All Forum Posts by: Mark Safrin

I read, study, spend time with my family and communal activities. The closest to "Dead time" I have is here on BP which I justify under the "study" category since I learn a lot here. ;)

But if you want a "Yes", come to me with a nice property you have or are about to have on contract and want a loan on. A property whose 75% of LTV is light years above my minimum loan size and in a large city, and also have a great credit score. If you are referring to a meetup, I can almost always be put in the right frame of mind for a Yes with an offer of a shot of single malt or a rusty nail drink. ;) Even without that though, a smiling countenance can usually persuade me to, yes, part with one of the loan program flyers I should be carrying.

Best of luck.

You can always try and negotiate. Your HML will usually have a going rate but may also have some discretion.

Of course negotiation works best if you have something to offer. 

To exaggerate slightly... That rock solid $8 Million, recently rehabbed, fully leased, Manhattan SFR that you only need 50% of LTV, when you have done 30 flips before and your credit score is 850 and you can give the HML what he considers ample time to do due process, underwrite and close, will give you a heck of a lot more chance of said HML exercising his (or his CEO's) discretion...

... than when you are barely scraping the minimum $75K loan size, have no experience, the property is in Nowhereville (Population 3.), you have a credit score of 420 with a recent foreclosure, you demand the money in small unmarked bills in 48 hours, will complain over every fee, point and percent including spending hours on the phone arguing that the lender has to pay the appraiser and why should you provide any docs whatsoever, and by the way you can't speak now because you are busy running narcotics across the border at the moment on the run from the military, and the lender can just tell that you are the horror customer that will take up weeks of his time and grey the last remaining follicle on his head all for a massive $1.95 of personal commission.

;)

This question come up so often. I should probably find one of my old posts and keep copying and pasting.

I would be wary of HMLs who offer 100% financing. Most want you to have some skin in the game.

The HML will cover his risk one way or the other.

Hefty interst rates and points (Like 15% and 5 points), substantial fees and quite possibly placing Title in a LLC which, if you default, you get booted from the LLC losing all equity including the rehab you sweated on, are but some of the things to watch out for.

The general rule is if something sounds too good to be true, there is a catch somewhere. Have a lawyer and accountant look over any such deal with a microscope first.

How common is for a group of investors to sell properties amongst themselves to inflate the apparent value of the property before approaching a HML to draw out the value?

Came across one such group. If I understand it correctly, they are hoping our appraisers will just use the last sale price as the preferred comp.

I don't think they realise our professional underwriters are not dumb. Nor that people in the industry speak to each other.

I am however wondering how common this is.

If you do, be sure to factor in the costs of using that lawyer into the loan costs of your deal. 

Also, consider having an accountant look over your deal istead, including whether it makes economic sense.

Once you have used a HML and have grown comfortable both with the lender and your own abilities, you can probably dispense with it. Most of our borrowers for instance seem happy do the borrowing by themselves.

I have a contact at LendOnLand who I can introduce you to. PM or email me if you like.

I do not not know their terms, however given that land HMLs are riskier than those with a standing structure, I would imagine you will need a downpayment to have some skin in the game.

Best wishes. 

The point of Hard Money, usually, is to pull equity from the house to put into a project that will generate more money than the HML costs.

How are these broke people going to service the comparatively high loan interest rates? Do they have some other income and just need a short term respite? It sounds to me that if they are just staving off the inevitable and cannot get some other form of financing or income, they should strongly consider selling the house. A chat with an accountant as to their options is probably a good idea. Perhaps work out some payment schedule with the IRS.

PS. A HML is going to give perhaps 75% of As Is value. Presuming it appraises for $200k that's $150k. Minus closing and other costs that's barely enough to pay off the IRS. And those loan payments start just 30 days later...

 Yes most do. Either there is a minimum score and/or they can offer better terms the higher your score. 

Please clarify numbers.

Are you saying she has borrowed 260 plus put in 140 of her own? And what do you mean 140 in time and materials? Her time?

Yes. Paid labour.

Because she isn't getting credit for her time invested. When you say she is doing the rehab, you mean acting ss GC or doing the work herself? How were things gotten so wrong to begin with? Construction surprise or she didn't know what she was doing?

Construction surprise apparently. She was not acting as GC, she paid someone else to do this who grossly under-quoted.  "Didn't know what she was doing" is an assumption I prefer not to use when describing my clients in public. Surprisingly she is an experienced multiple rehabber in this suburb.

How much actual cash is sunk at this point?

As far as I can tell, it is $400K.

Does the 200k needed include holding costs or just rehab?

Rehab.

Why not post the property details? What's the secret? She owns it. Let us figure out ARV.

What secret? Do you usually post your all your client's property details while she is going through a difficult time and will want to sell it hopefully one day soon?

The ARV has already been appraised.

Sorry but it just sounds suspicious when someone wants me to believe their ARV with no details.

You are not being asked to believe anything. What is this, the inquisition? If it was not out of the ordinary I wouldn't be posting it. The ARV was professionally appraised third part using the selling method. Multiple comps were available for ARV.

As it happens, the situation was solved since I posted the issue. Her current lender made her an offer she couldn't refuse and we ended up not lending on this property.