All Forum Posts by: Patrick Roberts

Another thing on this - how long has it been since you got this loan? Your post makes it seem like the assignment of the mortgage will be in the future. If you just recently obtained this loan, you really dont want to use this as investment property until you've lived in it as your primary residence for a while. Also, since this is an FHA loan, there is 100% a due on sale clause.

As others have mentioned, the legal advice I have received is that having the note/mortgage individually but having the property owned by the LLC creates a potential pathway to pierce the corporate veil in a suit. This is specific to my situation, so your situation may be different. Probably worth asking an attorney before you go through all of this trouble, though.

I dont know if there are any REI meetups in Boone, but if there are, that's an excellent place to start. If not, I know there are a few in Charlotte if you can make it out that way. This forum will provide a ton of learning, and then there's youtube and books for deep dives into certain topics. I would also lean on the finance department at App State. I would imagine there is a professor or two with real estate and finance experience who can provide some guidance.

Having been in your shoes, I recommend you stay focused on school and getting a decent job for now. Continue to educate yourself and network, but dont obsess over taking down deals at the moment. Once you have some cash coming in and capital saved up, start househacking or flipping. Despite what social media gurus say, this is not a game that can be played well with no capital and no experience. 

From what I understand, NC is in the process of making wholesaling illegal. A bill for this has been proposed and it's extremely aggressive, but I dont know where it stands regarding probability of passing. SC outlawed wholesaling last year, so it wouldnt surprise me if NC follows suit. 

@John Wallace Nice. We used to go Destin a ton when I lived in Louisiana. If DTI is the issue, a bridge loan would probably fix that part. Most of them convert your current primary to an investment property and then allow for no payment with a 6-9 month term. This gets rid of the DTI issue because the existing mortgage gets paid off by the bridge loan.

 Spot on. Anyone charging any kind of fees prior to the loan Closing is likely a scam. A handful of lenders may ask the borrower to pay for the appraisal directly, but even that is infrequent and not the norm. 

What specifically is holding you back in this situation? Is it DTI, needing the equity from the current home, or something else?

A bridge might work here. What you may run into is that a lot of bridge loans have size and LTV restrictions. For instance, a bridge with a max loan size of $500k and a max LTV of 75% will not provide much liquidity from the equity in your current home.

There is no juice in refinancing from FHA to anything else just for the sake of no longer having an FHA loan. The damage is done when the loan is funded, not after. The only reasons to refi now would be to lower your rate, pull cash out of the equity in the property in a cashout, removing a coborrower from the loan, or getting rid of your monthly mortgage insurance (MI) payments.

You do not need to refi into a different loan type to be able to rent the property. 

 This makes more sense. So you are buying the house with cash from your grandparents, and then selling it to your parents while financing the sale for them. The mechanics of this are pretty straightforward - buy it in cash, then have an RMLO underwrite and close the loan for you. Some RMLO services will provide loan documents, but I recommend that you retain a qualified attorney to have this done on your behalf. From there, have the loan serviced by a licensed servicer. This will be an owner-occupied loan so you want to make sure you are compliant with the regulations that govern these (the RMLO service will handle this). 

The bigger question is around the nature of the deal. Are you doing this help your parents, or are you looking at this as an actual investment. Personally, if I was in your shoes, this wouldnt really be an investment for me - I'd be doing it for the sake of my parents. Give some thought to this question. If they stop paying you, are you going to foreclose? 

 That's why the borrower should be bringing a downpayment to the purchase and the construction funds are paid in draws - you never want more lent on the property than it is worth at the moment because you want the borrower to absorb the initial losses if the deal goes bad. 

Say we have this scenario: your borrower wants to buy a distressed property, rehab it, and sell it, and wants to borrow your money to do so. The total loan exposure is based on a % of the ARV, such as 65%. That being said, you don't lend 65% of ARV on day 1 when the borrower buys the distressed property. You lend 80% or so of the current purchase price on day 1, and the borrower brings the rest of the cash for the purchase as a downpayment. You then pay out additional funds in draws over time as the property rehab progress and the property increases in value. The combination of funds you lend out on the purchase + on the draws doesnt exceed your max LTV (% of ARV), whatever that is (I recommend 65%).

That being said, lending is not riskless. As a lender, you are not being paid solely to provide access to cash - you are in the business of bearing risk for profit. The skill in lending comes in the form of controlling and mitigating risk. Ultimately, though, there will be deals that go bad. Unforeseeable things happen. People make mistakes. You will take losses on some deals if you do enough of them. You want to make sure that your losses are controlled enough and your overall yield is high enough that you achieve your target return on balance. 

What youre asking isnt clear to me. It sounds like youre saying that your parents own a home with a current mortgage balance of $64k, and youre asking how to take advantage of this. More clarity and detail is needed to be able to provide any insight. 

What are you looking for?