All Forum Posts by: Corey Dutton

Yes I would agree. However, I think one of the findings was interesting, regarding the margin narrowing on distressed sales.

Will Barnard - here's a link to the entire report: http://www.realtytrac.com/content/foreclosure-market-report/us-foreclosure-and-short-sales-report-year-end-and-q4-2012-7609

Forgive me for the delay in responding to you as I was out skiing today. Oops! Did I just say that???!!!

As reported by RealtyTrac, foreclosures (also called REOs) and short sales, accounted for 43% of all home sales in 2012. “Distressed sales are still a disproportionately high portion of the overall housing market,” as reported by the V.P. of RealtyTrac, Daren Blomquist.

Another finding from the RealtyTrac report, is that increases in the prices on distressed properties are narrowing the margins that real estate investors can make on distressed purchases. “And while distressed properties are still selling at a significant discount, average distressed property prices are increasing in many markets thanks to strong demand and limited inventory,” said Blomquist.

A good deal of the demand has been pushed by hedge funds with the intent to convert the single-family homes into rental properties. Not to mention the flood of foreign buyers like Canadians that have shrunk inventory and pushed up prices paid for distressed properties. This has been very frustrating for U.S. real estate investors that are looking to make a buck on the spread between what they can buy a distressed property for and then resell later once repaired.

Because many borrowers are unable to qualify for bank loans against distressed, vacant investment properties, a private money loan is a good alternative to a bank loan for real estate investors.

“Your most expensive money is your own money, and your second most expensive money is your family’s money.” This comes from a real estate investor that I know. For those of you who have been in real estate investments with family members, you can likely identify well with that quote.

We were approached to do a loan on a property for a man whose sister is suing him over a property that they jointly own. The man’s sister felt she wasn’t getting her fair share. So the man sought to obtain a loan against the real estate in order to buy his sister out of the property altogether.

In a buyout situation, to determine the value of a property, seek out comparables sold within the last six months, along with active listings. If decent comps are not available, you can agree to split the cost of an appraisal. Then you will use this value to determine a buyout price. From there, if the loan to value is favorable to a lender, it is possible to obtain a loan against the property to buy out the family member.

If you are unable to negotiate a buyout with a family member, then the alternative is to sell the property. Because there are so many costs involved with family members, we are often approached for private money loans against properties where family members are being bought out with our new loans. Because many borrowers are unable to qualify for bank loans against investment properties, a private money loan is a good alternative in the case of a buyout.

Hi Scott,
To answer your questions:
You can usually expect that a bridge lender will give you 65-75% of the purchase price on multifamily commercial. So you'll have to be prepared to bring in a large chunk of cash. You can find terms on bridge loans from 9% up to 12% interest only. Loan fees range from 4-6 points.

If you have a vacant property, most banks won't lend on this. If it needs some work, the same applies. This is when a bridge lender may be the best way to go. Also if you need to move quickly on the purchase to take advantage of a lower "cash" price, this is also a good way to use private money loans.

We offer bridge loans in several States. Let's connect soon!

We’ve had a lot of requests for private money loans on single tenant commercial. Both for new purchase loans and for the refinance of existing loans on single tenant commercial buildings. This commercial property type is not a favorite of banks at the moment. Even with long-term leases in place, banks are turning their noses up at single tenant commercial.

This is where private money loans and bank loans differ greatly. Private money lenders will lend on any property that is income-producing, regardless of whether it is single tenant or multi-tenant. If the location makes sense and the business or tenant’s business inside the building make sense, a private money lender is always willing to make a commercial bridge loan on an income-producing investment property. When I say ‘bridge financing’ I mean a short-term loan that allows the borrower time to refinance the property at a lower rate sometime in the future.

If you are looking to acquire a single tenant building and you plan on financing the property with a bank loan, make sure you create a lot of alternatives for financing. At the moment, it seems single tenant commercial is not preferred by most bank lenders.

To learn more about our bridge financing and private money loans for single tenant commercial and other commercial properties, check this out: http://privatemoneyutah.com/loan-programs/

One of my clients who has flipped over 400 homes never has to think about what carpet or paint to put into his rehab houses. His contractor has the SKU numbers conveniently filed at Home Depot for easy ordering, pickup, and payment. Using one home improvement supplier like Home Depot has helped this real estate investor quickly and efficiently flip so many rehab houses.

Real estate investors have certainly fueled Home Depot’s profits, it’s no wonder that the Home Depot just “pulled up the Dow,” as reported today by the Wall Street Journal (http://tinyurl.com/aagp96f) Home improvement has been on the rise over the last 18 months as real estate rehabbers furiously work to fix up and sell all of the REOs, and first time homeowners eagerly spend on their biggest purchases ever.

Deborah Smith thanks for your comment in particular. That is over and above anything I can ever imagine. This way of doing business is sad. As I said, 'employees with degrees in Anthropology,' - i.e. just way out in outer space.

Thanks for all of the comments on this topic. Sometimes it feels better to vent frustration and have people who have experienced the same.

For real estate investors who are trying to get a deal from the bank, the worst bank to deal with is Bank of America. It's a wonder that B of A is able to get REO properties sold at all, given the extraordinary amount of time it takes to get anything through their complex processes. The people that Bank of America has employed to handle this task are underqualified and dense minded, most of them seem to be recent college graduates with degrees in Anthropology.

For any real estate investor or lender who is reading this and have also had experiences dealing with Bank of America, the stories you could share are stories of insanity and frustration. There are certainly no master minds behind that behemoth bank, and the cogs in the wheel that they employ are far worse for business. Bank of America exemplifies a broken banking system that fails to deliver time and time again, and in more ways than just how they handle their REOs.

Now that I've shared my rant on B of A, (and I feel better now actually), please share your own stories of dealing with B of A and their REO process. As a lender, I am obviously very frustrated.