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The Real Truth About Financing

Monday, February 23, 2004 @ 08:00 AM EST

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Contributed by: laurie ann waltz

laurie ann waltz Properties

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I have been reading this site for a few weeks now. I go to a few meeting in the areas I like to do business in also. I always seem to hear the same question everywhere I go. "I want to be a real estate investor, but I don't have any money". The Financial Industry does not recognize a real estate investor as an occupation. As a matter of fact if that is in job description space, 90% of loans will be turned down. It is considered


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exactly what it is - an investment. When your investments are calculated the line of questioning is as follows: "Do you have any 401k's, stocks, bonds, mutual funds, investment properties, ect" That is what I was taught over 15 years ago. It still hasn't changed. Then you get the people that say "I'm only asking for 50% LTV. The bottom line is that banks are in the business to lend money not SELL HOUSES.

I have a lot of people ask me how I survived in this business. I worked 12 to 18 hours a day for a number of years. There are no get rich quick schemes in real estate. That is why there are 30 year mortgages.

Another myth that I read about is the seasoning requirements. The only program that has seasoning requirements no matter what is a FHA loan. And that is even being challenged because they have been letting you use two appraisals to around their guidelines.( as of last month 01/2004)

Well I will close with this, if you have a job for two years at least, have 6 months or more of reserves in the bank, pay your bills on time,and want real estate property to use as retirement money you will have no problem qualifing for a mortgage.

If you want to buy properties, fix them up, and sell them you will have no problem as long as you do the work correctly.

I hope this helps someone
lori

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The Real Truth About Financing

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Re: The Real Truth About Financing (Score: 1)
by nebulousd on Monday, February 23, 2004 @ 11:37 AM EST

Your title is "The Real Truth About Financing."....What is the false? I don't understand your article. You talk about nothing in the first 3/4 of it and then cut straight to "if you have a job for two years at least, have 6 months or more of reserves in the bank, pay your bills on time, and want real estate property to use as retirement money you will have no problem qualifying for a mortgage." You leave me with more questions than answers.

"I have a lot of people ask me how I survived in this business. I worked 12 to 18 hours a day for a number of years. There are no get rich quick schemes in real estate. That is why there are 30 year mortgages.".....What????...is the point?

"The bottom line is that banks are in the business to lend money not SELL HOUSES." Okay, we know that. If I'm coming to you to get money, I'm buying the house and need someone to lend it to me. What is the point of this statement?

"If you want to buy properties, fix them up, and sell them you will have no problem as long as you do the work correctly." What is correct? I can always go to a hard money lender right? What are the requirements? Then this leads me back to what you said earlier, "Then you get the people that say "I'm only asking for 50% LTV. The bottom line is that banks are in the business to lend money not SELL HOUSES." Is this not a contradiction?

What truths are you exposing? I need a job for 2 years, some money in the bank and good credit? That’s not a truth, that’s a FACT, if you want to do things conventionally. Hard money lenders require no job, no credit, and they don’t even look at a bank statement. Bottom line is they are lending on the LTV. What about no doc loans?…

I’m getting frustrated typing, because the more I type, more questions arise. I think your going to confuse a lot more people with this article than help them.

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Re: The Real Truth About Financing by engelduo on Monday, February 23, 2004 @ 01:01 PM EST

Re: The Real Truth About Financing by tinman1755 on Monday, February 23, 2004 @ 01:45 PM EST

Re: The Real Truth About Financing by tinman1755 on Monday, February 23, 2004 @ 01:03 PM EST

Re: The Real Truth About Financing by nebulousd on Monday, February 23, 2004 @ 01:40 PM EST
- Re: The Real Truth About Financing by tinman1755 on Monday, February 23, 2004 @ 03:18 PM EST

Re: The Real Truth About Financing (Score: 2)
by JeffreyAdam on Monday, February 23, 2004 @ 12:58 PM EST

In terms of FHA is the only program that has
"seasoning requirements" I am not so sure of. When FHA came out with all of their "seasoning" requirements the last couple years, investors in my area were all
scrambling. Then there were some conventional FHA look-alike programs that came available. We all started doing those.

Guess what. Know I am being told my my
mortgage brokers that the conventional lenders are saying that the property looks like it is a "flip" and they want documentation to support why I am selling for $50k more only
4 month's later. So go figure.

WIth proper documentation: before and after pictures, rehab receipts and comps to justify
the sale you can get around this obstacle.
But what about the "pretty house" house that you buy from someone who has transferred
and needs to sell immediately? I have run into that problem recently. No receipts for escrow, no before and after pictures. Guess
what, we have submitted to two different lenders and they are saying I am "flipping"
the property. Maybe this is just happening on
the West Coast. Who knows.

Best Riches,
Jeffrey Adam[ No Comments Allowed for Anonymous, please register ]

Re: The Real Truth About Financing by tinman1755 on Monday, February 23, 2004 @ 01:29 PM EST

Re: The Real Truth About Financing by DJGROSSE on Monday, February 23, 2004 @ 03:16 PM EST

Re: The Real Truth About Financing by JeffreyAdam on Monday, February 23, 2004 @ 03:33 PM EST
- Re: The Real Truth About Financing by Lufos on Monday, February 23, 2004 @ 08:01 PM EST

Re: The Real Truth About Financing (Score: 1)
by engelduo on Monday, February 23, 2004 @ 01:07 PM EST

tinman, maybe you were having a bad day when you wrote this. I could have gotten your information from any banker. I don't pretend to know all the answers, but I know peple who have been successful using creative strategies. Maybe you're just not familiar with that concept. There are LOTS of ways to go about investing in real estate. [ No Comments Allowed for Anonymous, please register ]

Re: The Real Truth About Financing (Score: 0)
by hibby76 on Monday, February 23, 2004 @ 10:20 PM EST

"The Financial Industry does not recognize a real estate investor as an occupation" This can be overcome by having your company employ yourself as a consultant, property manager, or anything else your company wants to do, as long as you can document your income as such.

