All Forum Posts by: Scott W.

Assuming the loan usually gives the lender/bank the right to call the loan due.  Many banks will not call the loan due as long as they are getting paid.  On the other hand, some banks and credit unions are known for having a zero tolerance and will call the loan immediately when they find out.  Have a backup plan and be prepared to pivot if you decide to go the assumable loan route.  There are some that have built a good portfolio doing this so do some due diligence on the bank that owns the mortgage and see if they are known to call loans due.

I agree with @Stephen Akindona that the Broker fee is high.  I work with non-owner occupied investors and don't charge more than 3% on the broker fee.  (Shop around!) 

Hi @Joshua Szentes!  You will find that there are a few schools of thoughts and that some people swear by private lending/hard money loans and others have a strong distaste for the high interest rates.  

Here's a quick run down on why you would want to go the private money route:

1. Need access to quick funding (traditional financing can take a month or more vs private money where they can close in a week or two)
2. Want to avoid banks and institutional loans
3. Need more flexible terms
4. Need to cross collateralize other properties (where traditional lenders often won't accept this)
5. Credit problems 

Private money / hard money lenders will finance and provide you a loan on the After rehab value (ARV) so you can finance the rehab costs. Anyone lending you money wants to make sure that you have skin (aka money) in the game and that you have the money and resources to support the rehab process, holding costs and are going to provide their money back. Number one rule of money, is don't lose money!

In summary, it's all about finding the right deal and deciding what route you want to go.  I hope that helps!  

Scott

@Everett E.  Sorry for your loss and please be on guard during this fragile time. You will have a lot of people give you advice or investment opportunities that could set you backwards. Real estate is a team sport so it’s great that you are seeking advice just realize a lot of people are just out for themselves and will make sure they profit from the deal vs you. Other well meaning people will just give bad advice without knowing. :-)  Your portfolio looks good in that you are diversifying but a few cautions/recommendations:

1. Be careful investing and partnering with family and friends and make sure your lead investor has experience with working in multifamily. You have the money now you are looking for passive income and are in a position to re-chart your life. Just realize as fast as the money comes in, it can go out much faster.  I’ve invested in a multifamily syndicate where the lead investor is experienced and I get passive returns. This is retirement money I took out of the stock market and keeping in there for the long haul. If this investor does well I’ll put some more money in and slowly let experience guide me with this person. Do the same and stay alert and diligent.

2. I think your cash position is a little too small right now with all the craziness in the world. The laws being passed to prevent evictions, COVID madness, election “fun”! There is a lot of turmoil and it would be wise to have a little more cash on hand while you get some training and education to make sure you make the right investments.

3. Family, friends and professionals who don’t have experience with money, real estate or both. On the flip side, careful with the “experts” who will leave you high and dry

Blessings to you and your family during this crazy time. Keep seeking, knocking and asking! (Much due diligence on advice received and taken to heart.)

Scott

@Vickie Bruce, another option you could consider is splitting the 20 acres in half and selling the other 10 acres to pay your sister off. You’re living on 20 acres now so you probably enjoy it, but you might also be able to get a little creative if you don’t want to have the burden of refinancing or keeping all 20 acres.

@Vickie Bruce, I agree with Rob Lee that you should get a fixed rate at a very good interest rate. Now the deeper question is does it make sense for you to keep the property and buy your sister out and will it meet your short term and long term goals. Praying for clarity and wisdom as you consider all your options!

@MK Wang, the private money market is a good way to go if you happen to know a good private money broker. If you are interested I’d be happy to chat further and see if I can help connect you with the right money source