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He replied to my e-mail but it isn't looking good
As you can see from my response, I am not going to accept his terms.
I'd have to be crazy first.
----- Original Message -----
From: Mr. Maxwell
Sent: Tuesday, May 02, 2006 10:37 AM
Subject: Re: Private money for rehab/Reply
A bank is a bank and a bank is a bank... ;) This man is going to be out looking to charge high rates and make alot of money in a very safe manner. If he's serious about this he would not want to scare business away with an application fee because he knows he will make the real money on the actual deal.
Again, I'd like to know what kind of rate he's got in mind over there and I'm not comfortable at all with an "application fee". A couple points at closing would make alot more sense. If he will only go up to 50% I can't pay over 14%... if he goes to 60% I can pay 18%...... both would be figured on the 360 day clock.
Another question I have for this man is: How much cash has he got to work with?
I'll do business with him so long as he shows me he is serious and comes up with some reasonable terms
----- Original Message -----
To: Mr. Maxwell
Sent: Tuesday, May 02, 2006 10:25 AM
Subject: Private money for rehab/Reply
Thanks for the reply. The up front fee is one charged by many, many banks. If you went to a bank for a mortgage and had the credit that they would accept, you would be asked to drop $500 without a blink of the eye. It is an application fee. Call around, you'll see what I'm talking about. But understand this, all you need to qualify with this gentleman is 50% equity in a property....NO CREDIT. Of course, you want to prove that you can pay the mortgage. That is what the rent rolls would go towards. But if you don't have them, then you would want to provide some other proof.
Let me know what you want to do.
"Mr. Maxwell" <[email protected]> wrote:
This "up front fee" it is to be paid before closing or at closing... or?
I'm trying to find out if your talking about paying points.. or what?
The reason I ask is because there is no good in doing business with someone who wants a fee for "applying"..
A 50% LTV is going to be a little thin, more hunting and searching for property... alot more money spent on my end and so your guy would have to show proof of being awfully solid before I'd work for him
An appraisal and property inspection are important to me as well.. I like to see recent comps.
That is how I determine value because it makes sense.
How would I show rent rolls on a vacant rehab potential property?
Your man does realise that he won't be able to get any normal private money rates if he's only going 50%.. yes?
Meaning none of that 22% business?
Sorry for grilling you. I really am anxious to get into rehab but I'm not desperate enough to destroy myself over here either..
I am a mortgage specialist. I do know a gentleman who will lend only on the equity of the property. He will lend you 50% of the property value. He doesn't even want to pull your credit. It doesn't matter. He must be able to put a lien on 50% of the property. He must be in first place should there be other liens on the property. You must pay an up front fee. You must be able to produce an appraisal (doesn't have to be a new appraisal). In the case of commercial property, you must provide rent rolls. In most cases, the people who use this option use it on income producing property where the income will make the mortgage payments and produce revenue for the mortgage holder. If you need further information, contact me at ------
PS: I spelled "you're" wrong but I swear I am not illiterate
I was just waking up at the moment when I wrote that 8)
For a private money offer for a rehab I would typically expect someone to loan 70% of the estimated ARV. If my purchase price is at 50% or less then obviously I can use the rest for repair work and holding costs.
As far as interest rates go I would never expect to see anything that was lower than "traditional" mortgage rates. Truth is that there *is* more risk in a rehab than a traditional home and I don't mind paying a little extra for it. However, 22% is 3+ times higher than the current 30 year fixed rate which is unacceptable.