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Don’t Stop Buying Because Interest Rates Are Up

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To start the show, Gary Pinkerton shares that interest rates are going up, which will lessen the cash flow of rental properties. He explains that this doesn’t mean that rental properties are now bad investments. Then, Jason Hartman discusses the impact of higher interest rates during a Meet the Masters event.

Announcer 0:04
Welcome to the heroic investing show. As first responders we risk our lives every day our financial security is under attack. Our pensions are in a state of emergency, a single on duty incident can alter or erase our earning potential instantly and forever. We are the heroes of society, we are self reliant, and we need to take care of our own financial future. The heroic investing show is our toolkit of business and investing tactics on our mission to financial freedom.

Gary Pinkerton 0:39
Hello, and welcome to Episode 95 of the heroic investing show, where we focus on those challenges unique to members of the military, veterans and first responders. But we also help with those challenges that we all face. And one of those specifically is trying to get back more free time to focus on things that we want to do in life, like spend time with our family, and those activities and those businesses and those opportunities that inspire us. And sometimes that is our w two job, those are the lucky few. The rest of us, it’s not a perfect scenario. And so we want to improve, we want to start spending that time on things that do inspire us. And we need passive income from another source to help us get over that hump to be able to have the resources to take care of the family’s needs, while we master our unique trade and our ability to start that business to start that service to become the expert in what we know inspires us on a daily basis. So hopefully you share my feeling that income producing real estate has a part to play in that what I do at paradigm life every day helps people put in place, their solid financial base, their protection layer, as well as more efficiently use the money that they’re going to put into rental properties more efficiently fund those properties to help grow wealth faster, more efficiently, and with a lot more options. You know my feeling as though the last episode I talked quite a bit about it that having money locked up in an illiquid asset is not a very safe position to be in. I’m not a fan, I’m not a fan to have money sitting in a paid off property or large downpayment in a property. So if you’d like to find out more, please reach out to me Gary at Gary Pinkerton comm you can also see some of the specific things that I do and approaches unique approaches that we take a paradigm live by going to paradigm life dotnet paradigm life dotnet or sending me in an email over on that side as well at G Pinkerton at paradigm life dotnet. So glad to help you out from that perspective as well. So this discussion is a topic that I thought was pretty timely.

And so I searched in the archives to find a lender panel discussion on interest rates on trends and interest rates. This one’s a couple of years old, maybe three years old. But it’s a bunch of lenders in a panel discussion similar to the one that was held at this year’s meet the Masters topicals. A little bit different on this one, though, it was about will interest rates go up? And if they do, what is the impact of that. And I thought it was really timely, because right now interest rates are rising a little bit. But I can tell you that I’m going to do four new loans this year, and I’m not in a hurry to get them done fast. If you remember what john sharp said, you know, in our recent, most recent podcasts, he said, You know, people need to learn how to purchase properties in good times and bad continue purchasing properties throughout, you can’t time the market. And it’s not a bad deal because you have rising rents to help offset any rising interest rates on your loan. And the difference between a 4% loan and a 6% loan. Very, very small difference. People made these properties that we’re purchasing now. And we’re owning those same exact properties made sense and work just fine. In 15 16% interest rates in the 1980s landlords didn’t go out of business in the in those periods of time. So it still makes sense there. Can you get crazy deals right after market crashes in 2009 10 and 11? Absolutely. And I would certainly stock up when you’re there on the sale that’s happening. But it doesn’t mean stop buying throughout here waiting, you know, five or six years on the sideline for the next big event to come. I certainly am storing up you know warehousing some money in my life insurance policies, but you can do it in your in your checking account. That makes sense, but I think completely sit on the sidelines doesn’t make much sense.

