All Forum Posts by: Gary Ytreeide

You have a challange.  Having grown up in that part of the country (Spokane) and having worked at what used to be Fidelity S&L, later becoming a savings bank, I know the traditional lenders are really conservative.  If you can find a lender that  will lend on repaired value that may be your best chance.  Banks normally don't do that but find a mortgage broker and they may have someone.  We have a couple of mortgage banks of this type of lender in S. Texas but they only lend local.   So look on line and in the Spokesman Review for mortgage lenders and/or brokers.

Some lenders allow you to use alternate documentation to secure a loan.  For the person that is self employed or in your case, getting income from a non us source and does not have the standard W2's and 1099's an alternate doc loan which requires bank statements may be a solution.  Check with various banks in the Chicago area and see if they do Alt Doc loans.  Good luck.

All legitimate lenders I am aware of charge origination fees, usually 1% to 2%.   Follow the old adage, if it looks to good to be true, it probably isn't.   Personally I like to know I can reach out and touch someone if I have a problem.  That is why I stick with the local lenders

The only way I would use hard money is for a bridge loan where I was absolutely sure that I would not need that hard money loan for more then a period of 30 or less.   There may be other circumstances, but the point is I want it for only a short period of time

Conventional lenders will usually ask for a 1% to 2% loan origination fee, and if you close through escrow (which you should do anyway), you will be paying escrow fees.  You will also have prepaids for insurance and possibly taxes.  

Hard money lenders have a place.  In my opinion it is 60 days or less.  If you are rehabbing and you are convinced you can rehab and close on a buyer in 60 days, then hard money lender may be an option.  However, it now takes 45 to 60 days to close (thanks to the CFPB) if the buyer is putting a mortgage or trust deed on the property -  so there goes your 60 days.  

If your lucky you may find a lender that will loan on the purchase price + rehab costs.  

You are right to be concerned about the high cost of hard money loans.  Depending on your market, and how fast property is turning over when correctly priced - if you end up sitting on a piece of property longer then you planned - kiss off your profits.

Hard money loans have there place, but it sounds like you really don't need to go there.   So I suggest you don't.  Real estate is a risky business and if anyone tells you it isn't, walk away from them - quickly.  I buy and sell real estate and I buy and sell stocks and bonds.  Frankly there is a lot less risk in stocks and bonds - if you know what you are doing.  With real estate I know what I am doing as well, having had a real estate license for over 13 yrs and a brokers 8 of those 13 yrs along with an MBA.  And I still find real estate a lot more risky then the stock market.  

I have not read any of the other responses so if I am going over territory already traveled bear with me and get through it.

First off, seller financing - I am against it especially for the buyer.  unless they are willing to give it to you at a very low down and very low interest rate don't go there.  Many times the seller ends up taking back the property.  Some sellers have done quite well with this technique.

Look for a lender that will be willing to lend, not on the purchase price, but on the value of the property after it is fixed up.  e.g. we have one lender in our area that I know of that will loan on the purchase price, then will also finance the repairs.  This lender is a legitimate lender, not a hard money lender which you do not want to use except in some special situations.  You would be better to walk away.

As far as creative financing, there is absolutely nothing creative about it, unless you count the ways lenders come up with ways to transfer money out of your pocket into theirs.

As a realtor I feel there are two valid reason for using seller financing to purchase property. a

 Either because the property does not meet the lenders criteria, in which case be sure you really want it.

or because your credit score is such no one will loan to you.  in this case, generally the down payment and interest rate is higher then other types of financing and generally the seller wants you to pay off the loan in 5 yrs or less.  Which means you better be qualified to get a loan before your time is up.  Too many times buyers just walk away.  This lets the seller sell the property again, and sometimes again and again.  Nice racket.

Simple answer - no! Having said that if I was down sizing I may consider it, but my tendency would still be no. It really depends on your circumstances.

Long term leases usually have built in increases. Question is do you want to be tied up that long. Also consider mundane things like taxes and insurance tend to go up and in many cases quite significantly.