where is the lending world headed too??

Question

with all the programs being cut to a bare minimum, where is that taking the real estate investor?? it seems like we are headed no where fast!!  will lending ever be what it was??? maybe during the next war..

N/A N/A · Answer

ok, if you say so. Im not here trying to get into an argument...

Michael Rossi · Answer

oaks23,

It's not because Rehab or I say so, that is the reality.  Banks are not stupid.  Just because you have an aged company doesn't mean they will loan you a penny.

Mike

Michael Rossi · Answer

No bank is going to loan you a million dollars on a shelf company just because it has been formed for 10 years.  Banks want to see corporate tax returns.  If the shelf company hasn't been doing business, it's no better than having a company that just started business yesterday.

Mike

Richard Warren · Answer

You’re not going to get $1 million, $100,00 or $1,000 without being able to show income.  Just because an entity is aged doesn’t mean they are going to give you anything.  An entity generally has to be aged for 2 years for them  to even consider it but you still need to be making money.

8)

N/A N/A · Answer

Yeah, you can get 10 different corps and then go to 10 different banks and get business lines of credit for $100,000 each with a PG..then merge all the corps together and start spending the money on what you want...Its very possible....although having one corp try to get a million wont ever happen without tax returns and all that im sure..

N/A N/A · Answer

Another good way to procure financing is through business lines of credit...you can purchase a shelf company that it 10 years old and then go to a bank and get the lines you need up to $1,000,000 on several companies and then merge them all to form one "investment" company and go from there...

Dick Green · Answer

The high risk products are no longer available.

In my opinion, there's still money available to make those products available.  High risk investors don't want to extend it because of all the focus on preditory lending practices the last 5 to 6 years.   Individuals with bad credit wanted the same rates terms as those with good credit.  And amazingly enough, at one time before the crash...there wasn't a big difference between some of the prime and sub-prime products.

I predict money sources for sub-prime will be driven by supply and demand and will soon return to the tune of something like a 21% cap for a 2/28 or a 3/27 with a 5 or 8 year pre-pay.  People still want the American Dream of home ownership it's Maslow's Law.  I also think that many investors are going to be willing to gamble for those real high returns.  Give it two years.  I think legislators  will probably require consumers to qualify at the highest rate of the adjustable product (piti).

You heard it first here @ biggerpockets!  lol

Michael Rossi · Answer

I'm not sure all the hype about lending is true.  I am in the middle of a loan on 10 rental units in 4 buildings.  To be quite honest, with all the doom and gloom on CNBC about the subprime mess and the credit crunch, I was somewhat concerned about the availability of a loan for this deal.  I am happy to report that the loan was immediately approved and things are progressing normally.  Moreover, this is a no-money down deal!  So, I'm not at all sure that all the negativity about loans is justified.

I do have excellent credit; never missed a payment on anything; these are full doc loans; and I am buying these properties at about 40% of market value, so there is a huge amount of equity in the deal and the bank will therefore have a lot of security.

At any rate, the banks are still loaning money and things seem normal to me.

Mike

Eric Foster · Answer

Boy those are good questions... Lending has changed a bunch in the last year… to say the least!

There are things the "Investor" can still do... simply adapting to the times is what needs to happen!

Explore other options... here are just a few:

- Build relationships with banks - Having a relationship can help you get financing that is not normally available. 
- Get credit lines - Can be used for down payments etc. 
- Use private investors - people wanting a rate of return on their money
- Buy Creatively - Do more creative deals... Subject-to etc. 
- Find Partners - Find partners who can bring credit and cash to help finance the deals.

There are still plenty of ways to do deals... you just have to get more creative than in the past.

The 100% financing, Non Owner occupied, investor loans, with the seller paying the closing costs, stated income loans are gone!

Those days are over and will be for the next???... 5 Years or more... maybe never again!