All Forum Posts by: Shane Wilson

Lena, first just spend some time educating yourself and networking.

I would highly suggest seeking out those in your area who are investing and pick their brains. See if you can bring them a deal or two as a bird dog.

Once you can convince a few experienced investors that you are serious and willing take action you will find that many will help and mentor you.

If your going to invest out of area you better do your homework.

Whats the cash flow each home? Are they all occupied? Will they provide a rent roll for the past year? What's the maintenance cost? Whats the vacancy rate? Is the area in decline?

Persoanlly I would stick with the area you know.

I started in 2003 and invested part time buying 1 to 2 homes a year. I should have went full time in 2003 but I lacked the knowledge, experience, and the team I needed to make it work. I got involved in insurance for a couple of years and pushed real estate aside.

That didn't really work out so in 2006 I decided to just try going full time and go all in. I was young, had no family, and if I failed I failed it wouldn't be the end of the world for me.

I literally put every dime I had on the line. I got a hard money loan did my first rehab and sold it. I also used partners and any other means necessary. I did 3 deals in 6 months for a total of $40,000 or so in profit.

When the rehab market dried up I learned other tactics. Their is always a way to make money in real estate.

So for me at that time it worked. If you have a family, kids, and more responsibilities then just do it part time over the course of a few years until your ready. It all depends on your situation, financials, knowledge, and goals.

Whatever the case just be responsible and realize its not get rich quick.

Talk to the commercial lenders in your towns small local community banks.

They will loan up to 75% to 80% of LTV. Loans are amortized over 15 years and balloon in 3 years. Its shouldn't be an issue to renew the loans in 3 years if you are prompt on paying. Interest will vary but will run from 7% to 8% most likely for a fixed rate.

They will require the following info:

Balance Sheet
2 Years Tax Returns
Rent Roll
Property Info - what it will appraise for, the loan amount your asking for etc.

To qualify you need a credit score above 620, debt service coverage on you properties 1.2 or above, enough cash reserves for the number of properties you have.

Appraisal and attorney fees are paid for out of the closing usually. Closing cost are usually far less then a mortgage broker.

You can combine the properties. If you sell one they just release it from the loan.

All the banks are tight right now. I would wait until things loosen up some more. With the fed lowering rates its hurting the banks pretty badly right now as far as the cash they have and their ability to loan out money.

All my properties are generally bought with commercial loans from small local community banks.

Advantages for me:

-Commercial loans are much cheaper as far as closing cost.
-Generally close in 2 weeks
-Able to use my appraiser
-The banker knows me and I can deal directly with him and often they can approve you upt o $250,000 in loans before going to committee. Its just a lot less hassle.
-Easier to Qualify in my opinion
-I can get interest only loans so I cashflow more on my rent to owns.
-My rates are about 6.5% for a variable rate tied to prime for any new loans. I have some loans as low as 4.75% interest only that were down before the bank raised the rates due to their margins getting squeezed. Still 6.5% thats about the same as a traditional residential loan for an investor.
-Loan doesn't appear on my credit report at most banks.
-Can get loans in my company name. Liability protection is important to me.

Don't get to excited about commercial loans though. They have dried up considerably just like everything else and their standards have increased on real estate deals since the bank regulators have tighten up so much.

If your cash reserves are low like you said I would not suggest it.

Is your loan a commerical loan? If so ask if they will redo the loan as a construction loan so you can get draws as the work is completed. If they won't shop around a few other banks and talk to their commercial lenders to see if they will.

If you can't get a commercial construction loan because of credit and/or lack of cash you may need to find a partner to bring into the deal or as mentioned a hard money lender.

Talk to a local commerical banker and get a co-signer with a credit score above 620 with income on their tax returns and some cash reserves. You should be able to refi out to 75% to 80%. Talk to several banks. Money's tight right now you have to find the 1-2 that are actively lending.

I"m just curious how the active investors here are funding their deals right now? I've been very active with commercial lenders from my local banks but almost all of them have tightened to a halt or I've reached my limit with them at the moment so I'm having to use them sparingly. I have private lenders but only so many of them. I'm just curious if there is anything I'm missing in terms of financing since there are so many good deals but only so much money to go around right now it seems.

Talk to your local commercial bankers and learn about getting commercial loans. You can typically go up to 75% to 80% with them.