All Forum Posts by: George Despotopoulos

Hi Ethan, without knowing the language of your contract it's hard to issue an opinion here. He may be very well in breach of the agreement. Without the agreement though, it's just an assumption on my end. You should retain your own counsel to do a review of the agreement and facts of the matter.

 Oh dear me I love this! 

Usually a state has an exception if you're looking to invest in residential property, it may not be considered doing business in that state and you won't have to foreign qualify if that's the case. This is a case by case basis so you should review statutory authority and consult a local attorney. 

I am not aware of any extra tax / fees associated with investing out-of-state. But, I am not a tax professional.

It may be difficult to find hard money lenders for owner occupied properties. There are a lot of regulatory and compliance concerns with doing such loans.

Hi @Account Closed are you asking rates from traditional lenders or hard money and/or private lenders. I can address the latter two. 

Hard money is a short term loan option, usually 12 months, and the payments are interest only with the principal due at maturity in a balloon payment. There is no income verification. It is asset-based lending; the focus will be on the subject property's value. The rates will be high here, around 10-14%. This loan product is usually reserved for a fix & flip or a buy/rehab/refinance project for a rental property that needs a little rehab work. 

If you're looking for private money, that can be 10-30 years. The payments are usually a mix of interest + principal. There are fixed options (although those seem to be less offered) and adjustable rates. Here, there is no proof of income, the underwriting is done to the rental property's income. Rates will be between 7.00% - 9.99%.

Hey @Matthew T. are there seasoning requirements with your lenders? Also, your credit score may be higher than @Richard Moreno's. 

Richard, no seasoning is rare and usually not the best practice. Is this a portfolio lender perhaps?

As an attorney who handles the drafting and review of all loan documents, prior to and for closing, I would highly suggest retaining counsel for this. 

I don't know who or what kind of attorney would charge $3,000 for merely a consultation...I think there may have been some sort of miscommunication there. Perhaps they meant a $3,000 retainer that they will bill against at their hourly rate. 

Regardless, if you're lending money I would think you'd want that to be a secure investment. Each dollar I lend I make sure I understand fully the risk associated with that transaction and do what I can to protect myself. 

In the wording you provided there are many issues and things you have not provided for. Instead of going through and detailing the shortcomings, which would take significant time here, you should talk to an attorney asap. You always have to plan for the worst case scenario. Here it would be a default. You do not want to pray that the docs you drafted on your own or with input from online strangers holds up in court. 

Also, to save on legal fees, usually you talk to the initial attorney who drafts the docs with them and ask him how they will charge you to handle subsequent loans. Usually they will give you a reduction in hourly rate to make small edits.

Hi @Steve Rozenberg! 

Let's see. The most important factors are the origination fee (should be ~2.5 - 5 points due @ closing), closing costs (ask about miscellaneous fees, do they charge you for their legal services, recording fees outside of title company's costs), rate (typically 10% - 14%, anything above/below that is suspect) , prepayment penalty (should not have one). Term is usually 12 months, with an option to extend for %. Usually HML do not extend past 18 months.

I would ask how quickly they can close, if they're a direct lender (meaning do they have the cash on hand to close tomorrow if they wanted to, instead of looking for investors to fund your loan), ask for references (past clients, vendors they use). 

I would ask about any upfront fees you'll have to pay. Some lender's have an application fee which is standard but it should be less then $500 and they should tell you in writing what it's for and in what circumstances it is refundable. 

 You're right. All the more reason to have docs in order and seek counsel prior to closing. 

Yes you are correct, they do @Jay Hinrichs -- Oregon requires licensure to make both rental property loans and hard money loans.