ED, URGENT HELP NEEDED ON CLOSING , PLEASE! - Posted by Potor

Posted by Bruce Barilar on July 25, 2002 at 13:51:58:

Potor,

Please try not to use all caps- it is like shouting on the internet.

I do not understand why a hard money lender will only lend at 40% LTV, I would think 65% is more reasonable. That number would put you above the pruchase price. Then you have closing costs to consider. How is the 40,000 number being arrived at? Do you have a local investment club in your area? I would go there to find out who can handle your closing.You also didn’t say what the rental income would be, what taxes and insurance are. Did you run the cash flow numbers? Refinancing is not an exit strategy, it is a means to buy and hold. Since you are very new, I would heed Zack and Eric’s advice. Educate yourself, they have done very well for themselves. Personally, I am always learning and reading about this real estate.
Again , I will wish you good luck, only because we all truly mean it.

ED, URGENT HELP NEEDED ON CLOSING , PLEASE! - Posted by Potor

Posted by Potor on July 24, 2002 at 21:07:39:

HELLO ED:

I HAVE FOUND A PROPERTY FOR $23,000, WITH A MARKET VALUE OF $40,000, AND ITS BEING FLIPPED TO ME BY AN INVESTOR. I HAVE FOUND A HARD MONEY LENDER WHO WILL BE WILLING TO LEND ME $16,000 TOWARDS THE PURCHASE WITH 16% INTEREST PER YEAR.

HE’S CHARGING ME FOR $250 APPLICATION FEE, 6-8 POINT ON LOAN PLACEMENT WITH A MAXIMUM OF $1500, $250 FOR DOCUMENT PROCESSING, $25 FOR SOMETHING ELSE.

IT MEANS THAT I NEED ALMOST $10,000 TO BE ABLE TO CLOSE THE DEAL. I HAVE TO GET A TITLE SEARCH DONE WITH TITLE INSURANCE AND FIRE INSURANCE.

DOES ANYONE THINK THAT THIS IS A GOOD DEAL?
CAN ANYONE HELP WITH HOW TO CLOSE ON A PROPERTY?
DOES ANYONE KNOWS A REPUTABLE COMPANY WHICH CAN DO THE SEARCH ON THE TITLE OF THE PROPERTY.

PLEASE HELP ME.

Re: ED, URGENT HELP NEEDED ON CLOSING , PLEASE! - Posted by Ed Garcia

Posted by Ed Garcia on July 26, 2002 at 11:23:34:

Potor,

I agree with Bruce, watch your caps for the reason he gave you.

Potor, something’s not right in River City. In most cases a Hard Money Lender will go 65% of the value of the property. 65% of $40,000 is $26,000, which is more then enough for you to do your deal. If the Hard Money Lender is only willing to give you $16,000, I’m concerned that the lender does not feel comfortable with the equity or value.

Lenders prefer larger loans and you give me a feeling that the lender is holding back. Also it’s difficult for me to imagine another investor flipping a deal with the numbers that you have given, if so then what did he buy it for $16,000 after all he had to make money.

I feel the same as Zack, on the surface your numbers look OK, but you need to do your homework and have a definite game plan as Zack suggest. If you should get into trouble on this deal you can get eaten up in holding cost and debt-service. The size of the deal makes it difficult to finance with a mortgage company and you will be experiencing that on the back end when you try to find a qualified buyer to sell it to. So your main candidates are, a small bank if you have good credit and a Hard Money Lender if you don’t.

Ed Garcia

Re: ED, URGENT HELP NEEDED ON CLOSING , PLEASE! - Posted by clint n ok

Posted by clint n ok on July 25, 2002 at 22:46:05:

hey porter try stocks.

Re: ED, URGENT HELP NEEDED ON CLOSING , PLEASE! - Posted by Zack W

Posted by Zack W on July 24, 2002 at 21:26:28:

Potor,

I am not Eddie, but, this deal seems way to skinny and from the price of the house I am guessing it is located in a bad area of town. What is your exit strategy [meaning, how are you going to make any money on this thing?].

Potor, if you are asking these types of questions, I would suggest at this time backing out of the deal, educating yourself to your market and educating yourself on a few techniques. Real estate can be very rewarding and very lucrative, but, if you get started on the wrong foot, you may never make it to the gold.

I wish you luck in whatever you do.

Zack W

Re: ED, URGENT HELP NEEDED ON CLOSING , PLEASE! - Posted by Potor

Posted by Potor on July 24, 2002 at 22:41:33:

THE COST OF THE PROPERTY DOES NOT NECESSARY MEANS THAT ITS IN A BAD
NEIGHBOURHOOD. THE GUY IS FLIPPING THE PROPERTY, AND IF THE PROPERTY HAS
EQUITY OF ABOUT $12,000, WHY NOT CASH IN?

WHY DO I HAVE TO START WITH AN EXPENSIVE PROPERTY WHICH HAS NO EQUITY ON IT?
MY EXIT STRATEGY IS TO REFINANCE THE PROPERTY. THE GOOD THING ABOUT THE
PROPERTY IS THAT, I DO NOT HAVE TO DO A SINGLE REPAIR ON THE PROPERTY. ITS
READY TO BE RENTED OUT.

DON’T WISH ME LUCK JUST HELP ME WITH INFORMATION IF YOU CAN. I KNOW THE
CONSEQUENCES OF EDUCATING YOURSELF, HOWEVER THERE WILL NOT BE NOTHING FOR
YOU TO MAKE MONEY ON IF YOU WANT TO KNOW EVERY RULE IN THE BOOK. THAT’S THE
BEAUTY OF THE FORUM. YOU GET TO BUY INTO THE MINDS OF SEASONED INVESTORS.

SO,LET ME KNOW IF YOU HAVE ANY THINGTO OFFER BESIDES WISHING ME LUCK.

POTOR

Re: ED, URGENT HELP NEEDED ON CLOSING , PLEASE! - Posted by Eric - FL

Posted by Eric - FL on July 25, 2002 at 08:30:01:

Here’s some advice, don’t do it!!! If you need hard money to do the deal and can’t get bank financing or do not have reserves to buy this all cash this deal is too skinny. Why are you using hard money and refinancing? Refinancing might take you 6-12 months for a deal this skinny and bad credit. So, before being a jerk and telling someone not to wish you luck why don’t you educate yourself and negotiate a better price.

Good Luck,
Eric