All Forum Posts by: Zachary Dosch

The market (or government) will dictate how many banks it needs. The Frank Dodd bill is doing a good job at making it very difficult for smaller banks to survive (the opposite effect it was intending to have).

We, as consumers, need competition amongst banks. The more competiton and the more banks there are the better because they get hungrier for deals. When a new bank comes to town, they basically have to buy a book of business which means pay over the going rate for loans. If a new bank opens up in your town, I would hit them up for financing.

You are getting your wish - there are going to be less and less banks every year. The smaller ones are going to be squeezed out. Just for an example, there are over 90 banks in North Dakota that are under $100 million in assets. None of them are going to be able to survive the next 5 years. They will either be bought of close up shop. Im not really sure that is a good thing but it is inevitable.

My market (North Dakota) is boring. There isn't any great deals and there are very few rehabbing opportunities to create a little sweat equity. Its basically a buy and hold mentality if you can find a property that cash flows. Oil is making everything boom and its making this fairly new investor very impatient!

Basically the only thing I have going is a couple SFHs. Not great returns but they are very safe investments. There is 1/4 the normal amount of properties on the market. Great time to own property, bad time to try to find something. It only makes me wish I had more!

Most people have unrealistic lending expectations. The banks aren't all that tight if you have proper expectations. View points have been skewed due to banks basically handing out money not to long ago which is complete insanity.

Im a business banker as well so perhaps I can be of some service.

The biggest thing that I haven't heard people touch on is the increased regulations that are being placed upon financial lending institutions. The Frank Dodd bill is going to have a lot of unintended outcomes mainly making it impossible to function if a bank is under at $100mm in assets. It takes so much time and resources to keep up with the new regulations that only the bigger banks can afford all the extra costs.

The margins that the banks are earning now are so slim that they can't afford to be wrong anymore. The well collateralized and secure lender could have a hay day in this market - he can keep leveraging his assets and taking advantage of the low interest rates.

I was thinking about starting a thread about this but even as far back as 5-10 years ago, a lot of people got their start with 0 down and other creative loans. Obviously, times have changed and now its a lot harder to get your investment real estate portfolio off of the ground. I don't think we are ever going to see the type of opportunity that was available to people who were able to snatch up dozens of properties for almost nothing down, fix them up or hold them, and esentially create massive amounts of profits out of basically nothing.

To sum it up, in most jobs, if you are right 95% of the time, you are doing a good job. If you are wrong 5% of the time in banking you are out of business. With the interest rates this low, its no surprise that banks want more skin in the game. Its a high risk low reward situation.

Getting it to cash flow and getting an accurate estimate on the work needed is the problem. I don't want to hijack this thread so I won't go on anymore. If anybody has any good ideas on how to handle General Contractors or keep costs down so the project can cash flow, please PM me. Ill resurect my old thread once I get the official bid before I set everything in motion.

Still trying to figure out a way to remodel and cash flow this 15,000 sq. ft. building I would like to buy. The project went from $500M to $1.3MM yesterday! Not ideal for my first rehab!

I don't have a specific system in place but I do monitor the classified and all the listings on the MLS on a daily basis and basically keep track of things in my head. Only reason Im able to do this is there are about 1/3 of the amount of properties that are normally on the market and there are almost no apartments for rent. Actually, where people normally advertise their apartment listings is full with posting about people trying to find apartment, duplexes, or SFHs.

The good news is that most people around here are very diciplined and prices for properties haven't gotten out of hand. Just a steady incline every year. Its a big reason we didn't get hit with the housing bubble.

Just make sure your cash flow doesn't get too tight.

Depending on how big of a difference there is between the interest rates, It wouldn't be the worst idea to go down to a 20 year loan and pay extra if you want to. The last thing you want is for things to get too tight.

Its not really going to help anybody but rents in North Dakota are really starting to go up to the tune of 15%/yr.

Makes me a little nervous so Im going extra conservative on my cash flow numbers.

While I really don't disagree with anything anybody has said to this point, Im trying to look at it from the bank's perspective. The rents generated could really off set a lot of the costs associated with the foreclosures and the fact that they are occupied and at least maintained better than letting them rot would hopefully help to prop up the value of the property.

If they didn't have a problem selling the foreclosures then that might change my perspective a little bit but its hard for me to accept the stance that it is better to let the house rot and rapidly decrease in value versus maintaing the property to some degree while generating some income.

On the other hand, this could be a pandora's box as they most of the banks have proven they can't handle their business which is a contributing factor to why we are in this mess in the first place.

I guess the question Im left asking myself is can banks really do this the right way or are they going to half *** it and screw everything up again.