need help with this - Posted by cherry

Posted by Ed Garcia on March 05, 2001 at 11:27:07:


Not in Ill. but this week we’re looking for hard money lenders from all over the country, so stay tuned to see if one should come on the scene that could be useful to you.

Ed Garcia

need help with this - Posted by cherry

Posted by cherry on March 03, 2001 at 14:13:06:

4 duplex and triplex renting for 2400 a month 90k would get all. three section 8 approved. mortgage brokers says on my preapprovals i can get 30k to 40k based on dept to income 10% down seasoned money i dont have 10% down seller cant do carry back selling due to divorce. how do get around dept to income and down payment if no carry back. check out other lenders? wont i just keep getting into same problem?help thanks

Re: need help with this - Posted by steve wright

Posted by steve wright on March 04, 2001 at 01:03:32:

Cherry, Maybe the seller could refi, pay ex off, (she quick claims over to him) possibly put some $$ in his pocket too? (I don’t know what the existing loan is, if any) Master lease it to you with a 2-3 year option for $1,000/mo. An addendum to the Option should include a purchase agreement that seller agrees to sell and will create an AITD in the amount of, say, $100,000 at 9% due in 5. He, the seller, is out of management, covers his debt and is in a secure position, the ex is gone, you get an opportunity and the seller gets either increased cash flow or cashed out (if you and the property qualify) when you exercise option. If he has mortgage over basis he may not even want you to get a new loan and cash him out.

Re: need help with this - Posted by Nate

Posted by Nate on March 03, 2001 at 18:31:20:

Cherry -

You may be talking to the wrong people at the bank. I would go to the commercial loan people, not the residential loan people. For a property like this - 11 units total and a very attractive cap rate assuming normal expenses (which you will, of course, have to verify) you would want to get a commercial loan. It will be based more on the income and expenses of the property rather than you personally.

It won’t get you all the way there, but it will get you closer than having to find a seller that will carry back half or more of the selling price in a second mortgage.

Good luck,

Re: need help with this - Posted by cherry

Posted by cherry on March 04, 2001 at 19:55:59:

sounds good but you went way over my head! the guy selling them is a realestate invester and he told me he would love to carry back for me but his wife says sell all i want half would this still work? and if you think it can can you explain so can understand it better? sorry Iam new thanks

Re: need help with this - Posted by Ed Garcia

Posted by Ed Garcia on March 03, 2001 at 21:31:00:


First I have to tell you that it’s debt, not dept, to income ratio. I make mistakes like this all of the time Cherry and I just wanted to help you for future reference. Cherry, your broker should on the 3 unit and the 4 unit building, be adding the income in and then give you 75% for debt service. So you see the income from the property should qualify you for the purchase. If not, then you either have a negative cash flow or other high personal debt.

As far as down payment is concerned, now you know why I kept telling you to focus on one property at a time. I wanted to see you do at least one deal, because at the time you said you had no money but $2000, and then go from there. In doing a deal and getting it down, you would increase your income with the positive cash flow of the new rent.

At one point you mentioned your broker friends as partners, now might be the time to consider that. Here in California, I could get your down if need be with hard money. But I don’t know what financing is available in your area when it pertains the hard money.

I see it to be time for either convincing the seller to take a chance you, or get cash or a partner.

Ed Garcia

Re: need help with this - Posted by Steve Wright

Posted by Steve Wright on March 04, 2001 at 22:54:46:

Cherry, You ask “would this still work?” Let’s find out. I need some more information. Are there any existing loans on the property? How many? What is the total amount owed. Are they institutional (bank) loans or private money? (hard money loans) If the property dose have loans, what is are the interest rates, due dates and payment amounts? How long has he owned the property and how did he acquire is? Did he by it, trade into it, foreclose on it? What did he pay for it? Why dose he want to sell it? I know you mentioned divorce but why isn’t he buying his ex wife out? You mentioned 11 units grossing $2,400/mo for $90,000. ($28,800/year gross income - 60% expenses = $11,520 NOI = 12.8 CAP Rate) This appears to be a pretty comfortable property for someone to own. Dose he manage it? Dose he live there? I don’t know why he wants to get rid of this property. I don’t think it is because he is getting a divorce. Is it listed for sale? What is the asking price and how long has it been on the market? In other words I need to know a little more about the property and a lot more about him and why he dose not want to own this property any longer. What is he trying to accomplish? Dose he need/want money? Would passive (no management) cash flow or a note he could sell or trade work for him? You mentioned he is a real estate investor, is there another property/project he wants to acquire? When we have the above answers then we can start to determine if a refinance to pay his ex off and a master lease with an purchase option for you would meet his needs. If you can provide me with these answers I will follow up and continue to give you my opinion on how you might structure a transaction that works for everyone.