And I believe this video taken from the archives of a couple of years ago will help hammer home that that perspective that that you should not be overreacting about these interest rate changes. They’re just not going to have a big impact on their performance of your rental properties. And if you’d like help going kind of through that math, I’d gladly take you through that discussion. I have a couple calculators there beyond the basic financial ones, may help out a little bit more in providing perspective to that. So reach out if I can help you. And please enjoy this lender panel discussion about interest rates about purchasing capabilities, and hopefully with the intent of keeping everything in perspective and keeping you on path. Thanks so much. And I will see you next episode from my good friend, Mr. Craig Horton.

Jason Hartman 5:44
First of all, maybe if you want to pass back to Steve here, I wanted to ask you all what is the sentiment you’re hearing from investors? What is your what is the feedback? What is the your take on the market right now, I just wanted to get your thoughts on the market, the real estate market, the economy in general, maybe any feelings about where interest rates are going, and so forth. And just kind of a minute on that one. And, you know, we’ll just get everybody’s, and we’ll go into some specific lending stuff after that.

Panelist 6:10
Right now we’re in we’re in record lows as far as rates, and you know, it could really go either way. And that as far as going up or down right now, I think what we’re gonna see is we’re gonna see the rate starts to slip, you know, stay down a lot of the investors that do come to me, and that they’ve had experience with other lenders, good and bad. And, you know, my job is really to, you know, just kind of help them through it, because let’s face it, the lending, you know, lending arena right now, we’re back at what it was 20 years ago. I mean, they’re looking at everything. And so it’s it’s important to have somebody that’s got some experience, can see some of the problems up front. You know, nobody likes getting that getting that call, saying 3045 days in the process that you don’t qualify, something happens, again, really, really important. And the complexity and what what the investors are trying to do right now is to get those people that get up in the 10 properties and want to get to 20, they want to get to 30. How do you get them there? years back when I was in banking, what we used to do, and that was we used to bond one commercial loans, having former Corporation do it that way there. And, you know, the banks lost a lot of their appetites for the you know, for the real estate, real estate investing. Now, we’re going to start seeing some of that come back. I’m talking to a couple lenders right now that I want to be able to refer over to refer my clients to an ad and you know, it’s kind of where I see things.

Jason Hartman 7:27
So you think rates will stay low? In other words, that’s correct. And by the way, I agree. And Doug mentioned that earlier. Remember what low rates mean, people buy properties, not on the price, they buy it on the payment. So if someone can get alone and rates are low, that means price pressure is definitely upward.

Panelist 7:44
Well, can I can I comment on the rate thing? So I don’t know how much you guys spend on figuring out what your payments are going to be? It’s probably a lot per property, right? And then the price points that we’re finding are in the market right now. And having been through the last cycle, I mean, the sweet spots are what, on average, 80 to 121 30, single family residence? Would everybody agree with that? So let’s figure an 80% mortgage on that purchase price? Do you guys know the difference between a 4% interest rate and let’s say five 6% interest rate? It’s negligible. And in the in the big picture, if you’re looking into the future, the difference? Even if rates did go up a little bit, which I agree with Steve, that that’s probably not likely, I don’t like to predict past. What time is it? You know what I mean? It’s it’s very difficult. There’s so many different variables that go into how the rates are going to go from one day to the next. They change daily, sometimes a few times a day. So I would advise my recommendation, and I used to get really hung up on interest rates, is I wouldn’t focus so much on that number. I think that it’s a lot less important than the actual process and kind of understanding financing, and how to position yourself through education. Hopefully, that’s what we’re here to do for you guys. So that you know how to take one property 10 if that’s your goal, and make sure that you can still qualify in the process. It’s it’s can be tricky,

Jason Hartman 9:02
right. Just so you know, what I was kind of getting out there is the investor urgency issue, because when rates are this low, I mean, we’ve seen prices in Phoenix are up about 34% off the bottom. I mean, prices are rising and pretty much every city now. That’s the thing that that’s cause that needs to create urgency with all of us to buy up more properties is that that issue of the low rates now, it’s kind of an odd thing that we have right now because we have very, very low rates, which usually and so housing affordability is the best that’s ever been okay since NAR National Association of Realtors started keeping statistics. However, people can’t get the loans, a lot of them. So it’s kind of like a real quandary here, where you know, you’ve got these incredibly good interest rates, but it’s also still at the same time hard to get the actual loans. Eric, your thoughts?

