All Forum Posts by: Patrick Roberts
Patrick Roberts has started 4 posts and replied 1095 times.
Post: Private Lenders - Where to start?

- Lender
- Charleston, SC
- Posts 1,126
- Votes 945
Get a financing plan together before going under contract or buying. I cant tell you how many times Ive had people come to me needing a certain loan program/product only to find out that the way they set their deal up puts the loan out of reach.
Pick 2-3 lenders that you think may be a good fit and discuss options with them to see who will work best for you. Availability, skill, competence, product, rate/pricing all matter - dont just pick the person with the lowest rate or the lowest downpayment. Quality matters as much as cost.
Post: Interest Rate Issues

- Lender
- Charleston, SC
- Posts 1,126
- Votes 945
Quote from @Tyler Thackston:
Thank you everybody for your responses! I am an independent personal trainer but have made the transition to working in a gym. How long will I have to work at the gym before I can qualify this as income?
Any chance you know Donnie and Shannon at Core Fitness in Myrtle?
Post: Interest Rate Issues

- Lender
- Charleston, SC
- Posts 1,126
- Votes 945
Quote from @Tyler Thackston:
Thank you everybody for your responses! I am an independent personal trainer but have made the transition to working in a gym. How long will I have to work at the gym before I can qualify this as income?
This will depend on the loan product and the circumstances of your situation. This may or may not have any impact your interest rate. Highly variable.
Post: Interest Rate Issues

- Lender
- Charleston, SC
- Posts 1,126
- Votes 945
Quote from @Tyler Thackston:
I'm having A really hard time getting a good interest rate. I have about 1 million in assets with a 780 credit score but my job is unpredictable since I am a independent personal trainer. I have reached out to two mortgage lenders who have only offered me a 7.25% rate at best. Am I missing something?
Interest rate is highly variable and is based on downpayment, credit score, loan amount, loan type (FHA, Conv, Nonqm, etc), loan purchase (refi vs purchase), property type, property use (primary vs investment), the list goes on.
7.25% is very normal, both historically and with where the market is at right now. If you're looking at stuff on bank rate or some search engine, just know that those quotes usually entail 1% origination, 1-2 points in a buydown, and 20% down. For example, if youre buying a primary with 5% down and no points and low fees, your rate will be higher than the best available shown on those search engines.
Post: Can I refinance a Condo that wasn't eligible for Conventional loan

- Lender
- Charleston, SC
- Posts 1,126
- Votes 945
Quote from @Chioma Okonkwo:
Quote from @Dan Hawtree:
Have you asked the HOA if they are aware of the situation? Don't assume. And don't assume lenders will be honest about why they decline you. For all the pushback that this comment will engender, I've witnessed plenty of deals where the lender "didn't want to be the bad guy". So they made up something.
Thank you so much for pointing this out. The bolded was the complaint of the lenders with the master insurance policy:
(1) Deductible exceeds 5% of the coverage limit. HMC/HLP to work with HOA to decrease deductible to a maximum of 5%.
(2) Wind, hail, named storm coverage limit does not meet replacement cost value
After I saw your post, I went back to actually take a look at the insurance policy myself. The deductible is way below 5% of the coverage limit, it's like 2%. But Wind, Hail and named storm coverage is excluded from the policy. Does that alone make it non-warrantable? I don't know. But now I have sent an email to the lenders to clarify the deductible issue they are referencing and I will also check with other conventional lenders whether the master insurance policy suffices or Condo is truly non-warrantable because of that. So thank you! I just took this guys at their word initially.
It's either warrantable in CPM or it's not. If your lender is registered with FNMA, they can submit the condo project for approval if the deficiencies are corrected (the HOA makes the needed changes to its master policy in this case). If your lender is not registered or is a mortgage broker, they cannot take action to change the status. FNMA, Freddie, FHA, and VA each have their own processes. Being warrantable for Conventional does not apply to govt loans - there are a separate approval processes.
The insurance requirements are spelled out in the selling guides/handbooks for each loan type, along with all of the other requirements. Lenders may have overlays that are more conservative, but they cannot waive selling guide minimums and requirements without an exception approval from whichever GSE/agency.
All of these selling guides are publicly available and youre able to read through the guidelines yourself.
FYI, licensed lenders cannot lie to you about why they are declining your application for credit. If the lender has an NMLS # (they will if youre applying for a conventional loan) or it's a consumer loan, then declining a credit application is a regulated activity that has a lot of teeth. Lenders may sometimes be mistaken or wrong (which also brings consequences on the regulatory side), but they cannot deliberately lie to you about why your application is declined; serious fines and even loss of licensure can result because this gets into discrimination protection with the feds.
Business purpose loans from unlicensed lenders are a different story, but even then, some disclosure requirements exist under ECOA/Reg B. Many states have additional requirements at the state level as well.
Post: When Lenders become a headache

- Lender
- Charleston, SC
- Posts 1,126
- Votes 945
Quote from @Stuart Udis:
If you care to understand the reach and influence of social media guru types, look no further than this post. A few years ago someone would have never thought lenders were the issue when they struggled to borrow unsecured funds to satisfy a wholesale EMD. It's a fascinating world of real estate transactional participants we now live in....
lol right? The problem is the lenders that have "complex processes" and dont "just trust that the money will be returned" on a nonrefundable EMD on a wholesale deal orchestrated by a borrower with 0 skin in the deal.
As if there was ever a time in history where someone could walk into a bank or call a lender and expect to get a loan on "just trust me bro." This is a play for equity, not debt, and if I was putting up the cash on this, I would be expecting a lot more than a couple percentage points. As I see it, whomever is putting up the cash is bearing all the risk - what OP is doing is nothing more than a traditional commission-only sales role.
Post: Equity Trust held rental... Transfer apon death options?