Re: need help with this - Posted by cherry

Posted by cherry on March 03, 2001 at 21:49:45:

broker says 6 months payment before they could count rent money ? my dept to income with 40k for investment is 43% myscore is 660 but i have alot of new credit new car new suv new boat all in one year i know i should start with just one but the potential is so good i cant seem to walk away and start small i did buy a trailer on contract 500 down 168 a month now i have someone wanting to buy it 1000 down 325 amonth 5 years so i have started small but the seasoning of this rent tears me up and i have talked to the commercial lenders at the bank and they have told me the same season the money to count it?tried partner besides not know anyone to take a risk all say let me see you do it first then we will talk partnerships the only ships that sink? tell me how hard money works i have search the archives but i still dont fully understand itthanks for your help

Re: need help with this - Posted by cherry

Posted by cherry on March 05, 2001 at 11:44:28:

all i found out is yes he owes money on them he is besides the divorce he is moving out of the area he has a total of 13 prop.he has someone takes care of them for him a crew he calls them he said he would come down if i wanted more then a couple i didnt know he had 13 i only knew of 4 duples and comlpex i told him i was just starting and he said to start out small so iam going to get a list of all and see what comes about he just put them up for sale less then a week ago with a realtor ranging in price from 20k to 80k with buy more save more like i said i didnt even know about some of them. but the ones i know of 3 plex listed for 45k rents 430$ 375$and 325$ duplex listed 30k 400$ and 325$ and duplex 295$ and 325$ for 20k i will geet more info but as far as how much he owes i dont think he will tell me he lives in one that he is selling but i dont think it is one i know about

Re: need help with this - Posted by cherry

Posted by cherry on March 04, 2001 at 19:29:45:

i searched archives on hard money i think i understand it ed do you do hard money in illinois?

Re: need help with this - Posted by Steve Wright

Posted by Steve Wright on March 05, 2001 at 22:57:23:

Cherry, You may want to call Ed Garcia if you have not already, and ask him how much of a 2nd loan he could get for you on the property. Maybe it would be enough to pay the ex wife off and then the seller might sell you the property and carry back the difference. (you mentioned he would carry back financing but his ex insists on cash for her share) You would then make payments to the seller for the amount of the first loan, a payment to Ed’s lender, the second, and a payment to the seller for his remaining equity position. (sounds like a lot of loans but the payments are more for a while when you don’t put any money down) Maybe if you also offered to spend some time and a little money fixing up the 3-plex he would feel as though you are committed and it would improve his collateral. Perhaps if you could get started with the 3-plex and take care of the property and make your payments on time he would want to sell you his other properties too. I think you should present the seller with a written offer, perhaps like the one I just described, subject to your getting a loan. The only stupid offer is one that is not made. Remember persistence overcomes resistance. Keep on this one and you will learn more and more about what your doing and what it will take to make a deal with this seller. Good luck.

Re: need help with this - Posted by fred arndt

Posted by fred arndt on March 05, 2001 at 18:34:16:

cherry, I am in Illinois and also a mortgage broker where in Illinois are you from and maybe I can help you with some of the financing I have a few pieces of property that i have creatively purchased so maybe if you tell me the details i would be able to help or maybe partner up with you please e-mail me so that we can talk about it

Re: need help with this - Posted by fred arndt

Posted by fred arndt on March 05, 2001 at 18:51:31:

cherry, I am in illinois please email me at or call me at 630-226-1631 my name is fred arndt and I am an illinois mortgage broker and I also buy and sell property and help investors with financing please call me