I spoke with a banker today.
He suggests with my debt load, I need to buy and flip a house to pay off the debt that is preventing me from buying a house……….
………i’m going to bed now.
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Just remember if you need money you can't borrow, if you do, good luck!
Reminds me of the deal that ended up going bad up north.
I was looking for 80k to renovate a large duplex. The banker told me if I had 50k he'd lend me the 80k.
My reply was the obvious, "if I had the 50k I wouldnt be talking to you".
This is why I like the current view that most banks subscribe to today, the use of fico numbers. Shoot I 've been out of work for 2 years and they still give me credit, with no income!
My problems (first) I live in Michigan and my credit/debt load is pretty high right now. Still, I havent missed a payment.
Nothing makes you want to jump across a desk more than someone telling you,"Hey this is an impressive credit report.....sorry though, cant help you."
I understand how the ratios work still doesnt help me reach my goals though.
I think about my friends that do this and they all have help within their families. I'm going it alone. The only one in my family that could possibly back me is my FIL, and he thinks i'm an idiot for investing in real estate and not having a real job.
Edited 6/23/2008 9:43 pm ET by MSA1
"my FIL, and he thinks i'm an idiot for investing in real estate and not having a real job."
Maybe he's right. Isn't that a kick in the butt?
What do you do on the weekend for fun, hang out at Special Olympic games and tell kids their gonna lose?
Ratios are a funny thing. My wifes debt to income is something like 60%, yet she can go to the bank and borrow just about anything she needs! Don't worry, mine was under control until car accident, hopefully only 3 more mths and that will change
too much is put on ratios, normally they won't take into account nontaxable income. When they use the same ratios, you end up qualifing for less. Have you taken your records showing the nontaxable depreciation? Point out to them that this is free cash flow.
He's telling you that you aren't liquid enough to make payments for a year if your income stops. Bob's next test date: 12/10/07
I know. Doesnt make it any better though. I hate not being able to buy right now. I paying down as fast as I can.
he makes a good point
what are you using as collateral on thi loan? the property itself?
no wonder he's scared.
not making any disparaging remarks about your creditworthiness but just thinking like I would if you asked me to loan you the money.
If you were just barely able to scrape up financing for the project I might have ??'s.
Why not pull some equity out of your other properties and put it in the bank?
Then you can show say $50 grand in a CD and get financing.
Plus youn don't pay tax on a 'loan'. And your rents cover the note, of course.
."Never pick a fight with an old man. If he can't beat you he will just kill you." Steinbeck
Too new at this. The bank is only willing to go 60%LTV on investments so I cant grab anything right now.
I thought you already had rentals.If not, use the time when you can't get financing toward saving up some money into a CD. Once you get $10k then put it up as collateral for a small loan and build up a rep with a banker.Look for a place you can get the owner to finance and use the CD loan for the fix up work and do a flip or ..... Do a small deal with it and see where you can parlay it from there. Sounds like you have a lot of good ideas but just need to get your feet on the ground.
"Never pick a fight with an old man. If he can't beat you he will just kill you." Steinbeck
Hes got rentals.He's also got two thousand motivated sellers all around him. He could take over 100 mortgages without putting a penny down in the next two weeks. The problem is: the mortgages would be more than the houses are worth. Theres still some winners in there if he's willing to get tenants. Bob's next test date: 12/10/07
Well, that's no good then.In the 80's bust sellers were bringing money to the closing all the time. Now, it seems people are more prone to just walk."Never pick a fight with an old man. If he can't beat you he will just kill you." Steinbeck
Thats the next route i'm trying. Talked with an attorney today, he suggests going for land contracts.
Of course i'm willing to get the tenants but like you said its also a matter of finding houses with at least a little equity.
The lawyer suggests land contract because he's not an investor. Go to Creonline and read up on sub2 (subject to). You are in "sub to" heaven. There isn't any reason you should be looking to do land contracts when you could just take over their mortgages. I'd bet you could pick up one house per week with little effort if you put a little effort into finding them. The problem is that the mortgages would be worth more than the houses...which again wouldn't be a problem if you can cashflow it with rents. I'd guess that the rent situation is stable and there are a lot more renters than normal. Bob's next test date: 12/10/07
Thats exactly what i'm learning right now. The atty does own real estate. As a matter of fact he's a RE lawyer.
He thinks the takeovers may constitute fraud.
I have 5 rentals, I need 50. See my problem?
Edited 6/25/2008 9:28 pm ET by MSA1
You want to much?
They can't get your Goat if you don't tell them where it is hidden.
You kidding? I've got 5 kids. 50 houses wont be enough.