All Forum Posts by: Chris Zabaleta

I am a loan officer with a hard equity lender in South Florida, and it seems that our guidelines are constantly changing. Our investors are nervous because of today's market. Their concern is, if we take a property back, we have to sell it low enough to compete with everybody else's REO.

I feel like we are in an environment where banks are actually self-destructing by driving property values down (dumping their stock).
They get into a vicious cycle of lowering property values because they are forced to keep lowering REO prices to move them.

I'm curious to know what people in other areas are hearing from their private and hard equity lenders...
- how have their guidelines changed in the past 6 months?
- what types of deals are they willing to do?

Originally posted by "REIUSA":

If you use comps to determine the ARV, I'm sure the easiest is to use a Realtor but other than that what is the best way to get comps in an area?

My problem is I am researching possible properties but until I am ready to go I don't want to bother a Realtor so it would be good if there was a way to get comps without a Realtor.

Any other ideas?

I know that Zillow is customizable, you can input any upgrades you plan to do to increase the value of the property. This should be ok to give you an idea of which properties you want to move on.

Once you have narrowed down your search, you should get a more accurate opinion such as a BPO or an appraisal.

Also you may want to consider consulting with a hard money lender as we usually lean towards the conservative side. If a hard money lender will fund your deal, it's probably a deal worth pursuing.

Rehab702 is correct. I am an equity based lender in South FL.
It used to be that we would look at the comps in the area and not really worry about how long you have owned the property or what you paid.

Times have changed.

Lenders now want to see what you paid for the property and how long ago you purchased it because in today's market good deals are abundant.

My advice:
If you decide to proceed with the idea of private funding after rehab, you need to document everything you do to the property.

[list]Keep a detailed money log to keep track of where you spent your money. Have it in a format that will be easy for a lender/investor to digest. Excel spreadsheet is OK. Include cost, description of work and who performed it. I have had clients hand me 20 pages of photo copies of Home Depot receipts- not a good start.[/list:u][list]Take before and after pictures. An appraisal dated close to when you purchased it (or started rehab) is a good place to start because it comes from a 3rd party and will have photos.[/list:u][list]Keep the pictures in a digital format so you can easily send them via email. People often send me pictures via fax, it's not ideal because grainy black and white pictures don't say much.[/list:u]

Most private lenders are going to do their own inspection and they will see the difference between pre and post rehab.

Also, if you do decide to go with private money you may be able to secure a rehab loan before you dish out your own cash.

Originally posted by "wrigley":

We are exploring the possibility of bringing an investor into our land deal and would like your input.

We currently have an option on land. Our contract is "buyer friendly", due to the fact that we have been in contract for 3 years, without a close date. We also have 20% seller financed. This is a good size deal that is over $2 million.

How is a typical deal structured if an investor fronts all the money?
What percentage of ownership is typical for financing a deal?

If more information is required, please let me know.

Thanks for the help.

I don't know of a standard structure for this type of deal.

I would start by figuring out how badly you need the investor. You may have a purchase price low enough that with a 20% seller 2nd you can get financing through non-conventional financing.

Then you would need to weigh the pros and cons.

100% Investor finacing=partnership/non-conventional financing you will pay higher fees and interest and you will bear the full financial burden.

If you can structure a deal with an investor who takes a limited participation you may be better off with an investor. Or you may find an investor who is an asset (experience) to the project and it would not hurt to give them a controlling or equal participation. Then there is always the combination of a limited participation for the required down and bank or non taditional financing.

Originally posted by "Patriot":

I am new to the REO game an was wondering if anyone used a software program to gather information about REO's. Often the tapes from the AM's are vauge.

We have been putting these properties in an exel spreadhseet and then hitting Zillow and the county records to fill in some of the missing information such as delinquent taxes, public utilities owing etc.

I have also thought about hitting the REO listing agents to do a lot of the ground work for us. Any other ideas?

Best,

Joel

Joel,

I'm not sure I understand. Are you looking for software that somehow pulls information for you from public records sites, zillow, etc...? or are you looking for software that'll help you manage the information once you have it?

If what you need is help managing the information, I recommend using Salesforce (web-based CRM).

I'm a hard money loan officer and I use it to manage my clients' info - it is a life saver.
Now I'm using it to keep track of my employer's list of REO and all the data associated with each property.

If you decide to sign up for a trial account with Salesforce, make sure you go to the "Appexchange" (their directory of add-on applications) and install the REO HQ app into your Salesforce account because it was built specifically for REO related stuff.

If you have questions I'll be happy to help.

Chris Z.