Panelist 9:53
I think that actually caught those one exists because of the other because it rates our supply and demand of money. If you’re not tearing up that supply, of course, the the cost stays low. So because of the fact that we’re preventing so many people from getting these loans, that’s what I think is contributing to it, I would say it’s the total, the total reason, but it’s definitely contribution. When we’re talking about the financing piece, what a person needs to do is be pre emptive. With this, take the time to sit with somebody, whether it be one of us or somebody and figure out your financial profile well ahead of time, you’ve spent the last 1015 2030 years setting up your financial situation, we are giving a matter of moments to dissect it and tell you whether or not we can get something done. And a lot of times things can creep up in the process that we don’t find until we really dig deep. And that type of process can eat up into your escrow time, take the time ahead of time to get that figured out. Because it’s not a science anymore. It’s a moving freaking target is what it is

Panelist 10:52
freaking target.

Panelist 10:54
I’m trying to I’m trying to it is it’s a mess. So that being the situation, let’s sit down, let’s go through everything in great detail well ahead of time before you want to waste your time. Don’t be paperwork, apprehensive. That’s the biggest problem we have. At least I have. I don’t know about you guys. But people are very paperwork apprehensive. They like to say, Oh, this is my private information. I don’t want to hand it in right away. We’re going to need it. You’re gonna have to get, you’re gonna have to expose yourself, literally. Yes, you and when we say you do have to do all this, unfortunately. And one thing you also have to know, please, we don’t? We don’t want to see it anymore. Do you want to give it? Because if you give it to me, I got to read it. And I don’t like reading, just to be honest with it. We haven’t a question back here. Jason. If you’re asking me personally, there’s not a money issue that we’re talking about. Because if I’m working with when you guys one time, I’m working with you three, four or five times. So I’m not worried about one price point being low personally, but we do the banks do have limits it with the institution’s I’ve worked with, it’s depending upon what you whether you’re the first four loans, or the five to 10 loans or higher, it’s 40,000 for one and 50,000 to the other. That’s just where their breakeven points are. Because they’re

Jason Hartman 12:01
so that’s remember, that’s 50,000 loan amount, not property price, that’s the minimum loan amount they’ll do, because think about it, they don’t want to hassle with these small loans. They’re not very lucrative for them. You know, $50,000, if you live in Orange County is a car loan. Okay, you know, so

Panelist 12:18
there’s lower income people.

Jason Hartman 12:19
Yes. microphone,

Panelist 12:24
sorry. Just to add to that sentiment, the $50,000 loan amounts to there’s something now, in the powers that be decided that high cost limits loan limits, it becomes very problematic to make any kind of money on the smaller loan amounts, and be able to have compensation. So there’s Fannie Mae tests that either fail or pass and most often those $50,000 loan amounts, you’re failing. And so what you think you’re making 1000 bucks or whatever is really more like half that it gets complicated. So 50 1000s, or minimum,

Panelist 12:54
do you have a minimum I’ve done for my, some of my investors, and that because I have a tough time turning somebody away that wants to buy a property for 55. And they’re gonna put 25% down, you know, look, it’s alone. My branch manager, Randy over here, not really thrilled with the idea, but I’ve done a lot, I’ve done a lot

Jason Hartman 13:11
right over here. So he doesn’t look thrilled.

