All Forum Posts by: Account Closed

It's difficult to get financing in the name of your LLC. You're going to cut off all of the more normal 1-4 unit type loans. What you might be able to do is find a small local bank that would loan to the LLC, but you are really going to cut your chances. Even if you find someone to loan to the LLC, there's a good chance you'll have to personally guarantee. Check it out, but probably the best loan will be one to you personally, not your LLC.

@Bill Gulley 

When I was doing alot of owner finance/subject to type transactions at one time, when I presented my offer to the seller (almost always a seller not a realtor) I had my balance sheet and income statement available, and my credit report.  Generally what one of the seller objections to owner finance is that they're worried you won't pay.  One way to try to overcome that was to present financial data.  

Admittedly I suppose someone could make up some fraudulent documents.  I think that's been done with institutional lenders.  However, I don't think it would be too hard for me to verify information off the credit report for instance.

That said, keep in mind that the seller we're talking about here is "motivated" to sell.  And, they probably don't have a way to pull there own credit reports.  So when you present yours it's actually a help to them.

But your point is taken.

@Account Closed 

Yes, that's me.  And I went to several of those conventions so I could have easily met you.  I think I quit posting around 2001, so it's been a while.  You know, periodically I used go back there and read the posts.  In recent years I noticed someone from the Santa Barbara area who seemed to buy "title challenged" type properties.  It seems like it was a different name than yours...right now I'm not recalling the name.

Anyway, I'm glad to see someone from the old place.  I've noticed your posts here.  I admire the types of deals that  you do.  Smart.

I used to use credit cards all the time.  It was definitely the best financing I could get at the time....0% interest, and less than $100 in points.  The key was to figure out how you were going to pay the card off, because that 0% was only a year.  And like @Arian Potter, I was buying cheaper houses so I paid for the whole thing sometimes with a credit card.

Since then, I think all my credit cards charge several points upfront for the money.  They definitely made it less attractive, unless you've got a clear exit strategy for the cash.

@Joe Villeneuve 

The interest on a 15 year loan at 5% on the very first payment is exactly the same as a 30 year loan at 5%.  Absolutely no difference. As we move down the amortization schedule, the interest paid on the 15 years loan drops faster than the interest paid on a 30 year loan.  A $100,000 loan about a year down the road will have the 15 year loan paying about $14 less than a 30 year loan.  In other words, the 15 year loan pays much less interest than a 30 year loan.  In 10 years a $100,000 30 year loan will have paid $46,099.  A 15 year would have paid $36,974.  Almost $10,000 less.  Yes, you pay a higher payment on the 15 year.  But ALL of the money except interest goes to paying down the principal. So at that 10 year mark on the 30 year loan, the principal balance is $81,144, while the 15 year has paid all the way down to $41,288.  So Joe, the bank makes LESS on a 15 year loan.  The only money the bank makes is the interest.  The rest of your payment pays the loan.

Now, the usual reason given for wanting a 30 year loan is higher cash flow and, if you had some difficulty paying the loan, the payment on the 30 year is less than a 15 year.  And too, since there is no prepayment penalty, you can pay a 30 year loan off in 15 years and save yourself all that interest.  However, it's also true that typically the rate on a 15 year is less than a 30 year.  In my market today, there's an 87 basis point advantage to a 15 year loan.  So not only does it pay off quicker, the rate is just plain lower.

Funny story....I took over a loan one time back in the early 90s.  The payment seemed really high, and I didn't have hardly any cashflow.  But I was content with the deal because I bought it nothing down.  Within a few years I had raised the rent, so my cashflow had improved.  And about that point I realized one day that I had taken over a 15 year loan that had been about half paid off at the time!  The house just had a few years to go on the mortgage!  You know what?  I think I've owned that house now about 20 years.  Most of that time there's been no mortgage, so it's been a cash cow! 

You know what @Johnnie Smith ?  You're a young guy.  If you don't really need the cashflow then why not pay the house down?  There's always gonna be someone who proves to you that you could have done better than you did had you kept all your cash flow fully leveraged.  It true...you could have.  But some of those people went out of business a few years ago.  Too much leverage then was a killer.

Whether you have a 15 year or a 30 year is really your preference. You gotta love how quick that 15 year pays down.  But if you were having some trouble, being able to make the smaller payment could potentially help you.  It's really your choice.  But your folks sound pretty  smart to me.  And having a higher equity is going to help you trade to larger properties or more properties at some point if you decide to.

