Which type of lender might lend on $100k EMD deposit?

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Which type of lender might lend on $100k EMD deposit?

Taro Wichman
Houston, TX 路 Member since 2017 路 10 posts 路 3 votes

I am wondering what kind of lender might lend on a sizable EMD deposit, $100k. Has anyone on the site performed a transaction that required it?

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Jay HinrichsBusiness Member
Real Estate Consultant 路 Summerlin, NV 路 Member since 2014 路 45k+ posts 路 66k+ votes
6y
Originally posted by @Steve Vaughan:

I could maybe see it with a bona fide, proven credit risk on a rock solid, doable contract at 3x EM in equity price/terms and assignable to me to step in as buyer with enough time to save it if going to breach.  

What is being offered in respect to those items?  

Steve when I do these its all about relationships.. and even then its nerve wracking.. LOL ANd for the borrower VERY EXPENSIVE.. which equates to some equity ...  but if the deal is good enough and its the only way to get it done.. its a win win.

the transaction lenders for double close.. generally only put the money in the day of closing and get it back basically same day.. EM deals that I have done for apartments many times those funds are out 90 to 120 days.   it becomes big boy transactions.. :) 

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  • Heath Ryans
    Investor 路 Kingsport, TN 路 Member since 2016 路 412 posts 路 254 votes
    6y

    Are you asking about a loan for your emd? To my knowledge, noone in their right mind would lend money for an emd unless they are getting an equity position in the deal. That money can very easily disappear if for some reason you aren't able to close. Granted, you should have enough contingencies to cover all your bases.

    Why try to find a loan for emd? Just for the sake of not locking up capital?

    2Reply
  • Taro Wichman
    OP
    Houston, TX 路 Member since 2017 路 10 posts 路 3 votes
    6y

    @Heath Ryans Yes that is true. Looking for a loan because I am wholesaling a deal that has a sizable assignment fee. As far as I know the best way to hide the assignment fee is to double close. By double closing I would have to put up EMD which in this case would be $100k.

    1Reply
  • William Hollis
    Investor 路 Member since 2019 路 38 posts 路 14 votes
    6y

    @Heath Ryans I'm in a similar position and figured I'd have to give up some equity in the deal. In which case any suggestions on raising EMD. I have half of it from my own funds.

    1Reply
  • Heath Ryans
    Investor 路 Kingsport, TN 路 Member since 2016 路 412 posts 路 254 votes
    6y

    @Taro Wichman @William Hollis Sorry for the delay. For some reason my notifications aren't working correctly so I just seen your replies.

    Taro, I would imagine that i'm too late to assist you with your specific deal. I apologize for the delay and I hope your deal went smoothly.

    William, the only way I see that being possible to get someone to lend is if you have very strong contingencies for the return of EMD that stretch the full term of the contract, as well as a personal guarantee on the loan amount.

    In this situation, I would try to use a line of credit or credit cards to float the EMD.

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant 路 Summerlin, NV 路 Member since 2014 路 45k+ posts 路 66k+ votes
    6y
    Originally posted by @Heath Ryans:

    @Taro Wichman @William Hollis Sorry for the delay. For some reason my notifications aren't working correctly so I just seen your replies.

    Taro, I would imagine that i'm too late to assist you with your specific deal. I apologize for the delay and I hope your deal went smoothly.

    William, the only way I see that being possible to get someone to lend is if you have very strong contingencies for the return of EMD that stretch the full term of the contract, as well as a personal guarantee on the loan amount.

    In this situation, I would try to use a line of credit or credit cards to float the EMD.

    I have done this many many times..  you have, can it be done, then reality..  reality is my clients that use me for this are bona fide .. I would never do it for someone starting out or does not have significant assets etc.  but yes its a common business practice in many arenas.

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  • Steve Vaughan
    Rental Property Investor 路 East Wenatchee, WA 路 Member since 2014 路 10k+ posts 路 16k+ votes
    6y

    I could maybe see it with a bona fide, proven credit risk on a rock solid, doable contract at 3x EM in equity price/terms and assignable to me to step in as buyer with enough time to save it if going to breach.  

    What is being offered in respect to those items?  

    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant 路 Summerlin, NV 路 Member since 2014 路 45k+ posts 路 66k+ votes
    6y
    Originally posted by @Steve Vaughan:

    I could maybe see it with a bona fide, proven credit risk on a rock solid, doable contract at 3x EM in equity price/terms and assignable to me to step in as buyer with enough time to save it if going to breach.  

    What is being offered in respect to those items?  

