Posted by jennifer on January 25, 2002 at 11:03:07:
Ed,
Thanks for the reply. I was under the impression that in general mortgage companies offer the lowest rates, and that is why I was focused on using a mortgage company instead of another financial institution.
I have perfect credit and a substantial free cash flow-Currently my mortgage advisor has me locked with a fixed rate of 7.63% for a 30yr note (10% down). Are there other options i should consider.
also can you recommend a good book that is written for intermediate to advanced real estate investors. that covers such topics as: how to acquire rental real estate (limited partnership, LLC, C corp etc.) and tax strategies. Thanks
Posted by Jennifer on January 25, 2002 at 08:14:21:
in general real estate returns are much greater with higher leverage. what are some techniques for purchasing real estate with no money out of you pocket- if the mortgage company is adament about at least 10% down. is it common to resort to another financing institution such as a bank or credit union for a loan in the amount of the downpayment. any suggestions in this area would be greatly appreciated.
Posted by Ed Garcia on January 25, 2002 at 10:22:48:
Jennifer,
The most common way to purchase with “NO MONEY DOWN” is to do it with a seller carry-back. As far as mortgage companies underwriting guidelines of 10% down, that’s easy, don’t use a mortgage company.
However after saying that, most mortgage companies will do a deal NOO with 5% down and a seller carry-back of 5% doing a CLTV (Commutative Loan To Value" or “Combined Loan To Value” of 95%.
If you’ve structured you deal right and don’t have a credit problem, and show cash flow? A small bank can accommodate you. There are other local portfolio lenders who will also work with you. If you do have a credit problem then of course you’ll have to seek out Hard Money, get the seller to carry all of it, or seek out a partner.
There is a lot to be discussed on this subject, because I think that many of us come here to Creonline just to learn how to do what you’re requesting. However it’s difficult when your talking about it hypothetically and then some one will always want to tell you why that example doesn’t work for them and of course the reason is obvious. There circumstances are different.
Usually once an investor starts thinking creatively, you be surprised how many different combinations of deal structuring they’ll be able to come up with.
Of course for those who think conventionally, these ideas are considered either shady or unrealistic which is not the case. Putting money into a deal doesn’t make the deal any better; it just makes it safer for the lender. A good deal speaks for it’s self.
Posted by Chris O. (WA) on January 28, 2002 at 04:08:08:
Let me try to digest this. In the event that you cannot fund a down payment, you should attempt exercising an option from the list below, starting with the first, and moving your way down as, and if, your attempts fail.
Have the seller carry back the full down payment.
Find a mortgage company requiring a lower down payment that you can afford.
Find a mortgage company requiring a lower down payment, and have the seller carry back the amount of the down payment you cannot afford.
Get Hard Money.
Create a deal with a private investor that could not be worked out with a hard money lender.
Any options you would like to add or modify? How about rearrange the order?
Systematizing the whole process enables me to understand it more. Once I understand everything clearly enough, THEN I’ll be able to stop going down a checklist and employ the freedom of creativity.
On an unrelated note, what does NOO stand for? What’s an NOO or an OO deal?