Good luck to you.

I call back.  I've never had anyone return a voicemail from a cold call.  Sales type calls in general I don't leave a message.

@Derek Martin 

No I wouldn't come out and say I owned buildings in the area.  You're right, it might give you some common ground, give you something to talk about.  But it's all kind of irrelevant for the purposes of a cold call.  You've only got a brief moment before you lose this guy.  So when you give out your history, you're missing the purpose of the call....which is to a) find out if he's a possible seller, and b) make an appointment with him.

Bottom line is you need to get him talking rather than you talking.  Plenty of time to tell him you own a building in the area if that's important to you.  But trust me on this, it's not important to the issue of whether he's entertaining selling, or to the real purpose of your call.  And too, your original question was about realtors and success with listings.

I usually called with something like this:

Hi, my name is Jim Piper with XYZ real estate company.  Just calling today to see if you have ever entertained the idea of selling your property?

What that does is it throws the ball to him.  Now, he has to talk.  I like to ask questions that answer the who, what where, when, why and how.  Every question you ask gives you more information.  How many units do you have there?  Are you full or do you have vacancy?  What kind of rents are you getting?  Do you have any deferred maintenance? How long have you owned the property? Etc etc.

Now, my goal as a broker was to make an appointment to get a listing.  When I went to the listing, saw the building, and continued to ask questions I would try to determine his motivation.  "How quick do you need to sell?"  "Are you able to carry some of the deal to facilitate the financing?"  If the answers to these question are coming out in a way that makes me think he's motivated, then I'm going to shift my direction to buying myself.  If not, I'm going to list.

Regardless of what hat you have on, no one especially cares about your history.  And too, you've got to know alot of information before you have any idea of what the value is.

I think you get the idea.  The idea of cold calling is to get down your list to the handful of folks that are interested in selling.  And btw, that automated caller is a poor idea in my opinion.  It some areas it might even be illegal. Legality aside, you do a higher quality call yourself.  And if you do them how I'm suggesting you'll down your list quickly.

Have you ever entertained the idea of selling?  No.  OK, thank you very much and hang up.  That's a 30 second phone call.

In a prior life I used to broker apartment buildings.  I got my listings via cold call.  It's an easy cold call.  If the owner says he's interested in selling, I personally would not muddy the waters up trying to talk about a low ball price.  You'll find out at some point whether or not this guy is motivated.  If you find that out, that would be the time to tell him that at times you buy the building yourself.  I'd give him the advantages, for instance, you close quickly and you take it "as is".  I don't ever just throw a price out.  I like to build up to it, after I have established value, creditability, etc.  That would be whether I'm going to buy myself, or I'm going to try to list.  Obviously, as an agent you'll have to disclose your license.

BTW, alot of owners of apartment buildings want to 1031 exchange.  So it's going to be helpful if you know about 1031 exchanges.  And in terms of price, I always point out that if he sells a little cheaper, he'll be able to buy a little cheaper.

If you rent an apartment the landlord is going to have you fill an application out with all your info on it, and he's going to run a credit report.  You're giving up something important, but he's giving you a house.  Personally I pull credit (and other things) anytime I rent or sell a property.

However, back in the old days I used to pull my own credit report.  If the seller wants credit I show it to him.  If he wants a copy, just explain to him that in todays times with all the ID theft, you don't like to give it out.  But he can certainly look at it until he's comfortable with it.  Prove who you are to him with your ID, so that he knows it's your credit report.

Completely normal to want to see your credit.  Alot of times the seller won't ask for it.  But the agents almost always ask.  And some of the seller's too.  Its a good idea to have it available.

@Account Closed 

I don't think this is "marketable title".  But if this is marketable title, then it would seem to me that the seller is required to sell the property on the terms he and the buyer agreed to, and if he is unable to do that, then he could be sued for specific performance.  If I were a seller I would think returning the buyers costs would certainly be cheaper than defending a specific performance suit.  Like I said, I don't think the title here is marketable.

As far as negligence goes, this was referred to as a "sizable" lien. It stretches the imagination to think a seller would not be aware of a "sizable" lien. And if he were aware, then don't we start to approach negligence. Then there is the agent. Wasn't he responsible to determine whether the property could be sold before he put it in the MLS? In the old days we would pull a preliminary title report before the listing appointment.

This seller is ready to close.  All the buyer has to do is comply with the terms of the agreement.