Need Advice on 1st NOO loan - Posted by K.Schade

Posted by SteveS(CPA) on June 18, 2001 at 18:38:20:


I rarely do flips. I’m not good at manual labor and its kinda more work than Ilike to do.

I try to stick to L/Os and subject to deals. I look for deals that will give me a few thousand at closing and a nice income for a good number of years.

I don’t know if you have purchased any real esate courses but I would recommend Bill’s cash cow course, you can find it on his web site at

let me know what you’re trying to do if I can help I will.

Hope this helps and good luck

Need Advice on 1st NOO loan - Posted by K.Schade

Posted by K.Schade on June 18, 2001 at 11:28:56:

This message is also posted on the REI Financing page - so disregard if you allready read it over there.

My husband and I are just getting started with real Estate investments. Over the next 6 months -we plan on purchasing at least two single family homes in northern or central Florida to be used as rentals. We will be moving to FL in about a year and also purchasing are own home there at the time.

Though our studies and research - we have had some difficulty getting a good idea of what rate we should expect to pay for a NOO loan on a rental house - we also have not found a lot of information on the availability or ease of obtaining such loans.

Here is our situation: We own a house currently in CA - we have approx. 150K equity in it. We plan on purchasing rental properties in Fl at approx. 100-120K putting down 20% on each loan. We will rent the houses our for greater than 1.2% of thier purchase price. We have liquid assets of about 200K. Both our credit scores are above 700. My husband’s W-2 income is about 90K a year salary and another 20-50K stock options and bonuses. I am self employed and have been for about a year. Our combined adjusted gross income for tax purposes has been about 220K/year the last three years. We have no outstanding debt other than our mortgage for our home - and $4500 due on one vehicle that will be paid off at the end of this summer.

For my cash flow calculations - I have been using a NOO mortage rate of 7.75% for a 30 year fixed or 6.85% for a 15 year fixed assuming I will have to pay about a point to get these rates- does this seem reasonable considering the above info?

Also - does anybody know where I might find more info. about financing on the second, third, forth, etc…rental home. Does it get easier and less expensive to get loans the more history of succesful rentals you have- or does it get more difficult or more costly to get NOO loans the more loans you get. I am hoping and believe it should get easier - but I just want to understand this whole part of it better, so I can plan accordingly.

Any feedback as well as any suggestions of websites or books that will help answer these questions would be very appreciated.

Thanks - K.Schade

Re: Need Advice on 1st NOO loan - Posted by Dave T

Posted by Dave T on June 18, 2001 at 14:02:03:

SteveS has a valid warning about eventually depleting your own cash and credit each time you acquire another investment property. But let me answer your questions on the assumption that your comfort zone right now is to use traditional bank financing methods.

If you always have cash for the down payment and a satisfactory credit score, it is no harder to get the 10th NOO loan that is was to get the first.

Lenders will look at your income, credit, and ability to pay for each new loan you are seeking. They will compute your debt to income ratios exactly the same way for the 10th NOO loan as they did for the first and apply their lending guidelines accordingly.

Don’t know the current rates for FL, but they change every week (if not daily). I am currently being quoted 8% with one point for a 30-year fixed NOO loan.

Re: Need Advice on 1st NOO loan - Posted by SteveS(CPA)

Posted by SteveS(CPA) on June 18, 2001 at 12:41:31:


It’s amazing the damage that a few people with a little money and credit can do. Here’s the best advice I can give you. If you have money and credit (which you do) pretend like you have neither.

K, if you really want to be successful in real estate investing, your money and credit should ALWAYS be the very last option when doing a real estate deals.

If you keep using your money and your credit you will find yourself quickly running out of both.

Right now, it looks like to me that you both are in the preparatory stages. And that’s what you should be doing.

Right now, you should be developing a business plan, learning your market area, gathering information, putting together your team of attorneys, accountants, real estate agents, contractors, other investors and a developing a strategy.

Preparing for investing in real estate is a lot like preparing for war;

Taking over a property (or a country) using none of your own resources is by far the best way to go

Taking over a property (or a country) using someone else’s resources is then next

Taking over a property using your own resources is last

I hope you can see the wisdom in that.

There is a lie that has infected the real estate investing community that says it takes money to make money. Unfortunately a lie will go around the world 100 times before the truth catches up to it.

You do not need money to buy real estate, spend money on your plan, spend money to gain knowledge and information and spend money on your marketing then you will be successful.

Preserve your wealth at all cost.

I know it may be harder to do it this way, but you will be rewarded far more for your efforts and time.

By the way, I’m in Los Angeles, CA

I hope this helps. Good luck and best wishes.

Re: Need Advice on 1st NOO loan - Posted by Kiersten

Posted by Kiersten on June 19, 2001 at 07:25:28:

I’m a lender in FL and based on yesterday’s rates (too early for today’s) I would have done 7.75 with a point if your deal is as easy as you say. If it were more complicated (i.e.–more work on my end) then I’d do an 8 with a point. These are Fannie rates with 20% down, NOO. As long as you are putting 20% down and showing cash flow ON YOUR TAX RETURN so that you qualify at property #10, you should not have a problem. People have a problem with multiple investment properties when their tax info kills their debt ratio and/or when they are only putting 10% down. Regarding the latter, it’s not the bank that has the issue, but you run out of Mortgage Insurance companies that will cover you. Hope this helps.

Re: Need Advice on 1st NOO loan - Posted by Kris

Posted by Kris on June 18, 2001 at 16:24:53:

I certainly see your point in not spending my own resources if I don’t have to - but part of our plan involves knowing the details of the financing of the properties we wish to purchase - so I can compute an accurate cash flow and return on investment for each.

I gather from your response - that there are other altenatives out there that are more effective at creating wealth than the conventional 30 or 15 year loan I suggested. Could you give me an example or two - so that I might see if they fit our current plan - and are more cost effective alternatives for financing.

We are not interested in flipping properties or fixer-ups - just some long-term investments that will give us both- a good return on our investment and positive cash flow.

I appreciate your advice- just want to make sure I completley understand it.

Thanks - Kris Schade