All Forum Posts by: Nghi Le

These days, the Greater Seattle Area has an average of 3 real estate meetups per night, but what about those who can't attend evening meetups due to work schedule, family obligations, etc? Then this is the perfect meetup for you!

We're back at one of our favorites for our south end lunch & networking! Kathy Tang, Jimmy Tang's sister, has opened her doors for us once again... quite literally this time since we're coming right when the store opens :-)

There are no speakers or pitching, just pure networking. Whether you're working a day job in the area or are lucky enough to work in RE full-time on your own schedule, come join us for lunch and networking.

I have to give the restaurant an accurate headcount ahead of time, so please RSVP to the meetup here:

https://www.meetup.com/RealEstateAtWork

Here are a couple of pictures of our past meetups at this location:

Keywords: Burien, Normandy Park, Renton, Kent, Des Moines, Seatac, Federal Way, West Seattle, Auburn, Tacoma, Lakewood, Fife

I think you mean Magnolia, which shares similar ownership to RCP?  That's their cheaper, more competitive arm, but has more underwriting constraints.

When it comes to flips, especially the quicker ones, it's not the rate that hurts you, but the points. Most lenders are charging 2pts these days, but I'm starting to see that approach 1pt or less, especially for experienced borrowers. 

These days, the Greater Seattle Area has an average of 3 real estate meetups per night, but what about those who can't attend evening meetups due to work schedule, family obligations, etc? Then this is the perfect meetup for you!

There are no speakers or pitching, just pure networking. Whether you're working a day job in the area or are lucky enough to work in RE full-time on your own schedule, come join us for lunch and networking.

We're averaging about 60-80 people per meetup in this location and raise money for a charity called A Hero's Home each time through the meetup fee. This charity is dedicated to providing homes (acquired and fixed up by proven real estate investors) to those who have served their communities and country; it was brought together by a few BP stars, such as Jay Hinrichs, Brian Burke, Chris Clothier, Brandon Hall, etc. For more details, please visit: http://aheroshome.org/

We'll be on the 2nd floor of Two Lincoln Tower (although we may decide to move it to the covered rooftop in the same building if the weather is nice). Please carefully read the directions to get there in the meetup link below. Parking is free in Lincoln South parking lot for up to 3 hours if you validate with any store in Lincoln Square. You can also park at Bellevue Square and walk over.

The fee is $15/person, and all proceeds will go directly to the charity.  We have a generous sponsor taking care of the location and food for the event.

Please RSVP so we can get an accurate headcount for food:

https://www.meetup.com/RealEstateAtWork/

Keywords: Redmond, Kirkland, Woodinville, Renton, Factoria, Newcastle, Mercer Island, Issaquah, Sammamish, Factoria, Tacoma, Everett

Pictures from the previous events:

Nice work! It sounds like you got a loan from Eastside Funding. Those 5-month loans are dangerous. I only get 1-yr loans nowadays, especially in our market that has slowed down.

I often tell people to not get sucked into the "cheapest" hard money lender; i.e. that it's not always the best deal for you or for the situation. I think a real life scenario might get the point across better.

I received nice hard money terms on my last Seattle flip:

• 8.4% interest
• 1.25pts
• 95% of purchase, 100% of rehab
• 9-month loan.

It's not the lowest hard money rate (I received 7.14% for another flip in KY), not the lowest points (0.5 - 0.75pts is achievable), etc., but it was a good combination of low cost, high leverage, and decent term length.  Keep in mind that terms like this are typically given to experienced investors, not new investors.  Your terms may also differ depending on where you are; west coast money is usually cheaper than the Midwest.

Now, I'll tell you all the reasons why I don't normally use this type of loan for my deals:

1. It takes 3 weeks to close this thing. This is because of #2 and #3.
2. It requires an appraisal AND an inspection of the property. That's two separate visits to the house.
3. The doc process was a headache. Much more intensive than most hard money loans, and underwriting came back with conditions that made me feel like I was dealing with a bank.
4. It only works if as-is value is at least 10% higher than purchase price. The lender would only allow the high leverage if there's a lot of equity up front and on the back end.

So basically, it only works with deals where there's a lot of margin and a long closing timeframe, and I have the time to deal with paperwork and underwriting headaches. That last part is probably the biggest factor in my book, and what essentially currently defines the real estate financing industry: the cheaper the loan, the more painful it will be. But sometimes it's worth it... for the right deal.

Keep in mind that the most important attribute of a lender is that they close, they close on time, and they close with their original terms (and don't pull a bait and switch at the last moment). And remember that anytime an appraisal or BPO is involved, those 3 things are at risk, unless those risks are mitigated (which is a longer topic in itself).

Figure out the extension policy of your current lender.  If they're charging 1pt for 45 days (which a lot of the local 12% shops do), I'd recommend to refinance ASAP.

If you keep making those monthly payments and dwindle your reserves, it may make it harder to get a refinance too.  The hardest type of loans to refinance is a borrower in distress from another hard money loan who has no/low liquidity and low equity.  Things that can affect your equity position: loans fees that accrue and pile up in the payoff, a market that's flattening / on a downward trend, and price drops on your listing.

@Jordan Sitzler Can you share more numbers on the rental side?  Hard for us to advise without that information.  i.e. gross rents, insurance, taxes, vacancy, capex/maintenance, and PM fees.  Cashflow can be a pretty subjective calculation, so having this breakfast of income and expenses is helpful.

How long ago did you purchase it, and how much total rehab is going to be done? It sounds like you have some decent equity in there and may be able to cash out enough to pay back your private lenders. Doing a successful BRRRR is pretty hard in King, Pierce, and Snohomish counties, so I do lend to lean more towards keeping it if you can cashflow and pull out all your cash. But it also depends on your financial position and if the bank will allow you to do a refi.

Those two requirements you're running into isn't the norm. Sometimes the LLC requirement is mandated by the state, but MI isn't one of those states. Also, most HMLs don't really care much about the contractor you use (and even allow you to do the work yourself) unless it's a significant remodel. I'd say find a different lender.

Another issue you may run into is the price points you're looking at.  Outside of the coastal markets, lenders have problems with small loans.  A loan under $100k already filters out half of the HMLs out there.  $75k filters out another half, and $50k is usually the absolute minimum they'll go to, but there are a few exceptions.

Feel free to PM me for recommendations.

This question confused me because it seems to suggest a refinance and a mortgage are different things... don't you usually refinance into a mortgage?

You can also refinance into a commercial/portfolio instead of a conventional loan. Then you are playing by different rules (i.e. DSCR restraints instead of DTI) and don't have limits on the number of mortgages (depending on the lender).

There are also more asset-based long-term rental lenders, but they're often a bit more expensive (but still cheaper than normal hard money loans).  Basically, the less pain it is to qualify for a loan, the more of a premium you pay.

@Alex Sabio As another west coast investor that invests out-of-state, I'm pretty cautious about when and where I use my conventional loans.  i.e. I'd rather save it for a $500k property here than a $50k property in the midwest since the bank counts the number of loaned properties towards your limit, not the dollar amount.

I tend to use commercial loans on refinances for my out-of-state deals as much as I can. The rates can sometimes be lower than conventional (currently at 4.6%), and you can do it in your LLC's name vs your own. Definitely cheaper than Lima One or FoA (or other asset-based rental loans). No limits on number of properties, can blanket different asset types all day long, as long there's good cashflow. PM me if you want a recommendation.