All Forum Posts by: Chris Mason

You can find firms that'll help you deploy capital for a fee, and they share the risk with you in some way or another. 

And you can go to any local REIA meetup and announce that you're a private hard money lender, and suddenly be swamped with people holding their hands out for money.

Either way, if you go it by yourself, I'd encourage you not to cave on two things:

- LTV.

- Experience. 

You're new, so you gotta make compromises. Fine. But don't cave on equity, and don't cave when it comes to the experience level of the person you are lending to. If you have to cave, fine... pick super safe loans to experienced investors, and instead go ahead and cave on rate, or fees, or other terms (prepayment penalties and balloons being other common levers you can turn this way or that). You don't need to make a zillion dollars and set world records on your first rodeo, you need something safe that'll let you get experience under your belt, and not impale you in the process. 

GL!

There's basically 3 possibilities here:

1) LO doesn't work with real estate investors and doesn't know what they are doing (you're on Bigger Pockets, but pick a rando to do your mortgage? Hmmm)

2) LO knows how to do it right, but miscommunicated it to OP

3) OP misunderstood LO

@Account Closed post back once it's clear which of the above it was. And if you don't mind, the first digit of their NMLS number (found in their email signature block) as well as how many digits it is (it'll be either 6 or 7 digits long). In my example you can see the 1220177 in my signature, which starts with a 1, and is 7 digits long. 

Once your 2022 tax returns are done, find a local mortgage broker that can work with a 1 year average for rental income. They will still ask for 2 years, but only do their math (for that specific income type) on the most recent year. Shouldn't be too hard, maybe start by finding a LO on these forums that's in NC (or wherever your rentals are). GL.

 Wouldn't need to be... little green checkmark thing, and if you hover your mouse over it... a picture is worth a thousand words:

This is an ongoing discussion among the mods. There seems to be close to a consensus that things have gotten to spammy. Just what to do about it, is another matter. There's resistance to the idea of just going back to the old rule prohibiting such posts entirely. 

My suggestion has been to allow it depending on ratio of votes to posts, call it N%. Let's say we set it at 50%, that would mean someone with 300 posts needs to have more than 150 upvotes showing, or they aren't allowed to solicit. And no soliciting no matter what until you've made 100 posts. Something like that.

If someone not meeting that criteria wants to be allowed to solicit, they need to go make more useful posts that get upvotes. That way, the users are deciding who is allowed to solicit, and folks are encouraged to make lots of high quality posts. Spammy posts in general are going to bring down your N% count, so you had better make them count and/or offset them with higher quality content. 

If 50% felt to spammy, we could just move the needle to 65%, and if that felt to spammy, keep upping it until it felt right. JPOW sets his federal funds rate to move the needle in aggregate, rather than making individual decisions about each individual thing, same thing here, just move the needle as needed to produce the desired aggregate outcome, no individual debates about the price of eggs or the cost of a new car.

And if a bunch of users with 500 posts and only 4 upvotes wind up banned b/c they just can't help but solicit... please hold the tissue I was crying into, so I can play the tiniest violin in the world while I attempt to hold back more tears. Boo hoo.

 You absolutely can go directly to the lender's call center, but it's not typically a cost-saving measure. There's a single loan officer you directly work with, who directly works with underwriting, either way, but you're swapping out 1099 independent contractor for a W2 employee with benefits and middle management, and the marketing department needs their cut of the action if a broker didn't bring it in, and bla bla bla. 

The reason all these banks and lenders have a wholesale division to take business in through brokers is because it's a massive cost saving measure for them too. That pie can be split into 3 slices. One slice pays the mortgage broker, one slice discounts the rate for the borrower, and one slice is surplus profit for the lender. 

 Everyone else already talked about the alternative documentation loans with crummy terms/rates/fees. 

Your brother could also get a little bit more, ahem, 'honest' about his expenses this year, before he files his taxes. 

Generally for someone with good credit, and a 5+ year history of the same income source, many loan officers will know how to go off of only the most recent ONE year of tax returns. 

Just saved you about 1.5% to rate and 1% to fees, you're welcome. :)

 No one can know that today. If they did, they wouldn't be posting on Bigger Pockets, they would be a bond trader and a billionaire multiple times over. Proof is in the pudding, after all.

Heck, if anyone knew that with even 60% accuracy (8% smarter than the super computers!), they'd STILL be billionaires. 

If you're OK with "40% chance of being wrong," here you are: rates will be in the high 4s within 24 months. But I am not a billionaire, so there's zero reason you should value my opinion on that. 

 A lot of good comments already, the only thing I'll add is that this isn't a thing. When rates drop (as they are broadly expected to), ANYONE doing mortgages would be happy to offer you a low/no-cost refinance. This is basically: "FYI - the car salesman told me that if I buy a car from him today, he'd be happy to sell me another car in the future, which is quite tempting." 

In the hypothetical case that some big institution did a bunch of mortgages with a bunch of "we'll cover some/all of your fees when you refinance!" promises out there, all that tells me is that they plan to offer slightly higher rates (or some other gimmick) in the future to offset it. 

We'll use Rocket, since you mentioned them. Their latest marketing campaign is "we'll cover the cost of lowering your rate by 1% in year 1!" OK, great. Interest rates are annualized, so the cost of that is basically going to be 1%, or equal to 1 discount point. They call it the "inflation buster," and it relies basically on the financial illiteracy of the American consumer (who doesn't get a "personal finance 101" class in high school, or in college, most of the time). So what's the gimmick?

The average mortgage right now is being done at a cost of about 1 discount point (note that the average mortgage is for an average buyer, who is an owner occupant, not an investor). Their website says that they're running TWO discount points, when the national average is somewhere between (long term) 0.5% and (more recently) 1%.

So that "1% off your rate in year 1!" is simply collecting 1% extra from you at closing on the front end, and giving your own money right back to you. It's a a shell game, no different than prices of things on amazon going up by 20% three months before Black Friday, only so they can tell you that their stuff is "20% off for Black Friday!" when they reduce the price to what it used to be, to begin with. It's so gimmicky that you don't even need a 3rd party, you could do it yourself: put 1% of your new loan balance in a savings account, and each month move 1/12th of it into the checking account you pay your mortgage from. That's literally the exact. same. thing.

Snip below:

 Note that I'm not speaking from professional experience on this one, so take it for what it's worth.

I think the point of FPI is that you eventually get to go after the borrower to true up with you and make you whole for that cost.

But your numbers from the foreclosure sale may... foreclose... that from being a possibility anyways (are they going to trash the place before you take possession? etc). If that's the case, FPI has no value proposition. 

By contrast if there's going to be a bunch of net proceeds (eg, EVEN IF they trash the place, it's got so much equity that the sale will still be in the green), enough to cover the FPI (and if you will otherwise be returning any of the net proceeds to the former owner), then go for it. It's more expensive, yes, but at the end of the day it's not you who will be paying for it.