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All Forum Posts by: Dion DePaoli

Dion DePaoli has started 50 posts and replied 2694 times.

Post: How do you still owner finance with Dodd Frank?

Dion DePaoli
Posted
  • Real Estate Broker
  • Northwest Indiana, IN
  • Posts 2,918
  • Votes 2,087
Originally posted by @Manny Cirino:
I thinks buying on terms/seller financing is single handedly one of the most game change techinics a new investor can learn. I preach it all the time on the wholesale forums to beginners. Learning seller financing and submitting multiple offers(the right way) can enhance your career substantially. Since your on the subject of land contracts, I am curious can anyone recommend some good reading/referrance materials for land contracts. I was ordering some new books off amazon yesterday and came across a few but do not want to buy trash (seminar into types.)

Manny, what makes Land Contracts or Contracts for Deed an important part of your arsenal or desire to be a part of your arsenal?

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

Dion DePaoli
Posted
  • Real Estate Broker
  • Northwest Indiana, IN
  • Posts 2,918
  • Votes 2,087
Originally posted by @Bryce Y.:
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...

...................
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.

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.

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

Dion DePaoli
Posted
  • Real Estate Broker
  • Northwest Indiana, IN
  • Posts 2,918
  • Votes 2,087
Originally posted by @Bob E.:
Here is a thought, what if, after all the markups and adding in PITI, the loan payment is less then comparable rent? Does that affect the equation at all?
Would you really be taking advantage of someone in that case? I have seen houses that have an ARV of less then 30k but neighborhood rents are $800. So If I didn't want to be a landlord, or maybe I just saw a chance to make some money writing a note would I really be practicing predatory lending?

Remember, in the is case you have a buyer who can't qualify but their monthly payment is less the market rent.

Fair example Bob.

Perhaps this is also a good example of how the public 'wants' to deal with real estate finance matters. It does not tend to be as much of a proposition.

We settle our matters in ideas from courts of equity. What is fair. Ideas which have turned into rules and laws. Clearly, by way of Dobb Frank, we believe it to be important to protect the public, in general, against 'unfair things' as they relate to matters of finance and property. [ESPECIALLY]

The example given is void of key elements to bring forward any idea of what is fair because 'fair' is not really being challenged. I think that tends to be something many folks tend to miss understand. It is important though as it is what creates the context of the evaluation.

Is it fair to finance a house for less than market rents?
- It seems so, provided we have no other conditions to consider.

Is it fair to finance a house for less than market rents.....for tens times the value of the house?
- It seems not.


Why not? An ordinary person, of ordinary means and knowledgeable of the concept would not agree to such a thing. So only a person with less than ordinary means or lack of knowledge to understand the agreement would actually agree to those terms. It follows then, this would be considered "Unfair". Somewhere at it's core, with all the "what if's", the INTENT was to gain based on one or both of those attributes missing. (ordinary means or knowledge to evaluate). Ergo, you unfairly took advantage of a member of the Public. Our laws protect the public.


Post: How do you still owner finance with Dodd Frank?

Dion DePaoli
Posted
  • Real Estate Broker
  • Northwest Indiana, IN
  • Posts 2,918
  • Votes 2,087
Originally posted by @Troy Michaels:
im totally new to all this, but, how i look at it is this: if you are going to do a lot of owner financing, you should use a mortgage originator. the problem, and the REASON dodd frank was put into place is to keep you from being able to finance people with poor credit. i initially didnt like the idea, but the more i think about it, its a good idea because it shifts the liability more onto the mlo if the buyer defaults down the road. if the mlo qualifies your buyer, how can you be held liable if the buyer defaults? thats why the mlo is BONDED..

There are a couple billion dollar mortgage settlements that would lead us to believe that the law may not pass all liability onto the MLO and absolve the Mortgagee based on MLO actions. The basis there, it has not been explicitly stated, therefore there is not explicit additional actions required to accommodate those types of liabilities on a state level within the SAFE Act.

The short version, 'Lenders' are treated differently in some states. There is a requirement for financial safe gaurds in the form of insurance, bonds and net worth requirements. Based on that idea, I think there is a limited liability to the MLO and still the majority will be the burden of the Mortgagee. An MLO could come and go in the industry over the course of 5 years but the loan made will still exist and your loan would still be present (with you as a Mortgagee). We do not understand how that will work outside of how it has worked in the past. Pre Dobb Frank and all of it's new rules.

I don't have enough time to dig in to that idea more for readers today. Might be able to loop back unless another BP member adds some commentary around the same. My short version, I would say do not bet that any Mortgagee is absolved from liability in full. I really do not see how that would be possible or make a ton of sense.

