All Forum Posts by: Bryce Y.

Originally posted by @Dion DePaoli: I will be the first to admit there is a bit of a conundrum within our ideas of finance. Risk often buts heads credit worthiness. The sub prime mortgage market is a fine example of such things.

However, let's not confuse the idea of simply taking advantage of someone's lack of ordinary means. We do not allow folks to exploit the public and to one extent the question begs the extreme. As such, we have allowable thresholds. Can you earn interest? Yes, based on certain thresholds. Usury for example.

It is certain we do not treat or view the public as product or commodity like a bottle of water.

I do not understand your questions related to disclosures.

In general you should not take advantage of anyone, not to mention "old ladies" who are likely someone's nice mother or grandmother somewhere. Senior citizens have many protections in our nation. We extend certain privileges and backings to members of the military. They too have a notion of protection to them.

Aside from that, disclosures are given from the Lender to the Borrower. So neither of those two ideas would come up. Dealing with either one of those examples in an unfair manner will get you in trouble plus one.

Heh, first let me say that I do not condone taking advantage of the elderly nor treating people like bottles of water. :)

The point I was trying to make was that as a lender charging an above-market interest rate, you can either be seen as a crook who exploits the under-qualified if they should default and lose the house or a saint if you put them in a house they otherwise could not obtain. I feel that if you "take a chance" with those less-qualified, you should be justly compensated, similar to requiring a higher security deposit if a tenant has a questionable past. Yet it seems many would view this as predatory rather than appropriately adjusting for risk (referring to lending, not security deposits).

Re: disclosures, I was just trying to say that it makes a big difference who is on the other end of the disclosure (my analogy wasn't the best). If the borrower meets the ATR requirements and the loan complies with DF, a signed disclosure by the borrower should hold a lot of weight... or not?

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Originally posted by @Bill Gulley:

A point to Dion's book, LOL, very good BTW, but when he speaks of it being just fine for a buyer paying the difference of market and the sale price, be very aware, the buyer is fully aware of the market value and clearly understands they are paying more and paying it in cash up front. This is a far cry from a seller doing a seller financed deal saying they disclosed everything, that is total BS, no regulator, no judge nor any jury would swallow that. There are appraisal requirements in Dodd-Frank as well, the difference to be paid by the borrower is not as it's basic prudent lending practice. I can just see that disclosure: Dear buyer, I bought this property 94 days ago, I paid 90K, I added 4K of lipstick, I'm selling it to you today for 120K, I'm taking your 20K down and financing the property at 9.5% within the Dodd-Frank requirement, further, I'm charging 2% over the interest rate of the underlying mortgage that we included in your obligation.

Right, I'll believe that when pigs fly.

Hi Bill, are you assuming $120k is above FMV? What if $120k was FMV? I should think I as the seller have every right to sell my property for FMV regardless of how much I paid for it... (ofc assuming the borrower and terms of the loan meet the all the requirements)

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Originally posted by @Dion DePaoli:

And there in lies your slippery slope. A property worth paying a premium for is arguably not 'over-priced' to market. The buyer of said property would need to have their own means of capitalizing the premium. So in all conventional loans, a buyer may pay more for a property and still obtain finance, they simply have to put more money down to make up the difference. This is not an uncommon occurrence.

Great discussion and I'd like to play a little devil's advocate. Shouldn't there be some weight put into whether or not the borrower could afford conventional/cheaper financing? If you could document the inability of a borrower to get cheaper financing through credit reports or a rejection letter from a bank, shouldn't that add justification for a higher interest rate or sales price? A bottle of water would command a higher price in a desert than a supermarket...

Disclosures often time mean nothing and are merely one part physiological warfare on a borrower/buyer and the other a paperwork version of crossing your fingers. A simple analogy for this, if I plan to shoot you dead, just because you sign a disclosure releasing me from the act does not mean I am released from the responsibility of the act. Same concept here.

I understand your point but surely disclosures do have some importance. What if the person was a marine? What if the person was an 80 year old lady? Is that not similar to overcharging the guy with $1mm vs $1,000? Obviously I am speaking in theory and not from a practical/legal standpoint.

Again great discussion. I am really enjoying this.

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Originally posted by @Brandon Gamblin:

Originally posted by @Jon Holdman:

Do you have experience doing this?
Do you have some cash to contribute into the deal?

My math is that if your purchase price plus rehab cost is 70% of ARV (ARV meaning the price you conservatively think you will get when you sell) and your lender will loan you 100% of the purchase plus rehab then you will need about 15% of ARV of your own cash at a minimum. Many HMLs won't go 100% of purchase and rehab, so if they require some down payment, add that amount to the 15%.

No. I have absolutely no experience doing this. And I don't have cash as of right now but the most I could probably come up with would be anywhere from $2500 to $3500. So according to the example you just gave me, If the ARV is $100,000, the total of the purchase price and rehab costs the lender would give is $70,000? So youre saying I would need to add $15,000 to whatever the down payment is?

Most HMLs have LTV and LTC (loan to cost) limits so even if you can get all in for less than 70% LTV, you will still need to bring some money of your own. The whole point of this to make sure the borrower has skin in the game. I can tell you right now that 3500 is not enough, unless you can find a partner with cash. You will need around 20% of the loan amount in cash as a general rule. This is to fund closing costs, points (some HMLs will roll them into the loan or allow you to pay on the exit), and to get the rehab started. Good luck.

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Great job, congrats! The rate seems a little high. I am closing on a refi myself but at 4.5%.

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Originally posted by @Leslie A.:

Ivan,

I would ask for a copy of the money order receipt. If she produces it, I would wait a while and see if it comes, then check the postmark date and charge late fee accordingly.

If she can't produce the receipt, I would assume she is lying about sending the payment.

To add to this, there is a number on the money order you can call and check on the status, whether it has been cashed or not. I had this problem once before, and now I am trying to get away from snail mail as much as possible.

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One consistent observation I had through my limited dealings with these institutional funds is that they REALLY push the rent, possibly to the point of going above market. This almost certainly results in high vacancy/turnover. It will be interesting to see how this plays out...

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This post reminded me of this:

http://www.ebaumsworld.com/video/watch/83483178/

Clearly you need to get another bird, tie a string around it, stick it in the wall, and once they become co-dependent yank them both out. LOL

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Originally posted by @Jeff Greenberg:

We fought for two months threatening a sit in, in the previous insurance office to get them to give us a loss run, just so we could get an insurance quote.

Hi Jeff, what do you mean but this? What is a loss run? Did you try to use the insurance issue to renegotiate the price?

Also what kind of hold time and exit cap are you projecting? Thanks and congrats!

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What exactly constitutes an exterior door? Is a door between the garage and house considered an exterior door?

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All Forum Posts by: Bryce Y.

Bryce Y. has started 23 posts and replied 299 times.

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Post: Making Money on Deals that Most Investors Throw In the Trash

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Post: There's a baby bird in my wall... what would you do?

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