Comments on: Why Shouldn’t The Real Estate Investor Go With The Interest Only Loan? ‘Cuz http://www.bawldguy.com/why-shouldnt-the-real-estate-investor-go-with-the-interest-only-loan-cuz/ Real Estate Investing through Purposeful Planning Tue, 02 Dec 2008 03:09:52 +0000 http://wordpress.org/?v=2.0.11 by: BawldGuy http://www.bawldguy.com/why-shouldnt-the-real-estate-investor-go-with-the-interest-only-loan-cuz/#comment-8721 Mon, 09 Jun 2008 20:22:58 +0000 http://www.bawldguy.com/why-shouldnt-the-real-estate-investor-go-with-the-interest-only-loan-cuz/#comment-8721 Sam -- Your point is excellent and correct much of the time. A one year hold? The tradeoff for the pennies in principal pay down aren't nearly as nice as the holding costs savings with the IO loan. You'll get no argument from me. Great point, Sam. Sam — Your point is excellent and correct much of the time. A one year hold? The tradeoff for the pennies in principal pay down aren’t nearly as nice as the holding costs savings with the IO loan.

You’ll get no argument from me. Great point, Sam.

]]> by: Sam Pritchard http://www.bawldguy.com/why-shouldnt-the-real-estate-investor-go-with-the-interest-only-loan-cuz/#comment-8720 Mon, 09 Jun 2008 19:25:09 +0000 http://www.bawldguy.com/why-shouldnt-the-real-estate-investor-go-with-the-interest-only-loan-cuz/#comment-8720 Hi Bawld Guy. I understand your point on a 5 year investment strategy, but if you shorten the holding period, isn't there a point beyond which you don't pay down enough principal on the fixed mortgage to make a difference versus the IO, for example 1 year or shorter? I would think this is particularly true of a flip, in which the holding period is only a few months (hopefully). Hi Bawld Guy. I understand your point on a 5 year investment strategy, but if you shorten the holding period, isn’t there a point beyond which you don’t pay down enough principal on the fixed mortgage to make a difference versus the IO, for example 1 year or shorter? I would think this is particularly true of a flip, in which the holding period is only a few months (hopefully).

]]> by: BawldGuy http://www.bawldguy.com/why-shouldnt-the-real-estate-investor-go-with-the-interest-only-loan-cuz/#comment-8369 Sat, 17 May 2008 19:02:29 +0000 http://www.bawldguy.com/why-shouldnt-the-real-estate-investor-go-with-the-interest-only-loan-cuz/#comment-8369 Sam -- Lenders for 5+ units have been passive/aggressive for years now. Many offer down payments as low as 15% (or used to) but by the time they've applied their 'impossible dream' parameters to the subject property, 15-20% morphs into 25-40%. High DCR's (debt coverage ratios) are the biggest party poopers. Requiring a property to produce more than modest cash flow with a low down is tough in most areas. I don't know, to answer your question, any lenders who've been funding loans using under 25%. That said, there have to be a few lenders who are. There almost always are. Sorry I can't be of more help, Sam. Sam — Lenders for 5+ units have been passive/aggressive for years now. Many offer down payments as low as 15% (or used to) but by the time they’ve applied their ‘impossible dream’ parameters to the subject property, 15-20% morphs into 25-40%.

High DCR’s (debt coverage ratios) are the biggest party poopers. Requiring a property to produce more than modest cash flow with a low down is tough in most areas.

I don’t know, to answer your question, any lenders who’ve been funding loans using under 25%. That said, there have to be a few lenders who are. There almost always are.

Sorry I can’t be of more help, Sam.

]]> by: Sam Perchik http://www.bawldguy.com/why-shouldnt-the-real-estate-investor-go-with-the-interest-only-loan-cuz/#comment-8368 Sat, 17 May 2008 18:53:57 +0000 http://www.bawldguy.com/why-shouldnt-the-real-estate-investor-go-with-the-interest-only-loan-cuz/#comment-8368 I could't find a lender that will accept less than 25% down on 5+ units. Do you know of lenders that will accept less? I could’t find a lender that will accept less than 25% down on 5+ units. Do you know of lenders that will accept less?

