Posted by Frank Chin on February 04, 2001 at 08:01:59:
I’ve been involved in Real Estate for 20 years doing mainly 2 and 3 family homes. Then got tired of Software last July after doing it for 15 years. I quit my job to concentrate Real Estate.
The problem we had was:
1- Rental Income replaced my wife’s salary, but not both.
2- As we bought more and more properties with income check loans - the credit scores and ratios got lower and lower. We thought it was ridiculous that we BEARLY made the last loan with 150K combined salary with rental income to boot.
Even if we worked and want to buy more real estate - we would need three jobs to get the bank’s ratios come out right. But then we would not have any time to manage the real estate.
Our restructuring Plan involves:
1- Selling our residential portfolio
2- Buying Commercial Real Estate.
We’re looking at a number of commercial deals right now. The main points:
a- Commercial loan rates run 8.5%.
b- Lenders look at income from the properties - not your W2. They look at personal credit, but mainly to see you’re not a crook.
c- Downside is principal amortization runs higher.
d- However- higher returns makes up lots of the difference.
e- There’s more seller financing available. Most are tired landlords in their 70’s wanting out who paid off mortgages years ago.
f- We’re also thinking of foreclosures and rehabs again. However, we will pay all cash - thus not requiring income and credit checks.