I don't know about you but I'm done with this year. I've already ripped down every single one of my 2014 calendars all though out my office and my house. And I did this before Christmas even. That's how done I am of the year 2014.
Even worse (or better), I survived 2 very long lonely days: Christmas Eve and Christmas Day. Having no family makes this particular time of the year excruciatingly painful from an emotional perspective. So...glad that's over! (And I thank the TV gods for the Lifetime Movie Network for surviving another holiday!)
So now, it's back to business for me even though we have one more holiday left. (But I've blown past the most difficult of the year so...we're all good!)
I like to hit the ground running, especially as we're going into 2015 next week.
One thing that keeps coming up over and over again is this 100% LTV Bond Funding Program. Since this is one of the ways I'm now acquiring property, I wanted to explain a little more about the program.
When I did the Detroit event last month, Ronnie presented the basic criteria of the bond program which included, at the time, a minimum property price of $5,000,000. However, the Monday after the seminar, he received a new updated criteria sheet from his bond funders who had dropped the minimum purchase price to $1,000,000.
The reason I'm telling you this is because I'm sick of getting emails from students who either attended the Detroit event or watched the videos who apparently don't believe me when I keep telling you guys and gals over and over again via email that the minimum property price has dropped from $5,000,000 to $1,000,000. I don't know how to be more clear and this is the last time I'll be mentioning this change to you.
Next, you'll have to have a property that can support a 100% LTV mortgage at about an 8% fixed interest rate (30-year amortized). In areas of the country that have low CAP rates like Seattle or Los Angeles or New York...you're not going to be able to make a 100% LTV property cash flow unless you're knocking 50% off the asking price. And no seller will accept that offer from you. Instead, you'll have to focus in on areas of the country that can support 100% LTV deals after, of course, you shave off 10% to 15% off the asking price of any property you're looking at (which you should always do when buying a property anyway).
Where are these areas of the country?
Smaller "big" cities like Cleveland, Detroit, Indianapolis, Jacksonville, Atlanta, and Memphis to name a few make excellent areas to work with. Any area that doesn't have low CAP rates (as an average) that consistently fall below 8% across the board.
Remember, your 100% LTV has to be supported by the cash flow of the property. Deciding to invest in low CAP rate cities will guarantee that you'll end up with a negative cash flow property and your bond funders won't fund a negative cash flow deal.
Next, I have students asking me why the funders want to see that you have 1% to 2% of the purchase price of the property when it's a 100% LTV bond funded loan. The funders need to see that you are somewhat financially sound to the point where, when walking into the property after closing, you can pay for any upgrades, repairs, or get any units (needing new paint and carpet) rent-ready for new tenants. There's nothing worse than funding a property to find out that the lender has funded someone who doesn't have 2 nickels to rub together and can't do basic things for a property if needed.
Also, my students want to know about credit criteria. These funders will allow for people to have some credit issues/problems. I do recommend that if you don't have good personal credit and you don't have built business credit, start getting it together, bub. This upcoming year isn't one to be messing around and dragging ass otherwise you'll lose out on every last opportunity out there!
See you at the top!