What is your viewpoint/position on minimum amount hard money in low priced areas. Such as ~ 50k.
My Answer,
I have no problem with low price areas. They experience little appreciation so you have to make your money on the buy. To do an adequate job of lending Hard Money in these types of areas you should be a local Hard Money Lender.
Cork, as for the most of your post, it seems as though you were expressing your opinions or perhaps venting. If you should need help or to talk to me, you have my phone number.
When you make reference to fast nickels, slow dimes.
The term is ( A fast nickel is better then a slow dime) meaning you can make more money turning deals then just sitting on them for appreciation that may or may not come.
Hard Money minimums and other trivia - Posted by cork horner
Posted by cork horner on June 13, 2006 at 10:02:08:
Hi Ed,
What is your viewpoint/position on minimum amount hard money in low priced areas. Such as ~ 50k.
Also, your attitude toward investor borrowers occupying the property doing the work until refi? Most HML’s like the prop to be vacant during fixup stage.
I am looking at doing cre in out of town places with bird dogs/‘boots on the ground’ in distant cities. So Cal too.
As you know, my niche and specialty is new construction, rehab, remod etc. I have over 40 years of sweat blood and tears in it. Well, more sweat than blood. Few tears.----Except the last one in SD! :{
Controlling partnership arrangements is paramount besides cash being king. As you said to me at a workshop, my last partner ‘cost me a lot of money’. Ya-huh!
My latest exit strategy is selling to prequal subprime who can make the retail payments up to -0- down. Imo, the prequal subprime buyers are great for a 100% retail exit.
As you know there are many exit strategies.
‘Cash is King’ still rules the day, doesn’t it. You know, fast nickels, slow dimes.
One of my seasoned agent friends here in San Diego stated–“it depends on how fast the nickel is and how slow the dime is”
Re: Hard Money minimums and other trivia - Posted by John Corey
Posted by John Corey on June 15, 2006 at 08:30:03:
Cork,
Most HML will not lend on owner occupied property. There are legal reasons for this. Most HML operate by making commercial loans and do not want to lender to consumers.
Lets assume you have a home and you are borrowing to fund the rehab of an investment property. You will sign something indicating that you are not going to live there. Unless you say otherwise the lender will take it at your word.
To intentionally lie is to commit mortgage fraud.
To spend a night there when working late one night is not an issue. To move in with the wife and children and stay a few years is a problem.
Living in the RV that is parked in the driveway while the work is being done and using the toilet in the house is not living there.
Lets agree it is a gray area. Best not to post to forums that you are doing one thing while trying to hide the fact from the lender. That would be evidence of fraud.
Be smart. Keep your stays short. Make sure you use insurance that indicates the property is not occupied so you have coverage and are showing the intent to not be there.
Many times it is not healthy to live in a property being worked on. Living in the truck or RV might be better if you wanted to do a number of projects in an area before pulling up stakes and moving on. You can keep an eye on the tools at the same time if the area is a bit of a risk.
I personally don’t like small balance HMLs. My experience is that they don’t pay as well as 75-250K loan amounts and there isn’t enough equity cushion (in dollars not %) to make it worth my while. I would pass on a 10K loan on a 50K property every day of the week.
