Worried I Might Be In Trouble
I have 3 rental properties. I bought them all when they were distressed, I got hard money loans to aquire and rehab them, I have one refinanced.
I have two that are not refinanced and after I refinanced the first one, my credit score dropped ALOT. Basically Im below 600. I am afraid I may not be able to refinance them in time. What do I do?
Also, I am scaring the crap aout of myself about. What if the tenants decide to not pay me one day? I may end up payments behind.
Basically my questions are:
1. What happens if your credit isn't good enough to refinance a hard money loan?
2. (not that this will happen, but it seems like I may be. What happens when a landlod is in over his head? If a tenant leaves and doesn't pay and the land lord doesnt have reserves and can't pay?
How screwed can I be with this?
nEWBIE
Depending on you LTV, you should still get much more favorable financing terms than what you have now. Check your credit report and make sure that everything is accurate. It may be that you are over-extended with your credit. If you can refinance, you won't have to make the mortgage payments for a month or 2, you can pay a couple of things off and that should help.
If your credit score is to low to refinance, simply sell the property before it affects your credit. Use the proceeds from the sale for reserves. i hope this helps!
First of all, stop scaring the crap out of yourself and realize if this were easy everyone would be doing it. I know I have months when repairs go out of control or tenants don't pay on time. My reserves go out and at times way down. Needless to say I keep going, I have one for sale, one doing a cash out refi and two under contract. I don't have a huge income or a big savings...I DO have great credit. I will be using the refi to pay off some of my debt and catch up while the sale will give me money to reinvest and put in cash reserves. Meanwhile I look for another rehab to flip or wholesale and the cycle goes on...such is the life of an investor. If you can find a way to make it through the tough times and not panic and quit the end result will be well worth the few sleepless nights your sure to have in the beginning.
HI
Ive been there!
First of all DONT give any of your tennants the impresiion that you are desparate for their rents because they WWILL take advantage of those bad www.vibes.IF one decides not to pay do your best to reason with them oor threaten and pursue eviction without return of any deposit monies.
Secondly there are refis which can be done on lower credit scores ,they just bear higher interest rates.Your best bet is an Equity line of credit,they are easier to qualify for and usually move faster than www.mortgages.Go direct to the banks and/or find a broker (you may find one on this tci website) whom does b and c paper loans,you really should not have a problem refiing. good luck
dr
Seek a personal credit line with a bank.. **Negotiate with them**
They will offer you (say $3500)....say well I guess I don't need because I needed the money to _______ and will cost ____. Most likely will come back with something more attractive and that should help.
--
As far as your refi...go with a BC Lender. If you have 24 month of payment history, you will get the loan.
I have great credit and 5 accounts at my local branch of the megabank, but recently I tried to negotatiate the terms of a contract, and they just looked at me like l had lost my mind.
You may have such privileges with a locally owned and operated lender, but the peons of megalenders are handcuffed and totally at the mercy of their finely scripted paperwork.
Newbie... Use any means possible to get free from high interest loans! They are very dangerous!
About hard money lenders: Never consider them for long term debt. They have their place in inivesting, but don't use them if your exit strategy is not in place and has some certainty of succeeding before you sign. Nobody in the lending business is so unforgiving as hard money lenders. Why do you think they are called hard. Easy to get, but hard to get rid of. Easy, because they assume minimum risk with high rewards at your expense.
Good luck. Let us know how you come out.
Dan
Apprentice2Him -- Depends on who it is. Someone with no authority is usually trained for a speicific purpose. Virtually powerless. Big Banks will negotiate and I have negotiated with them. Always seek the right person for every situation.
Newbie,
Just a bit of advise about the credit score issue. If you now have any revolving accounts such as credit cards that are at the max credit limit, that could be what's making your score go down, not the mortgages. If you pay your mortgages on time they shouldn't affect your score much. Try paying down some of those maxed out cards and see if your score gets better.
Don't panic yet, you can still get a loan even with your under 600 credit score as long as you're not in foreclosure or bankruptcy and the property appraises okay. Good credit just gives you more options and better rates, there are still financing options for the rest of us.
Good luck, Ed :-D
interesting post, email me sometime about this if you still have them.
just curious, never had this happen, but what happens when the balloon comes due on those loans?
do you deed the property back to the hard money lender? how does this affect ones score?
Is it foreclosure?
got me looking into my own properties.
JB
[addsig]
keep it simple....I agree just sell one quickly and your scores will be better and a bank will look at your healthy reserves. Quick sale would be lease option or contract of sale....Calm down
Quote:
On 2004-10-12 18:37, Darryle-CA wrote:
If your credit score is to low to refinance, simply sell the property before it affects your credit. Use the proceeds from the sale for reserves. i hope this helps!
Whatever you decide to do, learn from the experience. What can you do in the future to prevent a recurrence of this situation?
"agree just sell one quickly and your scores will be better and a bank will look at your healthy reserves. Quick sale would be lease option or contract of sale....Calm down "
How do either of these solutions get him out of the present situation? Am I wrong that he would stay under his mortgages in both of these situations? And if he wants to sell w/tenant, what is the quickest way to unload ?
Hey, just outta curiousity, does anybody know whatever happened to this person? This was posted way back in October, and sounded like they were having a panic attack, thinking they were in over their heads.
And, I agree, if the person thinks they can't manage as much of a bite as they've bitten off, they should sell some of the properties, build some reserves to have in case something goes wrong, which they inevitably do, just when you don't want them to.