All Forum Posts by: Mike Parks

Im not quite sure why anyone would want mortgages on the conventional side of things. I have all of mine on the commercial side. I would presume because you get 30yr financing as apposed to my 20yr and a slightly better rate? 

This depends on a few issues, typically lenders want 20-25% down on an investment property loan. Number one thing is going to be your credit if you want to get a loan through the bank. If your credit is weak maybe see if your parents would be willing to co-sign or help with the deal. If you are looking to buy a duples for 100k you're probably going to be expected to put 20k into the deal to get financed. Ive done it before by making the sellers agreement look good for the bank and bought a 295k 6 unit apt building and put no money out of my pocket at all. I dont suggest doing this on your first deal but things can happen if you make it look good. Good luck on your venture and smart move by wanting to invest at what appears to be a young age!!!

Hello BiggerPockets Pals, I have a little issue that I need some direction on and am hoping someone can shed some light on this. I am an investor in the Philadelphia and surrounding areas. I recently purchased a property in the southwest section of philadelphia and was recently approved for a line of credit increase based on the value of the mentioned property. Now before I bought the property I of course did what I thought was my due diligence to obtain a rough value on the property, I had my realtor pull comps, I had the wholesaler give me their take on the value of the property as well as checking zillow, trulia, etc. Although comps from my realtor were 12-24 months old (as its mainly a rental area) were anywhere from 18k (wholesale) to as high as 95k (retail) I thought wow this would be a good buy expecting and being told that arv would be roughly 75-85k. Now I only paid 18,500 for the house and it needed very minimal work IE: ceiling repairs, paint, flooring, some new lights, heat replacement, roughly 4k worth of work.

Since then the appraiser when out to the property last friday 12-19-14 to do the "appraisal" I was told that his cost would be $575 (which was extremely higher) than I typically pay and that his turnaround time was 10 days. The bank contacted me this past friday and said the appraisal came in and that the cost was $450 (weird) and that the property appraised for 30k. Shocked, I immediately expressed my displeasure with the number and wanted some answers. How could a house that has a tax assessment of over 50k, comps as high as 95k (within blocks away) only appraise for 30k??? This cant be right being as though I have 2 other smaller properties 0.7 miles away in a rougher neighborhood that appraised for 67k less than 6 months ago???? My guess would be that they did a "drive by appraisal" or "over the table" appraisal rather than a walk through appraisal which is what should have been done??

I do not have a copy of the appraisal in my possession yet but can anyone shed some light on this? My numbers are usually damn close and this particular property isnt even in the same zip code let alone same ballpark. They claim that the number was based on rents which range from 700-950 (mine rents for $850) and comps which are mainly wholesale numbers NOT retail numbers. I'm dumfounded so any suggestions or insight from appraisers or bankers would be greatly appreciated.

When asked them for documentation that I signed agreeing to a hold on reserve funds this is what was in the loan commitment on page 3.

Deposit Accounts:  Borrower and guarantors to establish new membership account with (bank name) and maintain the deposit account for the entire term of the loan. Maintain the Cash reserve account with 2 months P&I for the entire portfolio. The reserve amount to increase with each new booked loan.

Financial Covenants:  Maintain a minimum debt service coverage ratio of 1.2x's both individually and globally for the entire term of the loan.

Other Conditions:  Any, and all, entity owner/purchaser business organization documents shall be required for review by ( bank name ) at least 10 days prior to settlement i.e. Submission and satisfactory review of Articles of Incorporation and/or partnership Agreement, Company By-Laws and time stamped copy of the Cert of Organization.

The term and conditions stated above shall apply from the date of acceptance, shall survive the execution of notes and/or other loan documents and shall continue to apply until the obligations or Borrowers are paid in full.

This commitment is contingent upon the right of the Credit Union, at any time hereafter and from time to time, to review the commitment, to adjust the terms and conditions or to discontinue the commitment should the Credit Union, in the reasonable exercise of its sole business discretion, deem it necessary to do so

To accept this offer, please sign and return this original commitment letter. With the acceptance by the Borrower of this Commitment, a non-refundable Commitment Fee equal to 1/2% of the total loan amount ($000.00) will be due to the Lender. This 1/2% fee is a portion of the 1% origination fee that is being charged ans will be applied at settlement towards final settlement costs.

No where does it say the account made will be placed on hold. Secondly I had a HELOC with them on a property that has since been paid off in full and they have not returned those payment funds to me. I have since tried to apply for a loan (no different than any other "approved" loan) and they denied it for BS reasons like incomplete application and no description of what funds from loan would be used for. These guys know what I do, I have 8 loans with them. So now they have my money in an account that I cant access, they have funds in the account that don't pertain to this particular institution, they have funds in the account for a loan that has been paid in full, and they clearly don't want to do business any longer. Should I get an attorney or am I blowing this out of proportion?

my bank bids them out usually running about 350-400

ok im not quite sure if anyone other than an attorney can answer this question but Ill give it a shot and see what responses I get.

I have been doing business with a local credit union in my area for a couple years now. I have reached a point with my portfolio that has required me (as of my last refi in July) to put monies in a reserve account. Now my first issue with this is that the bank had me put 2 months worth of mortgage payments in the bank for not only the last deal, but all previous deals that the bank had already approved, now I don't have a problem with that, but they also made me put in reserves 2 months worth of payments for loans that are not even held with this particular institution. Why should they have to protect themselves from potential "loss" for loans that arent theirs? I wasnt too concerned at the time because I wanted to get the last deal done so I met their request and put this money that they requested into a reserve account. 

They expressed to me that this would be an account that shouldn't be touched (used) or it could jeopardize future loans being approved, ok no worries lets get the deal done!!!! Well unbeknownst to me I later found out that the bank actually put a hold on this particular account so I have no access to the funds if need be. I feel like this was sneaky and left unclear. I emailed several parties that were involved with this "reserve account" fiasco including the banks portfolio manager, the vp of commercial lending dept, as well as the "member business relationship officer" and no one responded to my emails except the last party which is the least important person on the list. He was basically the middle man for the conversation relaying.

My question is, is it standard procedure for banks to put a "hold" on a reserve account so that you have no access to those funds and Is it legal for them to do it without any singed documents agreeing to the terms? Its not a lot of money, but I do not wish to do business with this institution anymore for a number of reasons and would like to close out my accounts and this particular account has money in it that I do not have access to. 

Can anyone shed some light on this? Thanks in advance

philly is always good in the right areas

i hope that price includes all book keeping. Mine for last year with 4 properties was a fews hundred bucks including my personal taxes. Price seems way high to me just to file

i would call their bluff. Send certified letter stating to come get their crap on x date. Put it outside and see what happens. I think they are trying to strong-arm you.