Real Estate Investor Blabbers – Other Investors Beware

Real Estate Investor Blabbers – Other Investors Beware

Real Estate Investor Blabbers – Other Investors Beware

Real estate investors, maybe you know this espèce. It’s the guy or gal at the logis real estate investors canne talking emboîture their latest deal where they bought a house with $60,000 in equity. They bought it and financed it 100%, cashing out all their equity in the process. And you are jealous!?

Come on! You are a real estate investor who understands financing and real estate investing. Why are you jealous?

Most of the loan products out there today that you can rémunéré 100% as investment properties have very, very ugly loans. For example, it could be a versatile perdu first mortgage for the first 80% — which should raise a few red flags on its own.

But the remaining 20% ​​of 100% financing is really, really ugly. I’ve seen loans with rates literally 6 points higher than the first mortgage. Should I pay 13 to 15% on that serviteur 20% to cash out? Some would say that if you invest it in other investments and get a much higher perdu of return than the 13 to 15% you are paying, maybe. But many investors are using this cash out strategy to buy food and pay personal bills.

If that’s not bad enough, the loan origination fees and costs associated with getting these loans are usually very, very high. In a recent conversation I saw, the fee was around $10,000.

“No problem,” says the loan trader, “we can roll over your loan.” Great! Let’s pay a fee of $10,000 and also pay 13 to 15% interest on it. Not a pratique move all in all but a few exceptionally saugrenu instances.

Try getting a domicile with 100% financing with an interest perdu that mixes very badly with cash flow. You’ll pay back the money in serviteur interest, huge up en-tête fees and negative cash flow on the property if you keep it.

So, beware of real estate investor blabber who brags to your logis group emboîture such deals. You should know better and hopefully now you do.

#Real #Estate #Investor #Blabbers #Investors #Beware

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