All Forum Posts by: Edward Liu

If the seller is smart, they will refund the $1k deposit.   If both offers are accepted, focus on the one you like the most and simply tell the truth to the listing agent of the 2nd one that you will not proceed with the less of the 2.   If they don't release your deposit, they cannot list the same property until you release them - you are under contract.  With inspection contingency or finance contingency, you can get out of the contract anyway with full deposit, so seller might as well release the money early.

This has occurred to me before.   The seller of 2nd house refunded the money the same day we told them, so they can list it again.   

When I first started investing, every deal seems a huge deal and I have minor anxiety and sometimes second guess myself, should I offer extra few thousand, should I offer as is as agent suggested, etc.  So I can understand that as new investor, you want to finish the deal you have invested a lot of time searching for, you might think this is deal of lifetime given how long you have searched for.  

After doing investment for a number of years, I no longer get into bidding wars - even some deals seems real good on paper.  Stick with the number that works for me and walk away if necessary. There is always another deal waiting.  

When you make an offer, there should be some line in the sand.   Inspection is a line in the sand for me - even if I buy AS IS properties, I still dictate inspection period.   I have walked away from many 'great' deals after inspection.   It is purely risk management. 

My suggestion is to get a better agent.   No good agent would suggest to waive inspection as way to improve your chances.   Agents have suggested to me to offer all cash, reduce inspection period, reduce closing time, increase deposit, increase $$, etc., but never waive inspection.  Not a single agent ever suggested it - I have dealt with at least 100+ agents over the years.

I don't trust anything seller tells - even if they say it is fully rehabbed.  Sometimes the seller doesn't even know the structure problems, until someone does inspection.   Waive inspection is a big NO for me.

Only scenarios okay to waive inspection is you are an inspector or you plan to tore down the building and do a rebuild.

I never buy for appreciation for investing, despite living in the SF Bay area, one of best appreciation areas in the country in the last 5-10 years.   Even invest for appreciation, not clear why you want to only look at appreciation record for the last couple years as real estate cycle is much longer.  

One thing to note is what goes up fast can also drop like a rock very fast also.  Many investors don't know that during 2008 to 2011, some bay area properties lost over 50-70% of value.   A client of my wife brought over 100 SFHs from bank in 2009 for around $90k EACH in the SF bay area - now these home worth between $450k to $800k EACH, about 10 years later.   This did not just occur in CA, also in FL, MI, etc., to varying degree.

With this new real estate cycle just starting, now sure if you want to invest for appreciation yet.  Be prepared for large paper loss as downturn could gets worse.   You can not go wrong investing for cashflow during any cycle.

However, if the banks is offering SF Bay area homes for not 90k, even $150k today, I will buy for appreciation and raise money from family to buy at least 100, even keep them empty for couple of years.  You can buy for appreciation, but for the right deal.

Honestly SBA can interpret the rules as it sees fit, just like IRS.   So nobody is absolutely sure what rules SBA will place on EIDL loans.   What I do know is following:

1) UCC is on the LLC, not on any specific property, so it should not affect any existing mortgage. Think of EIDL loan as any other loan. Let's assume you purchase a new property with new mortgage, your new mortgage will NOT affect previous mortgages as the banking system assumes the institution who give you the latest loan should make sure you have capability to pay all loans off. Your previous mortgage providers assumes SBA did its due diligence when hand you the EIDL loan.

2) EIDL loan will affect your future borrowing power as it increases your debt ratio.   Next lender will including it in its calculations for your next mortgage.

3) Lease/sale of existing properties will not be affected by SBA as this is just normal business transaction for the LLC.

4) You can not close the LLC with the EIDL loan still outstanding. Likely this will trigger an audit from SBA.

3) is the one SBA can always change with a new rule/interpretation.  However, government agencies tend to take the lazy way out, so unlikely to add rules that will drastically increase its workload.  This is why PPP caused huge uproar when SBA loaned PPP money to large corporations (who has LLCs or subsidiaries that are small) - it happened because SBA got lazy and did not bother to check the corporate structure.   Once there was an uproar, it immediately changed rules and forced some of the large corporations to pay the money back.   

SBA distributed the money in lump one time for the whole amount. The UCC should not affect when you sell any properties as it is not ties to individual real estate property, but the overall LLC/business. It will affect your debt ratio when you purchase properties, as it shows up as another loan with monthly payment. After talking with an expert from my wife's company, I signed the papers and got the loan.

I completely agree that tax payer dollars are thrown out of the window and if you are lucky to catch some, good for you.   I got the loan, but there was no request for proof of loss, nothing!   Decision seems to be very arbitrary - SBA office is likely spin a wheel to decide who gets the loan or not.

Even more strange is today I received in mail check from US government for stimulus money.   I laughed as my family do NOT qualify to get the check (my wife is partner in an accounting firm, so she is very certain we don't qualify).   Likely I will deposit this money and then donate the amount to some worthy cause.   I don't want to return the check as it will be misappropriated again.   This is just another example of how badly this whole thing is managed.    

Yes - in 2 separate deposits. One for loan amount (minus $100 fee), 2nd for the $1k grant as my LLC is single owner with no employees. I am not sure if you reject the loan, do you still get the grant, thus the post.

I received my loan 3 days after signed the contract.   It also comes with $1000 grant as separate deposit.  Not sure if you decline the loan, you still get $1000 grant.

It is multi-step process.   

1) SBA Email and ask you to create account

2) Status showing you qualify for loan of $$ amount.   If you have many applications, it should be tied to the same account

3) You must confirm the amount and verify your identity (bunch of security questions)

4) SBA will review and approve/deny the loan officially

5) If you are officially approved for the loan, you have 60 days to sign the loan documents (based on loan document)

6) Money distributed to your bank account

You should complete step 3 ASAP as there is no decision needed - it only completes the application process.  Step 5 is where some people have doubts due to the terms of the loan.

30 days is maybe referring to step 3, 60 days is for sure step 5.   Maybe that's why you get different responses from SBA.