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Real Estate Investing Forums | Real Estate Investing | Financing, Hard Money Lenders, Credit, Qualifying (Moderators: $Cash$, Bluemoon06, kdhastedt, Mdhaas, motivatedceo) | Topic: Bulk REO Funding « previous next »
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robdedgar
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« on: February 10, 2010, 08:34:04 PM »

Any HML out there that fund these types of deals?  I am having a hard time finding anyone that would be willing to fund them.  Even at 28-33 cents on the dollar!
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jbarry5
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« Reply #1 on: February 11, 2010, 02:58:51 PM »

What type of product/tapes do you have? 
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robdedgar
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« Reply #2 on: February 11, 2010, 03:04:22 PM »

I have a local reo specialist that can get tapes but whatever he has available. He has them 30 to 50 cents on the dollar
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jbarry5
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« Reply #3 on: February 11, 2010, 03:09:33 PM »

where is local?
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robdedgar
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« Reply #4 on: February 11, 2010, 03:14:49 PM »

Southeast ga and sc
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DHLC
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« Reply #5 on: February 12, 2010, 11:51:17 AM »

I get a lot of these calls. In-fact i think I spoke to you yesterday about this.  The reasons that HMLs, PLs and others are not excited about these types of deals are really quite simple.  They can be summed up in 1 word.  RISK! 

While you state you are getting these REO at 30 cents on the dollar I would suggest that you are probably paying closer to 60% -80% or more based upon the the drop in property values in those areas.  Further I would ask you this...if this is such a good deal why is the bank selling them so cheap.  If you could make money on these they why wouldn't the bank?  I ask this question a lot and the most common response is, "The bank just want's their money and they don't want the hassle".  I am sorry but as a lender I can tell you that is not only risky thinking but also illogical.  Why would a bank sell an asset, at a loss to you (thus having to report that loss to FDIC and increase reserves to offset loss), when they could sell those same assets themselves for the same price you think you can sell them for and make "big bucks", thus minimizing their loss.

Another big concern is the carrying cost issue.  Depending upon the size of the portfolio the carrying costs can be in the tens of thousands of dollars each month.  Few borrowers can afford that.  Finally there is the concentration issue.  Few lenders want to take on that many properties in depressed markets.  Too risky.

These are just some of the reasons you are not finding any enthusiasm from lenders.  We don't like risk and in these types of deals there is way too much risk.

Good luck!
Rob

« Last Edit: February 14, 2010, 03:09:57 PM by DHLC » Report to moderator   Logged

DHLC Investments, Inc., Direct Hard Money Lender
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robdedgar
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« Reply #6 on: February 14, 2010, 03:28:35 PM »

What carrying costs would be involved?  I am assuming electricity for the properties.  I dont plan on keeping the properties longer than a few months.  If a few was problematic in selling I might consider rehabbing it and renting it out or owner financing as long as the loan was satisfied.  I am also working with a local rei who will help me sell the properties for a fee. 
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« Reply #7 on: February 15, 2010, 10:15:23 AM »

Carrying costs include: Monthly loan payments, utilities, taxes and Insurance
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« Reply #8 on: February 15, 2010, 01:16:27 PM »

Could you give a young investor insight as what the loan payments would be on a million dollar reo tape?
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« Reply #9 on: February 15, 2010, 10:14:21 PM »

$1,000,000 * 15% = $150,000/yr or $12,500/mo
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Real Estate Investing Forums | Real Estate Investing | Financing, Hard Money Lenders, Credit, Qualifying (Moderators: $Cash$, Bluemoon06, kdhastedt, Mdhaas, motivatedceo) | Topic: Bulk REO Funding « previous next »
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