Posted by Tom A. on March 30, 2000 at 07:29:35:
Seems you have the systems down right, and the concern is genuine. What you probably have out of perspective is what properties for what clients, and/or what you do at the end of the year also.
First at the end of the year, and the client does not qualify, you should also be able to give the property back to the original owner and be happy with the $900 difference down and the $100 a month cash flow you enjoyed; or find another client and go again.
Second the right property for the right client is most important. On the properties with small margins you should be on higher priced/better clients. I know that may be an oxymoron at times, but they have the better chance of qualifying later and may be doing a L/O for reasons other than credit. The bad credit clients should be used for properties where you obtained at 80% LTV or lower. This really helps at year end when you face the senario you mentioned.
Mixing small margins and bad credit can lead to bad results. Match the properies to the clients a little closer.
Just my opinion… but hope it helps.
Tom A. - PA