- Lender
- Charleston, SC
- Posts 1,126
- Votes 945
Quote from @Jen Ray:
My mother holds a ET rental. I'm very familiar with ET but not the side I'm soon going to be dealing with.
Was told I can only hold the transfered account 10 years. Also it's 50/50 account with my sister also. Adds to complicated accounting.
Trying to come up with some creative options.
Do we sell it now in the equity trust account? While she's still alive. She pay the taxes{lower tax rate than us)?
Do we transfer it while my mother is still with us and then sell it? Or transfer it to her then sell it?
Or keep it as a IRA then invest in something else(there is other IRA accounts we could combine)
Any trust custodians that make holding 50/50 ownership easier than ET as if held in ET we need two ET accounts ( 1200/YR cost)
Sell it as a land contract?
Current rent is 1600/m market value
Worth 170-190k
Current tax bases is 60k
Anyone have suggestions...we don't need the cash (or inflated income for us) from it...but will also be holding or selling other IRAs also.
Thanks!!
You need to consult with someone who specializes in tax planning or wealth management/estate planning. If I understand correctly, the property is owned by your mother's traditional IRA. Usually, the property is an asset - no different than cash or stocks - that is held by the retirement account. I believe that when traditional IRA's pass to beneficiaries, the account holdings have to be distributed to the beneficiaries within ten years (which is typically classified as ordinary income). The normal tax scenarios - capital gains, depreciation, basis recapture, etc - are unlikely to apply. Basically, with traditional IRA's, any contributions are pre-tax, and anything that comes out of the account is taxed as ordinary income. That being said, this world is full of exceptions and exemptions. It's impossible to know for certain what youre facing without knowing all of the specifics of your situation.
I am not a tax professional, and there are any number of variables that will affect your specific outcome and make generalized advice either not applicable or even counterproductive. You really need to consult with an appropriately licensed professional if youre unable to answer this question on your own.
Post: Thoughts on BLOC 12% Loan for Holding Costs

- Lender
- Charleston, SC
- Posts 1,126
- Votes 945
Fund the deal entirely with an ABL loan like hard money. The commercial LOC is good to have as an emergency facility for liquidity as long as youre not required to draw on it at closing (many require this). 11-12% is pretty normal for a business loan right now.
As a general rule, you dont go to a lender for money when you need it - you go to a lender for money when you dont need it. If the business LOC is not needed right now and is really simple to get (cheap closing costs, no required draw), then I would absolutely get this facility in place before starting to have an emergency source of funding. Liquidity is a good thing - when youre out of cash, youre out of business.
Post: Seller carry 2nd mortgage

- Lender
- Charleston, SC
- Posts 1,126
- Votes 945
No. If you use a VA loan or traditional financing, you will not be able to net cash from a purchase. There are limits on interested party contributions (IPCs) and other rules around this, as well as limits on CLTV's that are based on the lower of purchase price or appraisal price. Not to mention that this is likely a very bad move for the seller.
Post: A.I. and Underwriting

- Lender
- Charleston, SC
- Posts 1,126
- Votes 945
I'm looking at using AI to speed up underwriting, not replace it. Underwriting is as much art as science, and I have not seen any automated underwriting program that is accurate at the granular level. If you're taking a portfolio view, where you're determining Expected Loss and probabilities, AI is probably useful in data analysis and extraction for statistical purposes. This tells you nothing about an individual deal, though.
Additionally, most credit analytics that spit out a risk rating that are based on historical data are backwards looking, meaning that for the statistical analysis to be accurate, the future would need to look like the past. Most of the data that AI and other automated underwriting programs are based on are default scenarios that occurred in an economic environment that was very different that what we have today. In 2017 or 2021, if you had a liquidity issue, capital was available and cheap. A cashflow issue that was fairly easily solved in that economic period may lead to default/foreclosure today.
Every decent credit risk rating model I have ever seen incorporates both statistical analysis of historical data and subjective judgments of risk officers that are quantified into the model. In other words, where an AI program scrubs a potential deal on a property and spits out a static risk rating based on where things are at the moment, a skilled credit analysis could weight potential future scenarios that are not reflected in current information to adjust the risk rating accordingly.
I think where AI will help tremendously is in aggregating available information and data for an analyst to evaluate. This is what I mean by speed up underwriting - where an analyst had to manually scrape/clean info/data from various sources for hours on end, a robot (AI) will be able to bring most of that into a package in seconds, freeing up that time to find the more nuanced and harder-to-see variables that can move the needle.
I'm slowly figuring out ways to use Grok and ChatGPT to aggregate data and info, but it's not a huge focus for me. I feel like a lot of this stuff is overblown hype. I've also noticed that these programs will confidently provide answers and info that are wildly erroneous or inaccurate.