Ask Cornerstone

Ask Cornerstone: Are Millennials buying homes? Should I market to them?

To put it briefly, YES, millennials are buying homes and in big numbers.  It is a great group to design and market your flip homes. Millennials are defined to be between the ages of 18 and 35 (in 2015).  It’s commonly said that they have a reputation of not wanting to settle down.  This perception is a little skewed. The last several years of high underemployment and other factors such as student debts and tight credit have delayed them from home-buying. A recent National Association of Realtors report found that millennials make up the largest share of home-buyers at 32 percent.  The delayed purchases from this group could make that […]

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Ask Cornerstone: When should I line up a hard money lender for flip financing?

When to line up hard money lender

I am currently looking for my first flip property. Should I line up a hard money lender first, or wait until I’ve found a property? It is a good idea to consult with a few lenders while you are looking for an investment flip look at this site. You should know the lenders’ requirements for down payment, points, interest, other fees, and conditions. This will give you a good idea of how much house you can buy based on your available funds. Many lenders require 20%-30% down and then they will finance 100% of the fix up costs. Fix-up money are controlled funds that are paid out as work is […]

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Ask Cornerstone: Where can I find good contractors for my flip?

Finding sub-contractors for flip house

Finding good contractors can be a difficult task as many have poor reputations. Common complaints are contractors not showing up for jobs, completing late, and doing poor quality work. There are a number of online resources to find listing of contractors. We recommend The Blue Book as a major source for true professionals in the building industry. Many contractors in The Blue Book are big corporations… but in the mix are professional contractors that focus on smaller jobs. You can ask for referrals and check them as well.  Other resources include HomeAdvisor.com and AngiesList.com. I find that attending local REI clubs also gets me in touch with people networking and […]

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Ask Cornerstone: I want to bid on an auction, but I can’t go see it because it says “REO Occupied. Do not disturb tenant.” Should I stay away from these types of properties?

REO House Auction

Okay, so the bank owns the real estate… If the property is occupied, firstly, of course it doesn’t mean you can’t go see it from the outside.   If the property is really bad on the outside, it’s usually bad on the inside. You minimize your risk because it’s always good to see it from the outside so you can both get an idea of how it’s like on the inside, plus you need to assess the neighborhood anyway. Here is a secret tip for trying to see the inside.   Bring a $10 Starbucks gift certificate.  Talk to the occupant. Be really polite.  Say something like this, “Here’s a $10 gift card.  […]

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Ask Cornerstone: We want to buy the house that we are renting but can’t get conventional financing nor hard money. What are our options?

We want to buy the house ($110K as-is) that we are renting. We can’t get conventional financing because it needs to be repaired. We can’t get a hard money loan because we are living in it. What are our options? “Options” happens to be the key word in your question, since I recommend that an “Option to Buy” as a possible solution… Since you were considering a hard money loan, you would have needed 20% down, points, and closing costs, so I am assuming that you have at least $25,000.  I would suggest not seeking a hard money loan, but use the $25,000 for fix-up funds, contingency, and option money. […]

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Ask Cornerstone: Do any private / hard money lenders deal with owner occupied mortgages?

Owner Occupied Residence financing

I’m looking for a home equity loan for my primary residence.  I want to do repairs to rent it out.  I don’t understand why private money lenders don’t do owner occupied loans even if it’s a small loan backed by plenty of equity.  I need the loan soon and have plenty of documented income, but my credit score is too low (570) to refinance to a larger 1st loan. The reason most private/hard money lenders do not loan on owner occupied residences is because they are considered “consumer loans”.  A consumer loan falls under the new Dodd-Frank regulations that makes them cumbersome and doesn’t allow for the higher interest rate that […]

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Ask Cornerstone: If I sell my home “subject to”, do I become eligible for another mortgage right away?

Mortgage Eligibility after Subject To Sale

When you sell your home subject-to, you are still responsible for that loan and the loan shows on your credit report. So, when you fill out a loan application for a new loan with a second bank, the bank will know that you have a loan on your first house. The bank will qualify you based on your ability to carry both loans.    

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Ask Cornerstone: Can I find 100% financing / no money down loan if I can find a deal at a certain percentage discount of the After Repair Value (ARV)?

No money down financing for flips

In most cases, you cannot find 100% financing regardless of how good the deal is. Usually lenders will provide 70% to 80% purchase money loans.  Additionally, many lenders do provide 100% of controlled refurbishment funds.  The assumption is that if you don’t have any skin in the game, you don’t have anything to lose. That puts the lender Landscape at great risk if anything goes wrong. There are a small number of lenders that will provide 100% purchase money loans and fix-up funds, but in those instances, they will keep control of the property (i.e. hold the title).  In that instance, you will do all the work and the lender […]

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Ask Cornerstone: Do hard money lenders ever steal investors’ deals?

Do hard money lenders steal deals?

Question: Is it common for a lender to say “bring me your deals”, you show it to them, they say NO and then they secretly go and buy them and cut everyone out? Answer: It is not common, but yes, it could be a & problem, so deal with people you know. With good documentation, you may have a By strong case for a lawsuit against the lender.  If you are using a lender to help evaluate your deals so that you are more confident that your project has potential, don’t do that! You should be 110% convinced that deal is excellent, have it under contract and then go to […]

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