Re: can’t believe my banker - Posted by Ed Garcia
Posted by Ed Garcia on June 16, 2006 at 14:30:52:
Farril de foor,
I can understand why your banker is having a change of attitude. It coincides with the softening of the market. If the deal you?ve presented is a business model of how you?re doing your deals, then it?s time you change your business model.
When the market is HOT, 80% LTV can work, when it?s cooling as it is now, 80% is high.
The first 10% of a deal we don?t even count, its air, water, what ever expression you what to us, but it attributes to negotiation variances and 6% commission. When you say $239,000 to $250,000, conservatively I?ll take the $239,000. That being the case if the property was repaired up to market and sold today you?d be at 82% LTV not counting holding cost or commission.
If the property does not sell and you have to go into a holding pattern, I doubt the house would rent with a positive cash-flow.
A16 year business relationship means nothing if you?re not a prudent investor who makes their money on the buy and has POSITIVE cash-flow. The Lending community is going to tighten up in general and rightfully so, so we need to be an astute buyer with multiple exit strategies when doing a deal.