Advice On A Strange Situation . . .
I just purchased a 2-unit FSBO below market. It is a $110-120k property, which I purchased at $89,900. The lender I originally went with told me no prepayment penalty on the loan, I received the loan docs which said there was no prepayment penalty (with some small legalese print saying that the terms may differ from those represented . yada yada) and, lo and behold, there was a stiff prepayment penalty in teh the loan docs at the settlement table. I walked away from that loan, secured the whole amount from a family member (89,900) and am looking to refi and release his money back to him. FWIW, we have excellent credit.
A couple of questions:
1. A lender told me that many mortgage companies can check your credit report in a 30-day period and it still only counts as "1" hit to your score. Is this true??? I'd like to really shop this deal.
2. Anyone have any experience with lenders they would recommend w/no seasoning requirement?
3. Quickenloans might have some good options. Any opinions?
I'd love to put this property in my LLC (which is new w/no credit history) and refi it, but am not getting a very positive response from the lenders I'm talking to!
Any advice in general would be very much appreciated.
Thanks,
Lynne in PA
That's good that you walked away from the financing. I read a post recently about the old bait & switch at the closing table.
If you want to shop WITHOUT a broker because you have good credit, take your credit report/score (within the last 30 days) with you when you shop (or offer to fax it upon request). Be perfectly clear that you do not want multiple hits to your credit report. Your score is 7XX and ask for the terms you are looking for. Not sure of your timeframe....HELOC on an investment prop w/no seasoning req. There are fees if you close a HELOC before a certain period but they are minimal in comparison to closing costs on a re-fi.
Quickenloans is good for primary rez deals, in my experience. See what they're offering & try Greenpoint too.
You will have to personally guarantee a loan in corp name if the biz does not have sufficient credit.
HI Lynne
I know a local Broker who is an investor, hard working, and just generally a great guy. If anyone can help I'm sure he can. message me and I'll give u his info
Bri
I am not sure what you mean by avoiding a financial manager, but you should contact a hard money lender and see if they can set you up with some deals. They are motivated to put your money to good use as they make money on the points they charge and a spread on the interest. Plus they usually know the local laws, have the contacts in place, are using the proper forms and have a lawyer or team of lawyers to protect your and their interests.
Not sure if I am understanding your question but you can hire a property managment company to do the landlording on your properties.
[addsig]
I understand your question perfectly and I take these kinds of investors all the time.
This used to be called Limited Partner investing and it was a big business. Unfortuantely it was very much an income tax business. After the Tax Reform Act of 1986 the bottom dropped out of the tax loss deals and the name Limited Partnership got a bad name but the basic structure is still sound although more often than not these days some version of a LLC is used.
It is a game of risk and reward. I have done deals where the investor partners had relatively minor risks and they were happy with small (10-12% annual ROI). I am doing a deal right now that has substantial risks that's structured like this, the investor gets a 12% ROI before I take any money between 12% and 50% we split 50/50. Once the investor has a 50% annual ROI he is done and I keep all the earnings above that.
The trick, for your friend is to find a partner who can listen to his concerns, figure out how much risk he can live with and structure deals around his comfort level. Its not for everybody but it makes a lot of sense for a lot of people.
What I see here is a golden opportunity for YOU to be the active REI partner in a 2 man partnership or (LLC) where you do the work and the property finding, buying, fixing and selling...and your friend furnishes the capital...and you both profit from the relationship.
I've been involved in lots of these and if this is well done, it's a win-win for both/all partners.
Just have the agreement completed by your lawyer when you agree on who does what, how profits are split, who makes decisions, etc....as anything unwritten is likely to be a bone of future contention.