All Forum Posts by: Darren Eady

Banks are supposed to be loosening restrictions at this point.  It's sad to see some of them go the other direction.  Typically it is based on risk vs return for banks, so they may have seen some delinquency or default from investors.  As investors, we all need to make sure our payments are made and our credit is spectacular so these loans will be made more readily available.

@Allen Herbert

Even if you found one, they wouldn't be doing those loans for long.  2nd position for rehab is basically family only money.  Too risky.  I would find a line of credit elsewhere to cover or use credit cards if you have to.

@Andrew Michael

I've done this exact thing before, funny enough, and got a loan on the physical address and then put the wall back in and re-installed the kitchen. At the time it worked out, but the appraisal had to work as a SFR and then the rehab came from me. You may instead start with the county and make sure it is going to be a legal duplex before you apply for the loan and find out what is needed to make it legal first. Maybe there are only small changes the seller can make to get a loan on the property as a duplex.

@Nick Mazzino

It is tough to pre-qualify a situation like this with a bank.  Many loan officers can't use foresight to figure out what their bank will do six months from today.

Yes, many banks will do a rate and term refinance after six months of ownership and use the appraised value to determine the loan amount.  You may have to keep looking.  I have suggestions if you want to connect.

@Jay Hinrichs

Thanks Jay!  That's what I'm setting up right now with Darin H. Mangum, PLLC.  I'd like to talk to you about it.  I would imagine you have more experience than I have with funds.

I would be careful when fractionalizing ownership of a note that you do not break securities laws. I have a securities attorney that you could call and speak with. My other thought is to form a joint venture agreement with these investors and one LLC that they all own a portion of and invest through one LLC. To date I have kept my note sales to one entity and one note, so I haven't run into this issue, but I'm currently in the process of creating a FUND that will allow for fractionalization.

Once you self-direct your 401k you can purchase performing mortgage notes that pay 12% annually (paid 1% per month, with no fees).  This has been my all-time favorite use for self-directed funds.

Nir, you should probably consult with a securities attorney.  You can sell mortgage notes to a SDIRA if you assign them in their entirety, but you can't fractionalize the note or use the funds in multiple projects without creating a registered fund.  You may want to approach this a different way, but what you are doing is doable under the correct structure.

Some banks do not have a minimum loan amount.  I would look at local banks and credit unions close to the subject property.  Keep trying until you get what you want.

Note Servicing Center in Chowchilla, California is who I use.  Ask for Paige or Christine.