All Forum Posts by: Doug Smith

Ex-banker hear. Federal Regulators HATE smaller real estate investors for some reason and really come down hard on banks for funding their deals. Since you've got a great source of income outside of that, you stand a chance, but the rates and terms you'll get from a bank or credit union for a non-owner-occupied investment property won't be as low as you think. I would go with an instutional broker that specializes in investing. Here's another monkey wrench - the first thing we ask is "have you done this before?" Lenders are not super aggressive with first timers with little capital down if they will do them at all. I wish you well in your endeavors. 

Do you have a particular deal now? If so, PM me. I've got closing agents in GA. 

Please be careful, at higher amounts leveraged, the carrying costs/time value of money can eat you alive if you have any hiccups in your project. After seeing several "market crashes" of varying degrees, an experienced lender will not lend 100%..particularly on a non-owner-occupied investment. If they do, they probably weren't around in 2007-2008. It's nothing against you, but right before every single real estate market downturn, I've found that investors start to say two things: 1) real estate will never go down and the market is strong, & 2) I'll lend at 100% or even more or as a borrower, I need 100% financing. Those are the sacrificial lambs in a market downturn. I would, instead consider a partner with capital and perhaps experiences and skillsets different from those of your own. That might limit your exposure to having interest eat up your profit and might increase your success chances by bringing on complimentary wisdom while you hone your craft. I wish you well. 

I'm not licensed in AL (but I am in FL). Since the property is there, I can only do investor loans in AL, but from a consumer standpoint you can do Conventional, FHA, VA, and USDA as a renovation loan where you take the cost of the property plus the cost of the renovations as your purchase price up to the value of an "As-Repaired" appraisal. As for an offer, start with your ARV and subtract out your renovation costs, financing costs, a reserve amount for contingencies, any profit margin if you plan on flipping it, closing costs for both the buy and sell sides, and soft costs for the permitting, etc. Back into your maximum buy number that way. Just don't pull it out of the air. It can be done.

I've been around for over 30 years and I have a formal credit background from 2 of the largest banks in the world. I've seen the ups and downs of the market many times. Several things to contribute here: 1) Private Lenders with no credit experience emerge doing down payment and 100%/High LTV financing at the end of every cycle, 2) they're among the first to loose their shirts in every downturn, 3) although someone termed this type of lending "gator", it's not new, 4) the guy that coined it didn't get into real estate untill well after the last crash, 5) he has no real credit background or experience (he's never been a lender), 6) Google the guy's name and "looses professional license in AZ" to see what pops up, and finally 7) he's really effective at telling people what they want to hear, filling their heads full of hopes and dreams, getting them to buy his training, and his minios generally won't want to hear what a real, seasoned lending vet will try to tell them. Since this is your very first post (like a lot of people that post about this guy), one might think you're someone that sells his courses or you might even be that guy. If it's the latter, you're really, really effective at telling people what they want to hear to move money from their pockets to yours. Congratulations on sleeping at night as you lead lambs to slaughter.

 Bingo...that's our first question too. 

 The lender is going to want to see it. 

I've done several deals in the resort-type areas of NE GA (Blue Ridge, Jasper, etc), which are rural. I would really need to drill down more on the deal. I can't guaranty it, but I'll certainly take a peek at it. PM if you would like. 

 That's what suspected. Yep, they will need the Schedule E to properly cash flow the loan. There is currently common ownership of the entities that own the property and business, so they will need to sort the cash flow between the two out. The schedule E not only shows the common ownership, but it shows the rent that station pays. 

I've always found it ironic that banks think that businesses that lend money are risky. I thought it was incredibly hypocritical when I worked for a bank and got those requests from "risk management". The bank does have programs known as CIP, or "Know Your Customer" rules and they are heavily regulated to stop money laundering. The AML request is pretty legit. The requirement that you're audited is somewhat suspect. I would start the process of moving. If they have asked you for the above...trust me...they're at some point going to shut you down. I was a banker for many years and had to cope with this from that side many times myself.