All Forum Posts by: Shannon K.

Lol. 7, 8, 9 more years of med school are lookin pretty good right now...

Hi everyone. As I keep searching for lending options for my investment property, a friend sent me some information on a Fannie Mae Homestyle Renovation loan that investors are qualified for. There is only 1 local bank I've found here in Buffalo that offers this type of loan. The terms looked pretty good with purchase price & rehab allowed and for much less than the cost of hard money... til I hit another roadblock:

Investors cannot perform the renovations themselves! (My business partner is in the construction/remodeling industry and flips 50-60 units per year at his job so we'd love to do the work ourselves). 

Since no one at the branches or mid-level knew the story regarding this stipulation, calling to the top of the management chain revealed I can only choose from a list of 5-6 bank-approved contractors that I can have do the work FOR ME. What is the point of this?? This offers absolutely zero benefit to me as an investor if I can't perform the work myself. Is anyone else experiencing this with Fannie Mae Homestyle Renovation loan or know a way around this?

I mean no disrespect, but I'm just curious... what do you care about if its not the money or $10,800 cost of capital? Are you going into this first deal planning on using hard money and just wishful thinking it works out in the end? That's kind of how I interpreted it from your last few sentences there.

Numbers are king in the real estate game. Hard money is useful if your method of wholesaling/whatever strategy will support the cost of capital. You don't want to be so eager to get your first deal done that you just throw all the math away... Perhaps the initial numbers look good on paper, but before you think about wholesaling or hard money, I assume you'd want to get inside the house first to estimate a rehab budget, then calculate if hard money can support your needs for a few months if you can't find an immediate buyer to pass it off to...

Hi Sarah... I'm relatively new here so I'm not entirely sure, but how would Fannie Mae know your offer you presented for your client came from an investor? I assume there would be something in the contract that would specify your client did not wish to reside in the house or maybe they were an LLC? Thank you.

I'd say put in a bid that makes sense based on your numbers. If you've calculated you need to purchase the property at $40K, go ahead and try it. Follow what your calculated numbers tell you. You're not going to hurt the bank's feelings with a low offer. If they take it, great. If not and you're unwilling to go in at a higher price, let them know its a standing offer so over the next few months when they drop more and more closer to your $40K, your offer is still there waiting if no one else took it. The bank wants top dollar, but I've seen strange things happen during my short real estate experience-- $130K went for around $45K to my friend last summer, wow!

I will chime in here with some of the due diligence about the area in case you're seriously thinking about this property. Maybe I am a bit biased because I am most comfortable in the suburbs and am not one for city-living, so take this with a grain of salt...

I am studying to be a physician and have trained at Niagara Memorial Hospital and I would get into this city and out as quickly as possible. I would never prefer to walk to my car alone at night after a shift. The neighborhood area surrounding the casino is littered with crime, trash, and violence.

The ad seems to be reaching a bit far with the "benefits" here. The casino makes money and is a hub of activity and entertainment, yes. "The falls" as an attraction are beautiful and that makes money and is entertaining, yes. But the city of Niagara Falls as a whole is extremely economically depressed and has many boarded up houses, broken windows, vehicle theft, gang violence in this area. D-class area for sure. I know many people don't mind investing in these sorts of areas, but I don't think its going to be such "a breeze" as the Craigslist ad makes it seem. I'm not sure when you most recently drove past, but have another look. Spring 2015 was the last time I saw the neighborhood over there and after 2 guns laying in the parking lot, I never went back.

"Similar homes on the Canadian side sell for over $250,000".... <---This part of the ad has no real relevance in my opinion. The Canadian side of the falls has always been the "prettier" side and the area surrounding Niagara Falls, Canada is more expensive. Its well-developed with businesses/homes, and is not littered with violence and car jackings every Tuesday thru Saturday.

Thank you everyone for the replies. I will be reaching out to my realtor to check for clarification. I can't possibly imagine every single REO or foreclosure I might go after will require proof of funds in 2 days when I see so many others around here putting in offers with just pre-approval letters and having 30 days or so for their HML to come in. There has to be some kind of miscommunication here I'm hoping!

Hey Charlie,

I'm not necessarily worried about my agent not submitting the offer. He's a really smart guy and one of the top agents around here. Plus I've known him previously from years ago and between him and my brother, I have two skilled guys to help me evaluate houses. Can't find a darn one that looks feasible yet though! And the 1 I liked recently and thought about going after so far, magically I'm not eligible cause of this 2-day thing. 

I've just never heard of it before. I thought there must be something I'm not aware of because other people use hard money and they get 20-30 days to have the loan come through. What was discouraging was that from how he phrased it, it sounded like every single foreclosure or bank-owned I might go after will want 2-day proof of funds... which was never discussed or available from the lenders I've spoken with so far. I've never heard of all foreclosures or REOs needing an immediate 2-day proof. That seems like a lot to ask for from a lender I'm just first making contact with...

So since I am using a HML and its still a financed offer, there are zero houses I can bid on now? My realtor told me its not worth going after foreclosures or REOs/bank owned properties as all banks will require proof of funds in 2 days. So I can never buy a foreclosed house and flip it. Ever. I'm not understanding that logic here? I thought that's exactly what hard money was for was buying distressed properties/REOs/banks owned. There must be something I'm missing when bidding on these...

Hi everyone. I went to look at a house today with my realtor and he regularly works with investors. He knows I'm planning on using a hard money loan for the funds (in combination with some of my own). I have a pre-approval letter for the amount I'd need. 

But then he told me for any REOs/foreclosures, banks will require proof of the funds in my account within 2 days. He said banks are very strict on that and they will pass me by if I cannot show the funds in my account within 2 days. He said it would be a waste of time going after any of these foreclosures/REOs if I cannot show money there within 2 days. People use HML specifically to buy foreclosed/distressed properties that are too junky to put a conventional mortgage on them! How is this possible?

No HML will fund in 2 days. That's not even enough time for the lender to look at the property, run comps, and make a decision! Everyone I've ever seen use a HML has been able to obtain financing within 20-30 days or so for their loan to come through. How come I only have 2 days to show funds in my account? Could anyone shed some light on this as I'm wondering if I'm somehow misunderstanding him... Thank you all.