All Forum Posts by: Kathy Utiss

Well investors will sometimes have a home owner do a quit claim deed. Then assume the payments. Basically, until payment is received on the property you could effect your grandma if not paid on time. Sometimes it's considered a DIL-Deed in Lieu of Foreclosure. Investors may consider it a sandwich lease as well.

The hitch is grandma is on the hook until the cash is received to pay off the note she created. FHA is a good way to go for a low down payment unless your a vet. So it would be done as a purchase sale. With FHA it's 3.5% of purchase price down.

Example: 

Purchase Price $200,000 x .03%=$6,000 down payment 

200,000/360=$556 principal

200,000 x .04%=$8,000/12=$667 interest rate @ 4%

taxes 2,000/12=$167 

ins $2,000/12=$167

Total house payment $1,557 per month 

They will go from between 42 to 50% on your DTI-Debt to income ratio

The DTI is gathered from your secured assets- house, car, credit cards, student loans

A good FHA loan officer shouldn't have a hard time qualifying you if your earnings are easily verified and you have a good banking track record. They will want paycheck stubs and bank statements.

1. Generally, all property must be taxed based on its current market value. That’s the price it would sell for when both buyer and seller seek the best price and neither is under pressure to buy or sell. The Texas Constitution provides certain exceptions to this rule, such as the use of “productivity values” for agricultural and timberland. This means that the land is taxed based on the value of what it produces, such as crops and livestock, rather than its sale value. This lowers the tax bill for such land.

https://gcad.org/frequently-as...

Google occasionally is our friend. 

Here's a good piece on it for you 

https://rockethq.com/learn/per...

While everyone has given you good advice I'd run from this deal. We all have our own way of doing things. My theology usually goes like this. 

$395,000/360=$1,097

$395,000 x.04=$15,800/12=$1,316

Total Output without insurance or expenses is $2,413 

Total income is $3,600 according to what you listed they are putting out the rest in whatever. 

Granted the payment would be less with more down. However, with these numbers there's no profit. It doesn't take it down enough from what I see to make it a win. You could always check out the difference on setting it up on a 15 year note. But I would still run with the repairs and next to no income and repairs.  In lieu of huge down payments that only protect one side I would suggest buying a US Treasury. They do some pretty unique things. Although, a lender doing this could be hard to find.  Although, the private side of a bank may help. 

The thing about the US Treasury is it insures the loan you take out against default. They can make them interest only loans. The treasury also helps avoid usual holding costs necessary to purchase a property. As your prepaying your principal up front at a discount with the treasury. So you literally end up with an interest only payment. The principal money usually put out to repay the created debt is satisficed upon maturity. Then you still have accumulated appreciation. Sometimes investors use both a letter of credit with the treasury to make a self liquidating loan. People talk about reverse mortgages being great. The treasury makes it better than a reverse mortgage on steroids income wise. Especially, with income producing properties. 

Found this for you 

https://www.avvo.com/legal-ans...

Wow sorry this isn't about what this thread was started for. I got distracted by the company Justin Phillips represents. The life changer loan sounds unique. Being in asset management and real estate since 1994 I'm quite impressed with the idea. I was also impressed with the profiles of the principal's of the company.  

I have an approved idea that is as unique that I would love some input on. The idea does some unique things. We call it the income creator. 

It insures created debt for less than 50%. 

It insures the life of the loan 

By insuring the principal up front with collateral enhancement you eliminate monthly principal payments as your insuring the balance up front. 

It also insures initial down payments necessary to purchase or invest in real estate

The idea creates an additional $40 million over the 30 years of the loan vs the way loans are currently done

The idea also makes any created debt triple A rated. 

it also eliminates some of the holding costs lenders want. As the collateral enhancement insures the debt against default.

If you ask me there is a lot of real estate over priced vs the income they bring in. While it's good to avoid any payments to buy anything many have to finance things to own anything in this life.  

Plus there is still accrued appreciation

I agree with Eric. People use this method not knowing how to break it down. Tell me what you want here's what I consider a good way to see if a property is worth going forward on 

850,000/360=$2361 PRIN

850,000X.05=$3,541 Interest

                    $6,750 Net Pymt not including insurance, repairs, or maintenance at $81,000 a year it's $845x12=$10,140. 

Granted you may get a better interest rate. However, even with a better interest rate there's next to nothing left! I'm just curious are you sure those are the right numbers? 20x$700 makes $168,000 gross a year before deductions. I know some places have low rent prices depending on where the property is located but less than $700 usually isn't found in todays rental world. 

I have a great presentation put together. What I have put together we've also already had approved  with the necessary credentialed people with the ability to actually perform :)  If anyone is really interested this is the difference in income for the lenders who do it :)  Of course if you ask me its an ingenious concept that can rewrite many people's lives...But ya I'm just a wannabe :)

Hope you can tell me if this is possible or not. 

Know of property nicely discounted below appraised value (66% ltv)

Can one use transactional funds to pay off seller

Then create a note(refinance) as they're the new owner of property

Then sell off the note? Is there a seasoning requirement? 

This is for a commercial note creation 1st lien position.

No owner financing The note will debt service well. Even at a 75% calculation mentioned for a DTI

In my case as a principal I've been in both the banking and transportation industry since before 1994. I've been rebuilding my credit. My last bk will fall off my cbr this year. My scores are at 600/621/582

I also have an associate willing to go on loan with me if necessary with a score of 770 or above. She was a school teacher in Texas. In my case to better my credit I need more income. A survival money job just doesn't do this. Hence, why I've looked many years for a good opportunity. I also have another associate with a 650 score if that would work as well. 

We've also found a few properties that make sense. Maybe, not as nicely discounted as this property. However, they make sense with the asking price and the NOI to adequately debt service.

All answers are so appreciated. :)

The way it sits I don't think it's very valuable for any investor. I was being conservative. My friend would have said to make an offer of like $5,410,000 a hair cut of $4,585,000. He does his pricing based just on the NOI. Would love for someone to tell me what they consider a good DTI on commercial properties :) With what you told me about the area my friends pricing sounds more spot on. I really don't think the numbers are that great on the property. But it is about the only thing I saw that may have potential when I looked from over here in St. Louis. Good to share view points so we all gain more knowledge :)