Post: Taking Cash out of a house before the 6 month mark

Dion DePaoli
Posted
  • Real Estate Broker
  • Northwest Indiana, IN
  • Posts 2,918
  • Votes 2,087
Originally posted by @Peter Grosso:
The property is owned free and clear. The previous owner will stay in the home for two months at $500 a month then I should rent for $1000 a month. My wife is on maternity leave right now and plans to switch from her current job to a per diem situation.

I am not sure I understand what you mean by switching to a per diem situation. Because of that lack of understanding I am a little skeptical that your wife will qualify for a loan by herself.

All that said, the core or your question was about title seasoning. That is generically six months for most conventional loans both portfolio and agency. However, you always stand a chance that a portfolio lender, such as a local bank or credit union will have some flexibility within their guidelines. Some do and some do not.

Adversely, I do not think you find a conventional type loan that has a shorter title seasoning requirement. Private money from an investor could bridge that gap for you and allow you to avoid some of the scrutiny of underwriting conventionally. It also might take you six months to find terms you like with those folks.

Post: Math/Finance

Dion DePaoli
Posted
  • Real Estate Broker
  • Northwest Indiana, IN
  • Posts 2,918
  • Votes 2,087
Originally posted by @Steve B.:
I can recommend some books if you like, none of which are written by Michael Lewis.

HA....good stuff.

Post: Does anyone have rural experience?

Dion DePaoli
Posted
  • Real Estate Broker
  • Northwest Indiana, IN
  • Posts 2,918
  • Votes 2,087

Rural assets. Sure experience. Had scatter sets of assets and a couple of fractured developments.

I really like what @Brandon Turner said and i agree. Do not expect much in appreciation but cash flow could be good.

I would say as far as expectations, everything takes much longer. Marketing times are certainly longer. Heck, just getting calls back takes longer. Small towns can also mean hard to deal with departments. I once had a small town so small, the water department was literally ran from one of the old lady's in town homes on her home phone. Not kidding. This is aside from not much for them was on the internet either and I think their fax machine was from 1982. I always got the impression, there were like 3 people sitting in a room and they were the entirty of administration for the town. I am pretty sure that was darn close to reality.

The good news, they will certainly get to know your name pretty quick if you have a couple of properties and need to get things done with them.

Would I 'load up' in any geographic concentration of small rural properties. No. Not unless the rural town was about to expand into something bigger.

Post: Taking Cash out of a house before the 6 month mark

Dion DePaoli
Posted
  • Real Estate Broker
  • Northwest Indiana, IN
  • Posts 2,918
  • Votes 2,087

This sounds like an investment property. Six months is the conventional guide. Most portfolio lenders will carry a similar requirement for their standard loan too. There may be some options but I am not sure your plan is going to go with no issues.

If your wife is about to leave her job. So you want her to tell the lender she will have continuity of income and you want her employer to agree (likely in writing per a VOE) of the same, while you know she is about to quit? Not a good plan.

Is the property free and clear or is there another mortgage in place currently?

Some details might help spawn some ideas which are more likely to work for you.

Post: Where are the Land Investors in South Florida?

Dion DePaoli
Posted
  • Real Estate Broker
  • Northwest Indiana, IN
  • Posts 2,918
  • Votes 2,087

This thread makes me smile.

Where is the land in south Florida worth land banking?

Florida land is generally more expensive to hold than other parts of the country. Aside from this, there is some pretty high demand for inches of dirt in SE Florida. Certainly the demand gets higher as you approach the water.

If you want Brittany, toss out some of your questions there are folks that add some insight for you lurking in and out of the shadows.

In advance, trying to purchase land and hope for appreciation is not a good plan. That has cost many their savings when it comes to Florida. It is difficult to get rents from the land, so holding is an out of pocket expense with little offset chance. Adverse to other parts of the US where the land may be able to be farmed or alike.

Some folks thought they were wise and went inland, where they purchased larger tracts of land hoping they could use the decreased price to boost profits, they too had hopes of development, only to go bankrupt.

That does not mean you can't do it or find a good deal. Just means it is not easy and may have barriers of entry to get to a point where it make sense on lesser capitalized scales.

Post: Math/Finance

Dion DePaoli
Posted
  • Real Estate Broker
  • Northwest Indiana, IN
  • Posts 2,918
  • Votes 2,087

Our "finance" industry is worth TRILLIONS, add another set of zeros.

Our US Mortgage market alone is $14.3 Trillion. Frankly a billion dollars is just a figurative drop in the bucket related to the industry as a whole.