Question About Investing In Homes
First, Happy New Year to all. I use to be very negative about all this real estate stuff but its a new year and their are BILLIONS TO BE MADE! 
Anyways...
My partner and I have decided that what we want to do is buy single or multi family homes to invest in and rent out. We want to build net worth by holding on to our homes.
She is going to put all under her name. But we have a problem already. She has two properties under her name already and when we went to the bank, they told her that they can't loan her that much money....we got 20k credit line in the end...but they hesitated so much. Now, this lady makes 144k per year appx and has near perfect credit rating. Yet, we have already run into a problem because according to the bank, she has too much "liability".
That being said, we found one home that we are extremely interested in. Its a 5 family home with a store on the bottom. All five apts have been occupied for at least 2 years. The total income from the rent annually is about 70k with total expenses about 42k or so. And the neighborhood is EXCELLENT. The house is going for 550k.
My partner is hesistant because she says that we are gonna pay closing costs through our nose and we have only the 20k credit line. I imagine that there is no way to make this deal with no money down or none of our own money.
My question is this. Are there companies/banks that can let us just lump all the fees, closing costs, whatever in the monthly mortgage payment? I have convinced my partner that we can get real estate no money down and the less that comes out of our pockets, the more my partner will be willing to buy more and more properties.
I don't understand why it would be so difficult to buy 10 houses within the next year with her income and credit. Who cares if she has liability? None of her credit cards are close to being maxed out and she has the two homes with 80k equity on one and about 25k on the other. She is hesitant to use the equity but if this is the only way, I can try and get her to do that.
Any help/advice will be appreciated.
I have several thoughts here:
First if the deed is going to be in your partner's name then how are you investing. Her money, her credit, etc? What prevents her from just walking away.
Also, you said you found a 5plex priced at $550, well at 7%, 30 years, 100% financing payments are $44k a year. $70k-44k-42k = -$16,000!! Not a good investment
I think it is very possible to buy 10 houses this year but you're not going to get them financed through a bank.
Well, we have the trust of a 12 year friendship and putting her name on the properties will prevent her from walking away. She does not want to ruin her credit or her name. She just wants to make money 50/50.I have given her so much good advice on her stock portfolio that she trust my judgement. I need her name because my credit is UNDER the toilet.
As far as the investment, the expenses include present mortgage, taxes, etc. So, its 70k-42 if anything. The guy is clearing the money NET and just wants to move south.
If I can't get this financed through a bank, then who is gonna finance it?
Quote:
On 2004-01-05 15:32, Almu wrote:
First, Happy New Year to all. I use to be very negative about all this real estate stuff but its a new year and their are BILLIONS TO BE MADE! <IMG SRC="images/forum/smilies/icon_wink.gif">
Anyways...
My partner and I have decided that what we want to do is buy single or multi family homes to invest in and rent out. We want to build net worth by holding on to our homes.
She is going to put all under her name. But we have a problem already. She has two properties under her name already and when we went to the bank, they told her that they can't loan her that much money....we got 20k credit line in the end...but they hesitated so much. Now, this lady makes 144k per year appx and has near perfect credit rating. Yet, we have already run into a problem because according to the bank, she has too much "liability".
That being said, we found one home that we are extremely interested in. Its a 5 family home with a store on the bottom. All five apts have been occupied for at least 2 years. The total income from the rent annually is about 70k with total expenses about 42k or so. And the neighborhood is EXCELLENT. The house is going for 550k.
My partner is hesistant because she says that we are gonna pay closing costs through our nose and we have only the 20k credit line. I imagine that there is no way to make this deal with no money down or none of our own money.
My question is this. Are there companies/banks that can let us just lump all the fees, closing costs, whatever in the monthly mortgage payment? I have convinced my partner that we can get real estate no money down and the less that comes out of our pockets, the more my partner will be willing to buy more and more properties.
I don't understand why it would be so difficult to buy 10 houses within the next year with her income and credit. Who cares if she has liability? None of her credit cards are close to being maxed out and she has the two homes with 80k equity on one and about 25k on the other. She is hesitant to use the equity but if this is the only way, I can try and get her to do that.
Any help/advice will be appreciated.
Okay, let's start with the fact that none of those investment properties should be in her name. She is an effectuated civil judgement waiting to happen.
In your ascendancy into the world of high finance, you should be thinking of asset protection. The higher up the ladder you go the more exposure you will have. Meaning, in the litigious land of ours your bound to come across a deliberate and highly effective con man/women looking to take you into someone's courtroom. In furtherance, in the court of public opinion landlord's are not high on the public's list of the most likeable.
Why not land trusts and LLC's ? Spread those properties amongst a variety of LLC's and trusts in your state to offset any potential judgement being attached to all too include your partners personal assets.
Answering your question regarding who cares ... the banks and lenders care ... they don't want to own these properties in the event your partner becomes ill and or loses her employment for whatever reason. They operate on a system of debt to net! As an individual she's reach her fiscal loan peak.
Sidebar: L/O those sfr's instead of renting them out!
Back to the issues at hand ... sure there are hard money lenders out there who would take your partner on with rates found somewhere in the ionosphere. There's always someone ready to do business with someone whose purported fiscal standing is as solid as hers. And if you feel that strongly about a particular property and the numbers support your conviction ... well I guess you can go that way.
Remember gaining wealth is two fold idea ... obtaining and maintaining. Remember, there are always people looking to seperate you from your means. Buid your empire around that premise.
You need to talk to a mortgage broker who deals with a variety of different banks and programs. If her FICO score is above 720, you might be able to get in with minimal down and have the seller carry a 2nd. You might want to put an ad in the local paper stating: "Real-estate investor with proven track record looking for financing from private individual". This worked very well for me. I would stick with SFR for now and pay now more than 80% of market value.
Jeff
If anything, we have a trust that is rare between friends. You never know. But, I dont think I have to worry about it. And she the same.
I still dont have any answers as to what to do with this house. I don't know what to do. I have a feeling I will lose out on this property.
All these points and closing costs and this and that. Seems like no money down...even if its none of my own money...seems to not be real.
Maybe I am naive. But why not just combine all the costs in the mortgage? The down payment and all the fees? Do banks/lenders/whatevers do this?[ Edited by Almu on Date 01/06/2004 ]
Almu,
I what state are trying to purchase that building? maybe I can help.