OfflineI'm considering on using an HML for my first property. Their interest rate isn't any worse than what I'm already under for my car loan from Capitol One(13%). Plus the good thing about this will be that I'll be able to make money off of it with a lease to own after I've bought it. At least that'll be my cash flow for the moment. So I'll be able to pay off the loan within a short time frame as well as generate extra income for my family and I. I'm actually seriously thinking of doing the HML's route for several deals I have in mind that are actually cash cows waiting to be had.
What's your opinion on this?
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Bryant Slade
I think its a great idea! I am thinking about doing the same for 4 4-unit buildings i just got home from looking at! I just need to find a HML that will lend based on the deal its self and not my cash on hand or credit. But I do have decent credit. Max did you find a HML like this? What are the terms like??
Shaun
If the numbers work then go for it. But have an escape plan in place in case you run into trouble.
What I am doing is borrowing money from people for DP and offering a 12% interest rate compounded monthly, like Dean says, they wont make that kind of interest in the bank. But I called my broker guy ahead of time and told him to make sure i can refi soon after closing without seasoning so i can pay back the people i borrow from asap. He told me we can do it one way or another. I just like to have things in place. Already have renters on stand by also.
good luck.
Richie.
Shaun
I think that I may have found the HML that I may/will use for my fundings. It's a group called BlueWater Funding LLC. Well my credit is slowly climbing up to the scale(still in the crapper though, lol)thanks to this overly priced car I have. But I'm not crying about it(much). Here are the term(some of them anyway)
Loans up to $5 million
Rates from 13%; I/O
Terms: 1-3 Years
No prepayment penalty
Avg. Closing: 10 Days
Bryant Slade
What I am doing is borrowing money from people for DP and offering a 12% interest rate compounded monthly, like Dean says, they wont make that kind of interest in the bank. But I called my broker guy ahead of time and told him to make sure i can refi soon after closing without seasoning so i can pay back the people i borrow from asap. He told me we can do it one way or another. I just like to have things in place. Already have renters on stand by also.
good luck.
Richie.
Bryant Slade
How much is application fee and all that? What all do you have to pay out of pocket? Do they fund Nationwide? Whats the web address?
Thanks for your help!
HMLs are very different in different areas. Many are now requiring 10% down and points paid up front instead of in the loan. Most of the national lenders are using credit scores now as an underwriting guideline. Your best bet is to attend local RE investors clubs etc and ask around for local lenders. Local guys have in depth knowledge of the market they lend in so they are more likely let someone that has no "skin in the game" borrow for the right deal. Conversely some of them in my area are at their lending capacity currently. That being said, HM can really be a great thing as long as the property is sellable very quicklyfor a profit above and beyond costs. just in case of emergency.
Generate a quick sale price, where you are priced at or below the average REO and still make a decent profit and you may have a winner.
Example of a deal that I found that I would use HM on if I could find one willling to do small amounts
Purchase: 35k
Rehab: 3.5k
Comps for rehabbed properties: 80k
Avg REO Listing: 64K
# of REO in neighborhood: 4
I can list for 75k and take offers, but can drop to 60K for quick sale and still make 15k after points and interest etc.
Of course if you have a buyers list set up that is your ultimate back up!!!
Cash Flow on the deal would be great so you dont have interest eat up your profits. Just be conservative on how much rent will be available to service debt. One of the most common mistakes is to miscalulate expenses. To be very safe a conservative benchmark is 50% of rent will go to expenses, and to view anything better than that as possibly temporary.
If you can find a national lender that will lend without credit score and works in Indianapolis IN let me know. I have a couple of friends that I would like to hook up and get started in the business.
The issue for me personally is finding lenders that will consider smaller loan amounts under 50k without about 12 points up front.
Regards,
Tony Tomasek
Im also thinking of going that route.
because i have acouple of buyers but they want to buy with an fha loan.
and i wanted to do a back to back closing but cant because of 90 day seasoning.
the only way is to go hml or find a bank that doesnt care about seasoning
I live in los angeles,ca if anyone knows about a hml email me
Thank you for that information and synopsis Tony. That was not only very helpful and understanding, but also very in-depth on the matter.
Bryant Slade
Max, another thing to consider with long term contracts is the value of the house overtime. If this is a home you intend to keep for at least three year, then there is no problem. If you wish to keep for at least 6 month, you must take into consideration market trends, because if the value of the home goes down, you will still be held accountable for the entire loan amount the the HML. Hence the best strategy with HML is assignment or double closing, in and out quickly. My prayers are with you in all your deals.
Sandra
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"In all things, wait on the Lord."
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Well being that I intend for my first deal to be a buy and flip and not for my occupation. I figure that my first three(3) properties will be buy and flips and my fourth(4) will be for myself and my family to occupy. Thank you so much for your prayers, as God know's I truely need them at this point and time in my life. Thank you again!
Sincerely
maximilionalpha
Bryant Slade
will do their due diligence to look at CMA for subject property to make their determination whether it's a feasible deal or not. If you have to refinance with them they will look at that closely also. Like Sandra said know your market; how quickly houses are moving in that area and DOM for others.
Sandra
"I will NOT BE BROKE! ANYMORE!"
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