All Forum Posts by: Jerry Villa

Hey Tom, I should have specified more.... this would not be for a primary residence but more along the lines of rehab/brrrr property so traditional mortgage/bank might not be the best option I'm seeing. I'll definitely go to local financial institutions for sure. The part where you said you dont need to get your credit pulled, how far do you talk with the bank before doing an application, you're obviously not getting pre-approved yet in those situations correct? Are you sharing with them the numbers on the project to see if it makes sense for them before doing an application?

Mike, this project in particular is a property that I'm rehabbing and would like to refinance out the AVR once finished. 

@Tom S. Yea I heard about this. Would you do the shopping around yourself or do the mortgage broker route? Based on the other response here, if you get denied from one bank, it doesn’t make sense to keep going to other banks since they use the same criteria. What do you think?

@Etai Gil thanks for the response. I should have clarified more, I wasn’t denied or wasn’t starting applications but you hear Brandon on BP keep talking about not accepting a no and keep going till you find a yes with lending. Sometimes he mentions the larger national banks don’t try as hard to really qualify someone because they have a unique income source (investors) or that bank doesn’t do loans under a certain house value (maybe the neighborhood is lower value and a local community credit union might).

I just realized maybe another idea they were espousing was about finding creating ways to fund a project, including hard money lenders, partners, syndication, etc when traditional mortgages are not available to you....

I've heard on biggerpockets podcast hosts suggest you to keep on searching for Credit solutions, even after one bank has declined your application, so i wanted to know how does shopping around affect your credit? Do you guys have some tips on how to best shop around without affecting your credit too much? Thanks

I'm getting an open line of credit from a family member and wanted to give them interest on it. I'm not sure yet how much I will need as it will be used for any incidentals that are not covered by home depot credit card and other financing. It would be easy if it was just a full set amount loan of $XXXX.XX and just attach interest, there are loads of calculators online for that, but what if its an ever changing amount used, so maybe in the first 2mons we pull about a small amount and then later pull out more while paying it down. not sure what that is called and if there are any tools that can track interest on what is pulled out and at each stage of the balance. 

Thanks!

TLDR: What agreement should I write between my grandmother and I so I can take over her house (mortgage payment, agree to buy the house at a predetermined cost), while we keep in her name and then finance/buy it at a later time?

Long story:

I recently posted that my grandfather passed away this month, coincidentally happening right when I was pulling the trigger on next steps into proper real estate investment. My grandmother is still with us but she wont be able to live alone in their house, the place needs a lot of work. I've done the BRRR calculations and it makes sense for a lot of reasons (sentimental and financially) that I should take over the place. I've talked it over with the the family (uncles, parents, and grandmother) and it looks like we're going to keep the house in my grandmothers name while I move forward with the house. So, we'll be agreeing to a fair price on the property in the condition its in. The house wouldn't be able to be sold on retail market in the shape its in and really can only be sold to investors. The amount we're thinking its worth though will probably equal the loan amount, so she doesn't have any equity really. I would need to put in $25k-$40k of rehab into the place (ac, roof, gas, and much more). At a later time, either in a couple of months, a year, or whatever is best, I'm planning to get a loan to buy the place out right, the ARV should give me room to pay the first mortgage off (value her and i agreed to), rehab cost (either another loan or credit cards), and give me some equity to use for another project later on (BRRR strategy). My question are the following:

1. What sort of agreement should I create this week with on the purchase price?
2. When should I plan to actually BUY the house from her, should I do it soon, a year, or keep it in her name as long as possible (her mortgage is low, she pays no/little property taxes, etc)? What are the cons of keeping it in her name?
3. Lets say the purchase prices is the same as the amount she owes her bank, can we just make an agreement that says we'll pay the bank whatever the pay off is when I do choose to buy? Because if I buy in a month, I would have paid one mortgage payment, if in 1yr I would have paid down the mortgage 12 payments, etc
4. Should I worry if she passes away suddenly and it goes to probate, should I do anything else or add something in an agreement to cover that?

We're looking for something simple to understand but still covers things. I don't expect any problems later on, but want to make sure if she ever has issues with memory or decisions that she doesn't change her mind in a couple of months after I've put in $30k of rehabbing or any other family members coming to start issues.

@Karen Margrave thank you for those ending words. It would be a great story to tell that in my grandfathers passing he inadvertently helped launched my RE investment journey. He didn't leave much to us in terms of material wealth but left his legacy...

I'll be sure to look into the trust.

My grandfather just passed away and my grandmother wont be able to stay in her home. They've had it for 50yrs and its something we dont want to lose. They have a mortgage on the place that equals the value of the home (more or less) so she doesn't have a lot of equity in it right (or none). The house is not in good condition, needs a lot of work, so probably wouldn't be able to be sold in a traditional mortgage but instead ideal for an investor. 

I was told that it might be best to get some idea of what investors would pay for it, so that I can make an agreement with my grandmother to buy it at that price (so there is no chances of family members saying I low balled her). 

She has a low monthly mortgage note, she doesn't pay property taxes (or double digits low). I was suggested to keep the suggested that I should make an arrangement to buy the house at the fair price, but keep it in her name, dont move the loan. And that I pay the monthly mortgage payment, rehab the unit (will use some home depot credit) and pay for the labor with myself doing a good amount of the work also. This would make reduce waiting for closing, getting another loan to purchase, save cost in property taxes and more. And later, whenever is best, purchase the property from her, at the price we agreed minus the amount that I paid monthly, and try to get the equity out of it with new value (ARV). I can also make some cash flow with the rental income after rehab and give her a bit more cash flow also since I would be saving with property taxes and interest saved.

I dont have a lot of funds to actually purchase the property right now, working on a heloc loan but that takes a lot of time and has a chance of not going through. I do have room on Home Depot card to purchase all the materials, I can pay for the labor while doing a lot of it myself. I've done the BRRR calculations and the property makes sense. I just have to be careful to not let my emotional attachment to this property to go to far with the rehab (expensive materials, costly upgrades, etc), this would be the ultimately challenge for that.

What are the pros and cons from your professional/experienced position about this situation (keeping it in her name for now) and would which direction would you recommend?

Thanks

I've been pre-approved for a HELOC on my primary residences from Chase (they have the mortgage also). I'm not a traditional single W2 wage earner so most of my income comes from various businesses that pass through my own filings. These businesses range from Airbnb income, Cleanings Services, Internet Marketing work, and more.

Chase is saying that they are going to need 1099's from every income source, tax filings from the last 2 years, and lease agreements. 

I told them I wont be able to get 1099s for every single source of income, some I do have (like Airbnb and some clients). My tax filings dont show my gross income since gross income comes from various companies, then I deduct expenses and costs from the businesses, then I take that the net to my filings where I do the standard deductions. So the gross income I stated is not reflected in tax filings, so I told them I could provide all the P&Ls, accounting and bank statements to show gross income. I also told them I do not have standard lease agreements since majority of rental income comes from Airbnb.

They said they will do their best and they will request any supporting documentation as they need them. 

My question, is there a difference between lenders (national, local, credit unions, etc) in how they hustle to make the numbers work with whatever paperwork we can get?

When I bought my first house in 2010, larger lenders didn't seem that interested in really making the numbers work. Ended up going with another local lender who made it work and everyone won, chase even ended up with the note later on. 

Also any recommendations on who can really hustle to get a HELOC loan for their customers, especially those with diverse incomes?

Thanks

Thats great advice @Joe Facenda... 

I'm going to give that a try for sure.