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All Forum Posts by: Ed L.

Ed L. has started 43 posts and replied 449 times.

Post: how did you build you bank relationship?

Ed L.Posted
  • Residential Real Estate Agent
  • Hattiesburg, MS
  • Posts 475
  • Votes 141

Thats actually how my wife was finally able to start building credit. She put 1,000 in a CD as security and they loaned her 1,000. She literally had no credit prior to doing this.

She was able to build her credit up, but she never did attempt to get a higher credit limit.

It was very easy for me to get a LOC. I was in the process of Refinancing my office building and already had a presentation put together showing my financial statement, and 2 yrs of verifiable income..

I shopped the package around to a few different banks to get the best deal.

Wells Fargo almost laughed me out of the building. Mother F$#$# said "look here kids" to me and my wife... My goal in life is to put Wells Fargo out of business lol...

Hancock Bank (Local-Regional) was very receptive and offered to refi at 5% on 15yr amm

First Souther Bank (Local-Current loan holder) Agreed to just adjust the rate to 5% with a 20yr amm. So I stuck with them.

Hancock called me up afterwards and offered to do a 50K Unsecured LOC. I did get f'ed in underwriting because the way one of my flips is structured so it was reduced to 15K with the promise of raising it once the flip sold. Ironically the person I'm selling the house to was financing through .......Guess who...... MF'ing Wells Fargo of course....... And of course they didn't close on time because of financing difficulties.

That's my story on LOC's. Hope there is something helpful in it!

Post: How does one get loan for renovating a property for flip

Ed L.Posted
  • Residential Real Estate Agent
  • Hattiesburg, MS
  • Posts 475
  • Votes 141

WF is the worst of them all based on my experience. Local bank financing usually goes smooth as butter. Through my RE Career I have now had 2 bad deals due to financing. Both have been out of town mortgage brokers using Wells Fargo.

They are holding up a flip I'm working on right now. Buyer was preapproved for financing through WF with a 45 Day closing.

At Day 50 the loan officer quit answering calls. Luckily the selling agent is a good friend and a great realtor. Once we verified that the Loan Officer was indeed screening our calls she immediately moved the buyers to a local bank.

The mortgage broker actually had the nerve to complain that he wouldn't be getting paid a commission after he held the closing up for 50 days and accomplished nothing.

They are now scheduled to close on the 15th!

Post: Business Line of Credit: Who Should I Talk To?

Ed L.Posted
  • Residential Real Estate Agent
  • Hattiesburg, MS
  • Posts 475
  • Votes 141
Originally posted by Bryan Hancock:
They are usually tied to prime or some other common index Ed. I am negotiating on mine right now...they want a 5-year amortization and I requested 15. The rate hasn't been mentioned yet, but it was presented in the 5%ish range a few months back when I started the process.

Access to cheap cash is never a bad thing IMO. I would rather pay 5% with personal recourse than 10% to a private individual without personal recourse...to each their own.

Same here. I also know the bank isn't going to burn my house down or break my knees if I lose alot of their money lol...

I believe my LOC is set at prime for the first 3 months and then it's a couple points over prime afterwards. If I recall it was Interest only. Will know when I get my first statement this month.

I know that's how my dad's are set up.

Banker brought up a great point. Get the line when you don't need it because it will much harder to get one when there is a actual need.

Post: War Zone or Low Income Minority Housing???

Ed L.Posted
  • Residential Real Estate Agent
  • Hattiesburg, MS
  • Posts 475
  • Votes 141

Thanks for the advice to call the police. I actually have a agent friend who used to work for me that is now a PO. Skinny little brunette packing a gun. Scary thought lol...

Post: War Zone or Low Income Minority Housing???

Ed L.Posted
  • Residential Real Estate Agent
  • Hattiesburg, MS
  • Posts 475
  • Votes 141
Originally posted by George P.:
From what I see on the map, housing looks like PROJECTS which are government owned and operated.
Anyway, like it was already stated, low-income housing requires high maintenance. Folks in there usually don't take care of stuff and enjoy the sense of entitlement. So 50% rule won't likely to work there. May be 55%. May be 60%. Account for it.

You are going to be dealing with Section 8, too (it's not necessarily a bad thing).
PS if you can get it for peanuts, there is probably a good reason for it - like high vacancy rate or deferred maintenance.
PPS You have a LOT of competition around your building. When worse come to worse the only thing you can compete on is rent. That's a bleak perspective to have to lower the rent, isn't it?

