All Forum Posts by: Derek Dombeck

HML's are not typically looking forward to a loan defaulting so they can take the property away from you. We make money by giving loans and helping people succeed so they come back for more loans in the future. That being said,  if a borrower is not performing as agreed and stops communicating with us, then we have no choice other than to foreclose.

We do less than 50k but there would be a minimum loan fee as we normally charge 3 origination points.  As loans get lower than 50k, it's not worth the paperwork for under $1500 to most lenders.

I'm not sure if there's a typical percentage. We pay our investors 9% currently.

I would take into consideration what your tax consequences would be. If you sell for cash, you will likely have a capital gain and recapture tax. If you sell on owner financing, you will limit this somewhat. If you refinance and pull equity out to buy additional property, you will likely have to manage more tenants. This will give you more tax deductions as well. Or, my favorite method would be to pull the equity out and become a lender to other real estate investors.  You could get straight interest or you could get interest and  equity participation depending on the borrower and the deal.

Yes. You are just pledging the house as additional collateral. We do this on hard money loans when the assets being purchased are not adequate to secure the loan or if our borrower doesn't have cash to put into their deal. Depending on where you borrow money from, it would be wise to ask them for a stipulation allowing for the release of their lien if certain benchmarks are met. For example,  when a rehab project is gutted and the rehab has just started, the lender has much more risk compared to when it is completed and listed for sale or rent. Perhaps the lender would release your personal home upon completion of the rehab. Its worth asking the question. Good Luck.

It sounds like you only talked to 1 lender. Find a good mortgage broker in your area. They have access to more loan programs.

Equity Trust has lost their customer service. Our investors are using Udirect IRA with less fees and faster service.

You should have  note, mortgage, appraisal or CMA, scope of work, personal guarantee, escrow agreement if they are taking construction draws, lenders title insurance,  and be listed as the lender on their property insurance policy.

If you plan on pooling money, yes. If you don't need to pool,  no.

We also have a buy back agreement in place. So, in the event of a default we can make the investor whole and take the note and mortgage back. This is important because we run a real estate business as well, so we have no problem rehabbing and selling an REO.