In panic mode and papers need to be signed

21 Replies

Hello i have a question. I found a 4 plex that i am looking into they are asking 48000 for drove by and looked at it i would like to go lower on it as the out side is ran down i haven't had a chance to see the inside. I reached out to a lender to see how much I could get and they are willing to give me a loan up front to cover the cost at 4% interest and 1% down with a 6 month grace period. ( wont state the information of the lender here due to privacy). They want information signed fast for the loan but I havent had time to get all the numbers. Nor have i had an opportunity to see the inside. I do know that ran down duplexes rent for 450-500 and other more fixed properties run for up to 675.

Property tax is 8% in the area and insurance is about $150. I am hoping that the rehab is less then $40k. It is on 4 meters so the tenant would pay utilities. I work in pest control so i would take care of that as well. It has a 2 car garage and a 2 car carport.

The lender has sent me a contract with the terms which i assume is ok to sign now. But should i sign anything yet until I get more information? I hope its not a bait and hook Deal just kinds stuck. They are a bit pushy in with the sign of the first agreement as its been 24hs since I spoke with them. Everything is in writing via email. But this is causing a bit of panic and pressure. This would be my first property and i have 3 kids to make sure i can feed.

And suggestions would be great. Please let me know if there is any information that I missed that you would need to know. Thank you.

Is there

IMHO.

Nobody does a 1% down investment property. 
you can’t get a loan for a property you haven’t bought. 
why would they do a $48,000 4% loan? So they can make less than $2,000/year max? A $230/mo payment?

Nope  stop talking to them  


In My Humble Opinion.

Means I could be wrong, I’m not a professional in the field I’m talking about at the moment. 

Ps. Good luck. 

I don’t think a reputable lender would be pushing you like that. Don’t give any money upfront and do some more research into this company.

Is this a bank or hard money lender?

@Shane Womboldt   The lender you're dealing with is scamming you, so I'd suggest you just stop communicating with them completely.  No legitimate hard money lender loans money at those terms (4% interest, 1% down).  Hopefully you haven't given them any money or any of your personal info yet.  

I'm with the pack. Especially not for such a small loan size.You declined to mention the lender by name for privacy, but I'm not sure why. Someone else on here may have dealt with them directly and can provide direct experience or you could save someone else from a negative experience.

@Shane Womboldt , here's a clue to whether or not this is legit...

4% and 1% down...

Hard money lenders don't talk that way nor do we give loans at that low of an interest rate or fee. Especially on that low of a dollar amount.

Also, because they are not legit, they don't know the lingo. The 1% should have been 1 point. The point is a fee that we charge for putting the loan together for you. It's how we get paid. We will never tell you it's a down payment.

Whoever you are talking to is a scammer. They are not a legitimate lender.

Good luck!

@Shane Womboldt I completely agree with
@Jeff Cichocki the language is a major give away. Best thing to do is jump on the phone with 5-6 different Hard Money Lenders, which you can find here on Biggerpockets, and get used to hearing the terms and lingo they speak. Then you’ll be able to spot these scammers coming at you a mile away.

Lender is definitley a scam - hard money is usually 10-15% plus points and if you have little experience they want a major down payment. How much money do you have for reapirs?

I am also suspicious of the deal? Why would anyone sell a property that brings in $2,400 in rent for $48,000? There is certainly a reason and you have to find out what it is. 

@Marcus Auerbach it is the mid west so there are some cheap properties. The one I live at was $90k for a 5 bed 2 bath den mud room basement and 1.5 acres of land with no rehab needed.

But upon closer inspection of the house with a contractor yesterday. The rehab for everything would be far more then I want to put in. It would basically need to be torn doen and rebuilt

So if the lender is asking for 10-15% interest then they sound more legit.

Thank you all. I am happy i got to bounce this off others. There was a lot of red flags and i was hoping the my cautiousness was not driving me away from a good deal. Glad to see that we made the right choice.

All lenders will want to see the financials, condition of the property, calculate how much rehab is needed and at most will only loan 60-65% of the ARV. This is their protection against borrowers who default.

@Shane Womboldt , there are some hard money lenders who I've seen as low as 8% and 1 point, but the norm is 10+% interest and 3-5 points. The national average used to be 15% & 5 points; I'm not sure what it is right now.

HML's are going to have LTV limits. I've seen them as high as 70%, but the norm is 60-65%.

HML's need to see the details of the property. They need to see purchase contracts, rehab estimates, comps & CMA's (they'll still want to get an appraisal though), your LLC docs(if you use one), Trust info (if you use one), etc. No one lends money without a good assets and good documentation.

Legit lenders also escrow rehab funds if they are providing it.

If anyone offers you money and it's not inside these parameters, it's likely to be a scam.

Good luck!