"The bottom line is that banks are in the business to lend money not SELL HOUSES."
I'm not sure where this comes from??? What does LTV have to do with whether they're lending to a homeowner who's buying from another homeowner or a homeowner who's buying from an investor. In both cases they're lending money, and in neither case are they selling houses.

"There are no get rich quick schemes in real estate.....That is why there are 30 year mortgages."

7 out of 10 Millionaires make their money in real estate. (Some say it's 8 not 7). I know many investors who make $30K on their first deal, and do 5 their first year. Others who do a couple of deals a month making 10-30K on each deal. That's not "Bill Gates Rich", but that's a good start. I know many people who have been in this business for a couple of years and increased their net worth by 6 and 7 figures last year. That said, and no offense meant, but none of them are loan officers. You can make a ton of money in real estate investing. Heck, you can even make it quickly. Most don't, but that is not to say that it can't be done. There are 30 year mortgages so that you CAN make money. Longer ammoratizations allow you to pay down your mortgage while getting a possitive cash flow. Cash Flow today AND appreciation. That's a great way to build wealth!!!

"Another myth that I read about is the seasoning requirements" Different lenders have different seasoning requirements. Some have no requirements, others have 1+ year seasoning requirements. That's like talking about the "myths of casual friday" regarding dress codes. The fact is that it varies from lender to lender. You can always sell on contract and have them refi in a year to get around it also.

"Well I will close with this, if you have a job for two years at least, have 6 months or more of reserves in the bank, pay your bills on time,and want real estate property to use as retirement money you will have no problem qualifing for a mortgage." ....You can also adquire real estate via a number of other methods. Everything you're talking about is CONVENTIONAL not creative real estate.

"If you want to buy properties, fix them up, and sell them you will have no problem as long as you do the work correctly.". ....If you want to get rich, you just need to do it correctly. If you want to retire when you're 30 you have to do it correctly. If you want a fat positive cash flow you have to do it correctly. Profound wisdom.

I enjoyed the discussions on the comments of this article. I think the value of this article is reflected in the Article rating, shown on the right.[ No Comments Allowed for Anonymous, please register ]

Re: The Real Truth About Financing (Score: 1)
by Bruce on Tuesday, February 24, 2004 @ 10:47 AM EST

Hi,

To be blunt, this is a very poorly written "article". It does not appear to have any specific point to make or provide any information.

BUT...

There are a lot of badly written articles on this site and I have NEVER seen this much anger and hatred directed at an author.

It is not enough to give it a bad rating and move on; must we dissect every sentence???

We all are PAINFULLY aware of the issues that are being fought about on this site currently. Frankly it is amusing.
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Re: The Real Truth About Financing by maiapapaya on Tuesday, February 24, 2004 @ 11:24 AM EST

Re: The Real Truth About Financing (Score: 1)
by tahuti on Tuesday, February 24, 2004 @ 07:39 PM EST

I am a newbie still working on my first deal and I can tell this is an awful article.

It has gathered more responses due to the reputation of the author (lori) on this site due to prior controversial posts[ No Comments Allowed for Anonymous, please register ]

Re: The Real Truth About Financing by tinman1755 on Tuesday, February 24, 2004 @ 10:57 PM EST

Re: The Real Truth About Financing by tahuti on Wednesday, February 25, 2004 @ 07:01 PM EST

Re: The Real Truth About Financing by tahuti on Wednesday, February 25, 2004 @ 07:08 PM EST

Re: The Real Truth About Financing (Score: 0)
by fearnsa on Wednesday, February 25, 2004 @ 09:56 AM EST

I liked your article, Lori. Thanks. Don't defend against some things. They were straight-forward in the beginning, saying essentially, "I did not get enough secrets to clear an easier $20,000" and, "I think I just wasted some time" or considerately, "How are newbies going to derive juice from this?"

From your article I learned the latest FHA items, avoiding problems with genuine fix-up work, and a reminder of the delicate status of being an investor to loan officers.

You've got a lot in ya! I have read your posts and your name stands out in my mind for outstanding comments. Write again a new article (after a deserved break!) Rise up with something fresh and fun. Bring our great TCI site back, with the "sensible brothers" returning to their better form, too. They post great for sure, until the other day when they were simply way too carried away.

Watch spelling, and please put yourself on the line again. We need you!

New cheers. Alan

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Re: The Real Truth About Financing (Score: 0)
by JohnBergman on Wednesday, February 25, 2004 @ 04:58 PM EST

Lori,

You are one tuff cookie. I am amazed that you continue to fight against the people on this site that want you out.

As far as the article goes, it was worth the price (barely). I love the fact that anything you write generates a firestorm. It would be understandable if any of your writings were poignant or thought provoking. Oh well... keep it up. This site has become very entertaining as well as educational.[ No Comments Allowed for Anonymous, please register ]

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