All Forum Posts by: Ron Nawrocki

Lots of good info shared but no one has summarized the 3 key issues:
1. Banks do NOT have money to lend, so they raise the criterion and cherry pick. Notice most financing is re-fi's where someone has paid a higher amount regularly for several years and a lower payment is even safer.
2. Banks don't have money due to the reserves they need to carry for REO's & non-performing loans (toxic assets). Toxic assets are like liabilities for debt capacity.
3. Carry Trade (was mentioned) - Why lend to investors at 5.5-6% when the US Treasury offers them 3.5% risk free? And even pressures them to fund the deficit.

The only know solution is the TACT Program to convert those toxic assets to performing loans. Even that $0 cost solution they're reluctant to implement until the government tells them they need to do it. We're trying real hard to get into see bank execs for 15 minutes to convince them.

132 banks have failed this year ... another 700 in serious risk of FDIC closure. If you get a monthly paycheck you evidently don't do anything unless told to do it ... strange but true.

Absolutely.

Although Arizona ballot was 2-sided with so many decisions the only way you would get done in 30 minutes is if you ignored 1/2 of it or had your sample ballot with you pre-filled in.

No one can blame me for being a passive citizen! I've lived overseas for 13 years and know how good we have it ... safety, freedom. low taxes, ability to change legislation, and pick the government.

We do transactional funding on small residential deals (up to $100k).

We have not had any problems with deals. We deal with competent Escrow Officers who want to make sure they get paid for their work, and want to keep us as Clients.

I agree that you never want to lend more than you would pay for the property. The good news is you have at least 1 potential buyer and some suspects that the wholesaler identified. That Wholesaler's future hangs on getting this property sold.

The biggest risk is having your money hang around waiting for the next transaction. Demand dropped off a cliff after the April tax credits ended, so we're doing very few PoF's lately.

Until the banks start lending again, I'm focusing on our other Solutions.

Seems to me that banks will start lending again once they have a stable portfolio. Once they start lending, there will be more buyers with financing and the housing recovery will begin.

Agreed 100% ... but until the banks sell off most of those toxic assets they can't lend.
They hold the key to fixing the housing market, but seem to keep waiting for a silver bullet out of Wash DC.

Politicians actually agree on 1 thing - small business is the engine of growth and job creation. What are they doing to help?

Try contacting a Congressman's or Senator's business liaison so you can find out what they're doing and how they can help your small business. The answer - there is only 1 US Congressman (Trent Franks) that has a business liaison! And the opposing party claims that position should be abolished and he should follow the standard structure which was designed 200 years ago.

Has anyone heard of walking the talk? Obviously the motto for politicians: "After all is said and done, much more will be said than done" !

The government officials are taking credit for the great job they've done to get the economy crawling forward. Consumer spending and retail sales are up. But no one mentions where that money is coming from. It's not from jobs and investments.

There are 5+ million people not paying their mortgages and living rent free in their homes for an average of 1.4 years. Gee, $7-9 billion per month not spent on mortgage payments will buy a lot of cars, iPads, and beer.

Add to it that to banks these mortgage payments are revenue, so they're showing good profits. But these payments will never be collected!

I'm bearish until banks wake up and implement the TACT Program. They need to kick out the folks that default and sell the properties to qualified buyers.

re: Financing
5.5% fixed for 5 years, 30% down, 20 year am., rate increase capped at 2% every 5 years.

I don't have anything commercial yet so I'm not sure how to factor in the variable interest rate.

All the financing we provide is variable and most borrowers don't mind after we discuss:
1. they can (and should) re-fi to fixed at a better rate after they have sufficient seasoning & operating history
2. On income producing properties, as interest rates go up prices (rents) are going up. So as long as you have the ability to raise rents you will be fine.
3. with interest rates rising, the property value is also rising
4. with 20 year amortiz. you have a max rate of 11.5% which is barely double ... and when it rises your interest component is shrinking at the same time

NOTE: variable rates are not as attractive for owner occupied since your income is less controllable ... unless you're a landlord

I chose not to have a license. I focus on what I do best, and avoid conflicts of interest, or perceptions of conflicts of interest.

When a hot property becomes available my realtor partners tell me about them and meet me there because they get paid when I buy,

When they have Clients that need private financing - guess who they call?

Excellent points in this dialog. I thought I was one of those odd ducks that hounded vendors about the bills.

I agree that reminding them and waiting is the right thing to do. Good vendors are often behind on their billing. If it crosses year-end, create an accrual and that way the expense is in the right tax year.

FYI - one of my best AC vendors did not bill me for July work until January (his slow season) when I reminded him again. After paying promptly he now goes out of his way to waive down payments on jobs that are far bigger.

Integrity pays.

In today's financing market I would say NO. Condos are very cheap now for a good reason. You and later your buyer will have trouble getting financing. Talk to a mortgage broker very familiar with loans for investors on condos. The percent of owner occupants in the complex is key.

Additionally, despite the low price your cash flow may be far worse due to high HOA fees. When fees were 10% of your mortgage payments that was fine ... now they may be 80%. HOA's lose those fees when there are foreclosures so they spread the losses among the remaining owners.

Step 1 - check on ability to get a loan on that condo ... if you can buy through the TACT Program then you're OK. If in AZ we can help.
Step 2 - Do your calculations on low priced homes vs condos.

Good luck ... if this were easy, everyone would be doing it, and the successful few would not be as wealthy as we are.