come and then if it earns another certificate, then a new 20% higher ceiling is achieved.

Is that common with certificates?

That seems excessive.

Anyone from south Florida see this before?

This tax bill is at least twice the amount for all other (30 or so) properties I have been evaluating.

Is there something to see between the lines?

Here is the tax bill:

https://www.broward.county-taxes.com/public/real_e...

Here is the listing:

https://www.redfin.com/FL/Lauderdale-Lakes/4031-NW...

Furthermore, it is the only tax bill I've looked at that has these very heavy yearly increases.

21% increase from 2012 to 2013 but when there is no cert, the tax increase is minimal like from 2013 to 2014 it only went up less than 1%.

It also has these early certificate issued, certificate redeemed.

For example, in 2014 the cert read $6353 but then $6677 was actually paid.

What are those and are those why are they causing the tax bill to rise at an alarming rate?