Very good advice, and i think that is a major flaw with the 50% rule.

Just because you lower your monthly rent doesn't mean there will be a equal drop in monthly expenses. May even be higher because you are renting to a lower quality tenant.

I've ran some pretty worst case scenarios and it still cash flows pretty good. Can't wait to get in and dig around.

Post: War Zone or Low Income Minority Housing???

Ed L.Posted
  • Residential Real Estate Agent
  • Hattiesburg, MS
  • Posts 475
  • Votes 141
Originally posted by Phil C.:
From google maps it looked like you might have a lot of competition for renters. Large Brick buildings as far as the eye can see!

Just something to keep in mind.

That's my big concern about any type of apartment or multi family housing in this town.

Based on my drive over there last night it appears that it was probably a pretty decent apartment complex when it was originally built in the 1980's.

I imagine it was thriving at one time. Someone took notice of this and built a new and much much nicer place right down the road from it.

The owners of these properties couldn't compete with the new development, so they just started competing on price alone. Then it just becomes a race to the bottom.

Good thing is the asking price is 32,000.

4 Units that are 1,100 sq ft each. Each is 2Br. 1.5 Ba.

Post: War Zone or Low Income Minority Housing???

Ed L.Posted
  • Residential Real Estate Agent
  • Hattiesburg, MS
  • Posts 475
  • Votes 141

Well I just made the trip over to the apartments at 11 PM and they looked fine. Definitely wouldn't call it a war zone. It's also a very convenient location for student housing.

Advertised rate fo 2br in exact same building is 475.00 May be a cash cow for the price. Can't wait to see how bad the interior is.

Post: Fannie & Freddie Houses..TRUE ?

Ed L.Posted
  • Residential Real Estate Agent
  • Hattiesburg, MS
  • Posts 475
  • Votes 141

They are definitely cleaning them up and keeping the yards mowed now days. Makes a huge difference for investors like my wife who will literally not go in a place that stinks...(Old Refrigerators yak)

I haven't seen any renovating in my market. Guess it might be necessary in some of the higher end regions.

Post: Selling fully depreciated free-n-clear rental - minimize tax

Ed L.Posted
  • Residential Real Estate Agent
  • Hattiesburg, MS
  • Posts 475
  • Votes 141
Originally posted by Daniel Payne:
Originally posted by Ed Lee:
Originally posted by Daniel Payne:
Hopefully you have been carrying forward all of the unused passive activity losses to use against the depreciation recapture when you sell the asset.

Please elaborate what passive activity losses are. I tried a search but didn't come up with anything.

Basically, passive activity losses are losses you experience from any income source that you do not materially participate (i.e. rental property usually qualifies).

You can deduct these losses against other passive income and sometimes against ordinary income if you meet certain requirements. Whatever losses you can not "use up" in one year are allowed to be "Carried forward" until you can use them or until you dispose of the asset.

Lets say Billy owns a rental property. This is his only source of passive income. However, after depreciation, mortgage interest, repairs, etc he shows a loss every year of $5,000. Since he has no other passive income, he can "carry forward" the $5,000 loss until he does have passive income to use it. When it comes time to sell the property, he can use all of the passive activity loss he's carried forward to net against the capital gain.

Thanks for the clarification! The complexities of our tax system bedazzle me lol..

Don't mean to thread jack, but wouldn't the taxes just be paid on the capitol gains??

If so it might be a good time to take the gains while the rates are still low.

Post: Why a business line of credit?

Ed L.Posted
  • Residential Real Estate Agent
  • Hattiesburg, MS
  • Posts 475
  • Votes 141

I have seen few owner finance deals with 0% interest, and none for 8 years. I just don't see why any seller would commit to such a overly complicated deal unless they were getting wayyyy more than the property is actually worth. If that is the case then your appreciation would be negated by the over inflated sales price.

That said... It is a very interesting concept that I would never thought of if not for BP.

I still prefer the idea of buying deals with cash & refi that have 30-50% equity. They also will truly cash flow and not just break even and hope for appreciation.

The best way to avoid default is to buy good deals...

I would honestly rather default and go bankrupt with a bank than default on innocent individuals. Going bust isn't the end. I could always use the method described post bankruptcy.