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Real Estate Financing Advise

quynn

PARKED
Nov 2, 2007
19
0
10
50
Hello,


Does anyone know where I could get financing for single family houses that are under 50,000. The cash flow is great. I currently own 7 single family houses. I have a high income/debt ratio. My husband and I have over 700 credit scores. I am looking to get several more single family houses. Any Advise?

Thanks
 

yveskleinsky

Bronze Contributor
Speedway Pass
Jul 26, 2007
2,233
489
192
41
Probably your best bet is either owner financing or local banks. ...Are you planning on keeping these homes for CF or flipping?
 

ChrisS417

New Contributor
Sep 24, 2007
81
10
27
33
St. Louis, MO
www.myspace.com
What about your debt to equity ratio?

Is there any available equity that you can leverage or use as collateral?


And on top of that are you planning on spending money on repairs/rehab?
 

quynn

PARKED
Nov 2, 2007
19
0
10
50
Yes, I do have equity, however, it is hard to get equity lines on investment properties now. I do have some cash for any rehab., down payment, ect. But do not want to pay cash for 2 or 3 properties and not have any on hand. I also want to purchase about 10 properties, and be able to leverage the cash I have.
 

AroundTheWorld

Be in the Moment
Speedway Pass
Jul 24, 2007
2,909
1,844
550
.
  • Split your financials with your hubby. You finance some. He finances some.
  • Partner with someone else. They finance, you provide down.
  • Seek owner financing
  • Trade up into multi-family
  • Land Trust
 

AroundTheWorld

Be in the Moment
Speedway Pass
Jul 24, 2007
2,909
1,844
550
.
In your circumstance, there would probably be 3 parties involved.

Seller
Investor (you)
Resident Beneficiary

By putting the property into a land trust, you can control the property without obtaining new financing, and offer the property to a buyer with "owner financing"

This is how it works:

You go to a seller, usually it will be a distressed seller. They agree put the property into a trust, and they keep the current financing in place. They become a 10% owner of the trust.

The house becomes owned by the trust. But, the due on sale clause is not invoked because they owner is still a part owner (they own a portion of the trust).

2 or 3 parties own the trust. The seller and you.... or the seller, you, and a new buyer.

If there is a new buyer, they become the RB (resident beneficiary). They own a portion of the trust, and they make rent payments to the trust. The trust pays the mortgage and the investor gets the difference (cashflow)

Let's use an example.

House with a loan of 150,000 . House is worth 200,000.
Seller can't sell. At risk of falling behind in payments. You agree to take over their payments for them. Seller signs house over to the trust (you). You can agree to pay them some equity or none... what ever you negotiate. If you do agree to pay them some equity, you can agree to pay when the house sells. In this example, let's say you agree to pay them 50,000 when the house sells.

Now. Your trust has the house. worth 200,000. Your seller has 50K promised to them when the house sells. Payments are 1000/mo.

You go find a resident beneficiary.... a buyer. someone that has the income to make a payment, but damaged credit.

You find someone that can pay 1500/mo plus 5,000 (down). They would like to buy the house for 250,000 in 4 years.

Now. The house is owned by the trust.

The trust is owned by:

Seller (10%)
You (45%)
RB (45%)

The RB pays the trust 1500 a month. The trust pays the mortgage 1000 a month. There is 500 left. That gets paid to you.

When, in 4 years, the RB decided to buy - they refi and get the house into their name and out of the trust. This is what happens.

RB gets a loan (or whatever) and pays the trust 250,000 for the house.
The trust pays the mortgage of 150,000
and the seller 50,000
and you get the remainder .... 50,000.

make sense?
questions?
 

Edge

Contributor
FASTLANE INSIDER
Summit Attendee
Sep 20, 2007
349
71
59
42
Kansas
The house becomes owned by the trust. But, the due on sale clause is not invoked because they owner is still a part owner (they own a portion of the trust).
Wow, that gets the gears turning.

Speed to you! This is one of the best nuggets i've ever pulled off a forum.
 

AroundTheWorld

Be in the Moment
Speedway Pass
Jul 24, 2007
2,909
1,844
550
.
No. There is an agreement that is signed stating how any distributions will go. It doesn't have to correspond with the percentage ownership.
 

lightning

Bronze Contributor
Read Millionaire Fastlane
I've Read UNSCRIPTED
Speedway Pass
FASTLANE INSIDER
Aug 24, 2007
553
202
107
36
Northern, NJ
Unfortunately, I am finding out AS WE SPEAK just how careful the banks are being with loans they give out for investment properties. :(

I am supposed to close on a 2nd property I picked up next week, and I just found out this afternoon that even with a 10% downpayment, steller credit score (768), and full documentation, i may not be able to secure the loan. :(

Ill know what my options are within the next couple of hours... (FINGERS ARE CROSSED!)
 

AroundTheWorld

Be in the Moment
Speedway Pass
Jul 24, 2007
2,909
1,844
550
.
Ya, we are definately noticing a difference.

We closed on a SFR in November.... financing was tough to get. We really had to shop and hunt for it.

We need to refi a SFR this month. I'm nervous about it!!
 

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