Re: ED, need advice on big loan - Posted by Ed Garcia
Posted by Ed Garcia on February 25, 2002 at 02:46:56:
You don’t tell us where you and the property are located.
I can tell you this right now, this is a deal with TALL NUMBERS and because of that it’s going to be hard to find someone to dance.
Pat I can see you salivating that you’re going to make a couple million bucks.
Exciting isn’t it. By the way, how do you plan to debt service a 2.5 million dollar loan?
If you qualify, which by the way you’ve written your post, I don’t think that you do, at 8% you will have a monthly payment of approximately $18,500 per month.
If you could go hard money, it would cost 10 points and 14%. Even if your payment were interest only, your payments would be $32,600 per month.
How much thought have you put into this deal Pat. Being from California, I’ve financed properties such as this. I’m going to tell you right now, it’s not easy finding a qualified buyer.
You say the owner will deed over the property to you if you come up with a loan for 2.5 million and then wants to split the deal with you.
Tell the owner to close his shirt his heart’s falling out. If you were to come up with 2.5 million, you would be saving the deal as well as the owner from a foreclosure. As a matter of fact if you could come up with 2.5 million, you could more than likely purchase it from the existing lender.
Houses in this price range take time to market. Don’t tell me that it will sell over night, because if that were true the seller wouldn’t be talking to you.
The average time for a house in that price range in California is 6 months to a year or longer.
Are you prepared to debt service the house for a year? That will be $391,000 per year.
You could go to the existing lender and ask them if you could assume the existing loan because it’s in default and the borrower is willing to sign the property over to you. Again you would have to show the ability to pay.
Pat, I’m sorry, but I think you’re biting off more than you can chew. I think what you have here is a dream with no game plan.
If you can’t sell it in a timely manner your going to say, gee I thought for sure I could sell it. Oh well I guess you’ll just have to take the house back.
Pat, even if I showed how to structure the deal, I don’t think you could debt service the loan. Don’t tell me let me guess, lets do a moratorium on the payments. Sorry, but because of the size of the deal most investors or lenders wouldn’t feel comfortable doing that with an unqualified borrower.
Pat because it’s a sizable deal most investors and lenders are going to look at this deal a little harder than they would a deal that’s more marketable or affordable.
My suggestion is to find another deal and don’t look back,