All Forum Posts by: Andrew Holmes

@Allende Hernandez

Sorry to hear about this mess. On your first deal the real estate Gods test you every which way. 

1. Go to the assessor at the county right away. They should not have a problem increasing the square footage if it is truly finished living space. They will give you a hard time if you say it is smaller. If is larger that should not be a issue. You have need some pictures and proof. 

Then get a letter from the assessor and show that to the appraiser. 

2. Make sure you measure the house yourself properly on the outside for finished space. The appraiser should have done the measurements as well. He/she cannot just rely on the county data because that can be in accurate. As is the case here. 

3. Based on that data you can appeal. 

4. The only problem with this situation is that even if you are right you may loose the buyer hence loose time. Very unfortunate and frustrating. But get that corrected asap because if in your area they go by square footage to come up with a value then you will run into this problem again. So it's best to try to address asap. 

@Lauryn Meadows

This is a scary situation as far as I am concerned. There is too much going on. 1 bedroom single family properties that makes no sense. Out of state. Commercial lender willing to lend on this with no balloon. Just does not add up.  

3 years on the MLS - Some thing does not add up at all.

You may want to call some local agent that do a lot of business there in the area. 

@Adrian Reyes

If the rehab is going to be totally out of control and you may take a loss. Take the loss now and move this headache off. The amount of time and aggravation you will have dealing with it is not worth it.

Sometimes it's better to cut the cord and deal with the one time pain rather than stringing it along. As @Christopher Phillips suggested see if someone from the auction wants to take it. Happens a lot. 

I would not get a partner because even if you convince someone else to come into the deal if would not be fair to them and just prolongs your headache. 

@Chris Purcell

Since the mess of 2008 to 2012 appraisers have become very conservative. 

When there is no sales contract that provided they know it's not a flip or a regular homeowner sale. They are going to be giving value for a refi based on a rental they will give you a value that is lower to stay conservative. Of course refi banks like that and it encourages that behavior. 

When it a sale on the property they lender sends them a purchase and sale contract and the appraiser pulls it on the MLS. Suddenly the appraisal is within a couple of thousand dollars of the sales price. It is usually at or just a tiny bit above the sales price. The appraisers job used to be to be give a value based on like kind comps. Now a days they appraise based on if the property is worth what the sale price is on the contract. That is not to say that they will give you an inflated appraisal. It's just they are as conservative as they can be when it is a refi.

We have done about 800 transaction in the chicago market on flips, wholesales and rentals. On many of the rental refi's we have given them exact comps next door that is 20K higher but they refuse to change their appraisals. We have even had cases where on the same street we have done flips and the numbers were just fine and then right down the street the same exact property for a rental get a appraisal $ 20K lower. 

That is not to say that at time they will give a higher appraisal on a rental and it makes you wonder where they are coming up with the numbers. So that cuts both ways. So when on all our refi we always plan on lower appraisals as a part of doing business. 

@Chris Purcell

So if you buy the property for let's so $ 80,000

Rehab is $ 20,000

Other costs $ 5000

All in cost is $ 105,000

Let's say your appraisal comes in at $ 150,000

Based on that you should get $ 120,000 cash out. 

I don't know of any portfolio lender that knowingly will give you 80% appraised value because it is over and above the $ 105,000 all in cost. 

Mind you this is with no seasoning etc. 

With seasoning things change. 

If you go to Finance of America they will give you up to 75%. Up to being the key word. meaning in reality 70% or so.

The other issue is that appraisals for portfolio lenders are low. Not sure why but a lot of times they are lower than what you may expect so plan for it that way up front. 

Mind you not always some time we have had 4 or 5 properties at a time up for refi and the one that should come low come high and the ones that should be higher come much lower. Doesn't make any sense but that the game. 

@Micah Kelderman

It's always good if you have a license. Makes things easier. Do you have to have it: NO but it good if you are going to a serious investor. Just give you more access to MLS, properties etc.

@Justin Sheley

I am familiar with a few of these type of companies including Midwest Corporate Credit. 

Did you get your line. One thing I would say is that no need to pay up front but at this point I hope you got your a decent credit line. 

We recommend a few of these companies to our member at ChicagoREIA. They can be great just be careful though how you use the line. 

@Phil Evans

@Alex Deacon

Phil: Alex is right it should be no issue as long as your are not buying a occupied property. If it a occupied property and lets say the town you are buying in needs transfer stamp then you may have issues. 

You cannot get a transfer stamp until there is an inspection in many town so if it is occupied then it can be an issue. Just make sure you run a FOIA request with the town before you buy a auction property just to be sure you are not stuck with anything. 

Also make sure you are getting title insurance with the property. You lender will require that. You attorney can take care of those issue if you are not familiar with that. 

@Mario Calabretta

Mario if they are writing a check for it then there is no issue. Are you going to give them a mortgage and a note or just a note. 

In Cook county (Chicago, IL) you have to attach a state of IL form called anti-predatory lending when you record a mortgage in Cook county. All you have to do here is get it from the state it's simple or a title company can just do that for you. Very few places have this requirement. 

You are good to do it's a private loan. Done all the time and there is a paper trail. Just can do it with cash now a days. 

@AL Blanchard

@Jason Bott

Al: Jason is right these number sound totally out of wack. Check with a few other providers. Our numbers for properties under LLC are almost identical to personal. We always have a $ 5 to 7K deductible but the quotes they gave you are very high.