    Steve when I do these its all about relationships.. and even then its nerve wracking.. LOL ANd for the borrower VERY EXPENSIVE.. which equates to some equity ...  but if the deal is good enough and its the only way to get it done.. its a win win.

    the transaction lenders for double close.. generally only put the money in the day of closing and get it back basically same day.. EM deals that I have done for apartments many times those funds are out 90 to 120 days.   it becomes big boy transactions.. :) 

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    4Reply
  • Steve Vaughan
    Rental Property Investor 路 East Wenatchee, WA 路 Member since 2014 路 10k+ posts 路 16k+ votes
    6y
    Originally posted by @Jay Hinrichs:
    Originally posted by @Steve Vaughan:

    I could maybe see it with a bona fide, proven credit risk on a rock solid, doable contract at 3x EM in equity price/terms and assignable to me to step in as buyer with enough time to save it if going to breach.  

    Heavy transactionWhat is being offered in respect to those items?  

    Steve when I do these its all about relationships.. and even then its nerve wracking.. LOL ANd for the borrower VERY EXPENSIVE.. which equates to some equity ...  but if the deal is good enough and its the only way to get it done.. its a win win.

    the transaction lenders for double close.. generally only put the money in the day of closing and get it back basically same day.. EM deals that I have done for apartments many times those funds are out 90 to 120 days.   it becomes big boy transactions.. :) 

    Heavy transactions I bet.  Do you guys ever want the right for the contract to be assigned to you?  Maybe more than you want to deal with. Of course with larger apt buys gotta watch the date EM goes hard.  That's when I'd want the right to step in as buyer if needed. 

    I thought of you on my current deal, Jay.  I've met my match with a creative buyer.  He's segregating costs on the buy, leaving me as seller with a 33% portion POC.  This bag of paper is leaving me a funding gap on my buy side (1031 exchange).  $335k.  I think I got it figured out but asked myself what would Jay do?

    Then I had visions of planes and Teslas and got my answer馃槑

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant 路 Summerlin, NV 路 Member since 2014 路 45k+ posts 路 66k+ votes
    6y
    Originally posted by @Steve Vaughan:
    Originally posted by @Jay Hinrichs:
    Originally posted by @Steve Vaughan:

    I could maybe see it with a bona fide, proven credit risk on a rock solid, doable contract at 3x EM in equity price/terms and assignable to me to step in as buyer with enough time to save it if going to breach.  

    Heavy transactionWhat is being offered in respect to those items?  

    Steve when I do these its all about relationships.. and even then its nerve wracking.. LOL ANd for the borrower VERY EXPENSIVE.. which equates to some equity ...  but if the deal is good enough and its the only way to get it done.. its a win win.

    the transaction lenders for double close.. generally only put the money in the day of closing and get it back basically same day.. EM deals that I have done for apartments many times those funds are out 90 to 120 days.   it becomes big boy transactions.. :) 

    Heavy transactions I bet.  Do you guys ever want the right for the contract to be assigned to you?  Maybe more than you want to deal with. Of course with larger apt buys gotta watch the date EM goes hard.  That's when I'd want the right to step in as buyer if needed. 

    I thought of you on my current deal, Jay.  I've met my match with a creative buyer.  He's segregating costs on the buy, leaving me as seller with a 33% portion POC.  This bag of paper is leaving me a funding gap on my buy side (1031 exchange).  $335k.  I think I got it figured out but asked myself what would Jay do?

    Then I had visions of planes and Teslas and got my answer馃槑

    ya primarily CA deals..   I suspect you will work your deal out just fine.. And remember I have joined the ranks of the furloughed or retired pilots.. 40 years flying around in those little bug smashers I figured i temped fate just about enough and am fine with all the fond memories.

    I did truly love flying into Pangborn though and the airport at Chelan that one is a little tricky..  And flying out lake Chelan to Stehken for the air tours  such awesome country and such a well kept secret..  if I have some regrets i do regret never getting my Float rating.

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    3Reply
  • Roger Lindell
    Puyallup, WA 路 Member since 2017 路 10 posts 路 1 vote
    6y

    @Jay Hinrichs

    Sitting on Lake Chelan now. :)

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant 路 Summerlin, NV 路 Member since 2014 路 45k+ posts 路 66k+ votes
    6y
    Originally posted by @Roger Lindell:

    @Jay Hinrichs

    Sitting on Lake Chelan now. :)

    Touche'   My Grandfather had a hardware store there in the 30s 40s and got in on the Grand coulee action.   

    Enjoy  !!!

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    1Reply
  • Josh Rohrbach
    Member since 2019 路 1 post 路 0 votes
    2y

    @Taro Wichman @William Hollis I wish I would've seen this when you initially posted it! I'd love to help fund your deal the next time you need EMD funds or to Double Close on a wholesale deal. My partners and I have no problem providing your funds for transactional lending like this case. Do you have any more deals coming up that will need funds?

    0Reply
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