Posted by JoeB(Atlanta) on March 17, 2000 at 09:25:21:
Hi Steve, I wanted to clarify some of my points and your response to above post. BTW, I have lots of respect for the way you run your business, we also have an excellent reputation for honesty and integrity.
Re: we always have emergency fund-private lenders that we can use (and have used) to purchase the house when buyer or lender falls through. I guess for the sake of simplicity I assumed the best with Kelly (I don’t know whether or not she does). But I do feel that ‘all cash’ is a valid term, if you have access to emergency cash as we do.
The second clarification was re: the ‘fraudulent investors’ I referred to. In Atlanta we’ve been told by many lenders (and faced this accusation ourselves) that the ‘fraud’ they’re guarding against is when an investor has an appraisor and an attorney in ‘his pocket’ and they all artifically inflate the price of a house and fool the lender into loaning too much money.
We’ve been accused of this because we buy them cheap and sell them with nice assignment fees to other renovators. I was assuming Kelly was doing the same (and wasn’t falsely jacking everything up).
Hope this clarifies some things,
Best of success,
Joe Brillante
I finally got a deal acceped a (Flipper) I tried to arrainge for a double closing. The Bank insists that my money be held in escrow even though my buyer has the cash to pay both me and the seller! Has anyone ever heard of this? The Bank basicly told me that they are cracking down on these investors doing deals without cash available! They said to me “The Partys’ Over for you Investors” you will all find out within the next few years. They said that we can certainly do these types of transactions but that we will be needing cash on the table, even if for only 15 minutes. They said you must complete one closing before beginning the next one.
How do I deal wiith this? Welcome to Investing I suppose.
Re: Bank says’ to me before simultanious closing “Where is your cash?” - Posted by Bill K. - FL
Posted by Bill K. - FL on March 16, 2000 at 09:32:57:
I’ve never heard of this. I am assuming this is the bank that owns the property? Is there any mention of this in the purchase contract you signed? If not, they are blowing smoke. If this is the lending bank for your buyer, it shouldn’t make any difference to them. They are making a loan to your buyer for a certain property period. What I would suggest if this is the case and you can’t work around it with this bank is to find another lender (there are hundreds if not thousands). If you are not already working thru a mortgage broker who has access to many lenders then get started now. There is no reason to put up with that nonsense. (Sounds like a jealous employee to me). Remember: Be Persistant.
Re: Bank says’ to me before simultanious closing “Where is your cash?” - Posted by JoeB(Atlanta)
Posted by JoeB(Atlanta) on March 16, 2000 at 06:52:10:
Hi Kelly, we’ve been in this same situation but usually when we try to flip a decent-condition house to an owner-occupant for a regular, institutional loan (as opposed to a flip to an investor with a hard-money loan–hard money lenders are not very concerned about whether seller/flipper has any cash or not).
Yes, it is becoming more frequent w/institutional lenders because of all the fraudulent investors out there. There are only three ways around it that we could figure…
1.ASK the lender/underwriter/atty WHY they need you to have the cash. Tell them you are NOT one of the fraudulent investors and tell them you’ll do anything they request to prove that to them (sometimes you get some open-minded folks that will explain their situation and you can give them documents, etc that make them happy again).
2.If #1 doesn’t work AND you can’t wait for Buyer to find another lender AND you can’t wait to find another Buyer, you could seller-finance the deal for your Buyer and flip the note at closing table for cash (click on American Note or e-mail Michael Morrongiello at MikeM@sunvestinc.com and ask about ‘table funding’).
If #2 doesn’t work because the financials are too tight, then GET the money (you have to decide if you’re comfortable with some of these radical suggestions) that the bank wants you to have for 5 minutes by: cashing in your life savings; borrowing against a life insurance policy you have; cash advance on your credit cards; offering a friend, relative, or local REI club member/investor or hard-money lender $1000 to $2000 interest in return for them depositing the money in escrow with your atty for a couple of minutes.
Joe,
I think you make great points in #2 and #3. I have a real problem with #1. He is making an all cash offer and does not have the cash (probably no plan to come up with it unless he flips it) and then you want him to tell the bank that he is not one of these fraudulent investors. This is contradicting himself.
My take on it is that if you put “all cash” on the contract and don’t have all cash then you are committing fraud. A prequalification letter from a lender and subject to financing is what I prefer to see investors doing, then let the bank decide what they want to do.
In the case of a prequal letter the investor should make a real attempt to get financing in the event they can not flip the property. A letter in place simply to create a smoke screen for the lender is, in my opinion, also unethical.