]]> by: BawldGuy http://www.bawldguy.com/why-shouldnt-the-real-estate-investor-go-with-the-interest-only-loan-cuz/#comment-8267 Sun, 11 May 2008 02:04:36 +0000 http://www.bawldguy.com/why-shouldnt-the-real-estate-investor-go-with-the-interest-only-loan-cuz/#comment-8267 Brett -- I've watched various states and their approach using this method. The common thread is 16% is offered outright due to the relatively high risk level. Still, with experience and expertise one can do well, as long as they clearly know the areas in which they're investing. To date, I've no first hand empirical evidence of anyone consistently making significant money with tax lien certificates. Again, that in no way implies some aren't cleaning up. I just haven't run into them yet. Brett — I’ve watched various states and their approach using this method. The common thread is 16% is offered outright due to the relatively high risk level. Still, with experience and expertise one can do well, as long as they clearly know the areas in which they’re investing.

To date, I’ve no first hand empirical evidence of anyone consistently making significant money with tax lien certificates. Again, that in no way implies some aren’t cleaning up. I just haven’t run into them yet.

]]> by: Brett Noel http://www.bawldguy.com/why-shouldnt-the-real-estate-investor-go-with-the-interest-only-loan-cuz/#comment-8266 Sun, 11 May 2008 01:53:59 +0000 http://www.bawldguy.com/why-shouldnt-the-real-estate-investor-go-with-the-interest-only-loan-cuz/#comment-8266 What do you think about tax Lien Certificates as Investments at 16% Return What do you think about tax Lien Certificates as Investments at 16% Return

]]> by: Jon Treon http://www.bawldguy.com/why-shouldnt-the-real-estate-investor-go-with-the-interest-only-loan-cuz/#comment-8007 Thu, 24 Apr 2008 23:30:39 +0000 http://www.bawldguy.com/why-shouldnt-the-real-estate-investor-go-with-the-interest-only-loan-cuz/#comment-8007 Bawld Guy- Any suggestions? Bawld Guy- Any suggestions?

]]> by: BawldGuy http://www.bawldguy.com/why-shouldnt-the-real-estate-investor-go-with-the-interest-only-loan-cuz/#comment-8006 Thu, 24 Apr 2008 23:19:23 +0000 http://www.bawldguy.com/why-shouldnt-the-real-estate-investor-go-with-the-interest-only-loan-cuz/#comment-8006 Jon -- It's my guess even the properties you deem to be 'working' require so much ongoing attention, as to make the investment a gigantic pain in the endus rearimus. :) Bite the bullet and get away from the local stuff. In the long run, you already know you'll do better. Jon — It’s my guess even the properties you deem to be ‘working’ require so much ongoing attention, as to make the investment a gigantic pain in the endus rearimus. :)

Bite the bullet and get away from the local stuff. In the long run, you already know you’ll do better.

]]> by: Jon Treon http://www.bawldguy.com/why-shouldnt-the-real-estate-investor-go-with-the-interest-only-loan-cuz/#comment-8005 Thu, 24 Apr 2008 23:04:04 +0000 http://www.bawldguy.com/why-shouldnt-the-real-estate-investor-go-with-the-interest-only-loan-cuz/#comment-8005 Thanks, Bawld Guy. I've got to start doing my homework and find alternative places to invest in. There are areas locally where the numbers are starting to work, but the properties are generally 19th century vintage with lead paint, etc. Thanks, Bawld Guy. I’ve got to start doing my homework and find alternative places to invest in. There are areas locally where the numbers are starting to work, but the properties are generally 19th century vintage with lead paint, etc.

]]> by: Christine http://www.bawldguy.com/why-shouldnt-the-real-estate-investor-go-with-the-interest-only-loan-cuz/#comment-7982 Wed, 23 Apr 2008 22:21:03 +0000 http://www.bawldguy.com/why-shouldnt-the-real-estate-investor-go-with-the-interest-only-loan-cuz/#comment-7982 I appreciate your followup with regards to the idea of using IO to purchase additional properties. I appreciate your followup with regards to the idea of using IO to purchase additional properties.

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