I have a question and I pray that someone out there can tell me if I'am on the right track or way off base. I live in northern virginia where, like many other places in the US, the real estate market is out of control. With it being such a hot market creative financing from the seller is next to impossible. From today's projections there will be a negative cash flow for rental property for the next 2 years. Anyway I have found areas in Maryland that still make it possible to produce a positive cash flow. My main question is does anyone deal with 100%-103% investor loans? If not why? If so why? What's the benefits and negatives? If this is a recommend way does anyone have someone they would suggest? As always thanks in advance for your comments and suggestions. Take care.

Chris,

I can tell you as a Mortgage Broker who specializes in Investor Loans that buying houses traditionally at over market prices is always a mistake. If you are serious about being an investor you need to target the endangered species known as the "Motivated Seller"

Another way to make deals prifitable is taking out an equity line against your home for the downpayment, and then taking an interest only loan, or a 12 MAT Loan, typically these loans go upto 80% for investors.

Best wishes,

Michael Pine
First Source USA
(516) 620-7791

Chris, our bud Mr. Pine is right. Buying traditionally above market is a recipe for disaster. You'll soon find yourself with properties that are worth less than your mortgage, and properties with negative cash flows. Just as the market is hot right now, it won't always be that way. And when prices do ebb, you don't want to be holding loans at 115% of FMV.
A great approach in a strong seller's market with an absence of motivation is our best friend, the Cooperative Assignment. Granted, it won't fit every seller's idea of nirvana. But, as long as they aren't in need of cash today, it's often a great fit and often the best deal they can hope to find.

MichaelP and MichaelC. While I agree that paying above market conventionally makes no sense. I think buying at market can work, but you need to sell your properties with long-term financing. that way you can get away with a much higher price, and if you use a CFD model, you can charge higher interest rates than you're paying, giving you that all-important positive cash flow.

By focusing on financing properties long-term you can smooth out price flucuations. If, for example, prices decline 15% and your buyer happens to leave at the same time. You should be able to at least resell the property for what you paid, and keep the interest rate up to continue your cash flow.

Also, I would purchase starter homes and small family homes, which will be in demand in the next down cycle as people have to downsize from their larger homes. That should keep price decline to a minimum.

this company does 100% financing for investors, i hope this helps

Investor Name: Sebring

Account Executive: Francette Pate

Job Title: Account Executive - Monica Walter (800) 716-6220 5099

Business Phone: (586) 268-7064

Mobile Phone: (586) 530 6934 / pager (888) 226-2879

Fax Number: (586) 268-7084

E-mail Address:

Address:

Web Page: http://sebringcapital.com

Funny you should bring this up. I just got back from a lunch meeting with one of main mortgage brokers and a lot of our conversation was on this topic. First of all, why are you looking for financing for your properties? Are you looking to do a LO or do you specialize in a different area of investment? I assume that you're not looking to do a straight rental since you mentioned a negative cash flow for approx. 2 years.

If you're doing LO's, you don't need to get financing. Find a seller that will give you an option price that will allow you to sublet it at a profit. I'm in a pretty hot market as well (Vegas,baby!), and it seems to work even better when the market is a little hot. You can get away with offering them their full asking price or a little higher (as long as it's below appreciation rates). If you're seeking financing, it doesn't make sense to pay market value (plus closing costs) unless your area is seeing something like 15-20% appreciation per year. A CA is also a very good way to go. No risk + fast cash.

Keep in mind, no matter how hot a market is, there's still people who lose their houses to foreclosure and there's also people that want to ride out the appreciation for some additional time. There out there, just a little harder to find!

I am not chris but yes that area is seeing that type of appreciation and I think he said 103% to cover some closing.

103% NOO, I don't think so 100% I would say yes. My broker now has a program where I can go as little as 10k min with 100% 80/20 w/ the 80 interest only. she is in VA and I don't know if she can do MD.

I would sugest when you right up your contracts that you stipulate sell to pay 3% cc (I do). Oh and I never pay thier asking price

High LTV investment property financing is our specialty. If you would like more information, please visit www.mortgageoffice.com
We offer 100% on SFR, condo, townhome, PUD and 2-4 unit properties with scores as low as 620.
100k min loan amounts.
47 states.
Full Doc or Stated income.
No Down payment investor loans are our specialty; even for sub-prime clients - we have a program that can allow for no down.
visit www.mortgageoffice.com or email: loan@mortgageoffice.com 877-209-8600, ext. 226

We can do 100% financing on investment property no problem.

In this forum I see many advertisements but the reality is every successful mortgage company has 100% investor financing programs from A credit to non-prime.

If you can't qualify for non-prime, hard money lenders exist for both residential and commercial.

If you just want 100% financing, it is available almost everywhere. Option One, an H&R Bloch Company (you know, the tax return processing company) has its own mortgage company that investors can qualify for financing.

Eventually your credit will not allow you to get properties because some financial organization will tell you that your credit and resources make you a credit risk. You cannot get any more financing for a real estate deal.

Who need this when it is so much more fun to get properties without using credit, banks, etc.?

Daniel Ng, JD/LL.B (Honours)
The Transactions Engineer

We want to do quick flips. Buy, fix it, sell it. Maybe target people who are in pre-foreclosure. We currently have our primary residence for sale. We want to use the money we make off the sale to start flipping. Is there a better way to go about it without selling the house. Cash out refinance, home equity line of credit, etc???? We want some money to pay off our bills so we can start flipping with a clean slate. Any ideas??

You can go ahead and start your "flipping career" without having to wait until your house sells.




Thing is, you can do this if you just omit 1 scenario from your "equation".
Omit the "fix it" part.
I've seen and heard of too many folks getting started in the rehab business fresh out the gates.
There's faster and easier ways to make $$$.
Why not just flip houses AS-IS to those that have the time, money, and experience to fix houses?
You'll save yourself a lotta headaches in the long run.

And if you want to pay off your bills, you can do the same.......flip fixers to rehabbers and/or landlords.
Whatever profit you make, use half of it for bills - the other half for living expenses or beers.

Hope this helps.
Take care.

I guess my questions are: what type of loans are available to investors when you are already carrying a mortgage? How much down?

On the other hand, can you explain more about the person who finds these rehabs and hands them over to investors. What are they called and how does that work?

Lynn, your question is buried in this thread. You'll get better results if you originate a new thread.

This may be a little off topic, but has anyone heard of Empower Capital?

http://www.empowercapital.com/

They offer 102% loans. Does anyone know anything about them?

DK

I agree. I have been fixing and flipping for two years. I am a contractor by trade, so I have a lot of knowledge. It is not as easy as it seems, if you want to fix and flip I would recommend working with a partner for a while that has a lot of construction experience. Unless you are very experienced, I have 5 different investors who partner with me, just for this reason.