Panelist 13:16
I’ve done $30,000 loan for the customer, you talked about the high cost, you know, we we get well basically, but I charge you for it, okay, you know, what you’re going to do is take my rate caps out at for three quarters, 4.8, that’s where you’re gonna end up, you’re gonna get the highest rate I’ve got on my ratio, that’s where you’re gonna end up, I’m going to hit you, I’m going to charge you back, because we get hit for the loan sighs you’re going to pay that I’m not. And I’ll charge you 1% loan fee. So we get back in at basically, even with the high cost test, and that, that one and a quarter, I charge you for being under $55,000 that absorbs the majority of that. So I do make a little bit of money. But at the same time, I had don’t look at the the customer is coming back. If you’re gonna if you’re telling me you’re gonna bring me five or 630 $1,000 loans, we’re gonna have a talk. Because I’m just not going to do that as

Jason Hartman 14:04
he doesn’t want to do. But isn’t it interesting what they’re saying about this? Remember the covenant, the second next 10 commandments this morning? It’s the same thing as a landlord. You don’t want to deal with super low quality, super low end properties. Because if they have to, if the lender, not they, but you know, the actual ultimate lender has to foreclose on that property or the servicer. It’s like not worth it. If it’s too cheap of a property. That’s why those ultra cheap properties, you can’t finance them. There’s just no point no bank wants to do it.

Panelist 14:30
If you if you have a need for that smaller loan amount. Usually what I’ll tell my clients is find the on the ground smaller bank in the area that the property is located in Detroit. Invariably, yeah, they’ll be able to do it for you.

Panelist 14:41
Thank you. Thank

Panelist 14:42
you do it. Yeah,

Jason Hartman 14:43
right. If they haven’t left the city yet, anyway. Okay, so next question. So the question is, how do I know you know, when I’m getting alone, that I’m not being nickel and dimed to death? You are Okay, next now Yeah,

Panelist 15:02
we’re in, we’re not the ones trying, it’s more or less we’re getting hit with it, we’ve got to pass it on the end result is you’re gonna have certain charges, if we can minimize it, we’d love to, because believe me, we don’t want to hear that question. We don’t want to have to answer that question. But I’ve gotten very good at answering that question. Actually. Now, after my career, I’m easily I can just throw a black suit, go to the hospitals, and tell people the mom just died on the operating table, because I have no feelings left.

Jason Hartman 15:28
Okay, pass the mic over. Steve, Steve, at least you’re compassionate go.

Panelist 15:39
You know, what, you don’t

Jason Hartman 15:41
rescue people when they fall off a cliff. When you get down there, you’re on the helicopter, you know, on the line, you have some money sign over your house, or there’s no equity, it’s upside down.

Panelist 15:59
You know, you you talk about the fees and a lot of the fees that we have in it regardless. So you know, you go here, you go there, you’re gonna get charged. Now the thing with the fees, though, and understand too, that a lot, a lot of the third party fees like your credit report, your appraisal fees, title and escrow and that those are fees, and that that, you know, as lenders we can’t make money on. So if we get charged 18 bucks, you get charged 18 bucks,

Jason Hartman 16:22
it’s it might be a different kind of credit

Panelist 16:24
report vendor.

Jason Hartman 16:26
But it might also be a different type of credit report.

Panelist 16:32
Many times I know because people ask me that same question. I’ve gotten that many times recently. With us, we have to verify so many things with the types of loans that we’re doing, we have to update many of a bunch of your accounts, update all your mortgages. And if you’re an investor has got several mortgages on there, we’ve got to update them to the most recent payment. So we have to have our credit reporting agency, call your mortgage company, update and make sure you’re current up to the very day that we’re doing the loan. And many times you’re going to be on a conference call with them. And you’re going to be saying, now I’m wasting my time I sit in on the freakin conference call for an hour talking to people about the stuff I already know, because I made the payment myself. But that’s what it is. And they charge for that. So if you’re talking $10 credit report, actually, it’s 15 bucks, we charge five bucks for every for every repository. So we got Equifax, TransUnion, and Experian, so we got 15 bucks there. Plus to get charged every time they got to make a call, every time we have to do a supplement, update one of your accounts. Anytime you have something on there, we need to verify so 65 bucks, it gets ramped up to that pretty darn quick.

Jason Hartman 17:26
So that’s the different that’s what’s called a tri merge report when it’s all three. Okay, I believe you were next. I’m not sure but Okay, so the question is, can you offer some options on investors trying to get more than 10? loans?

Panelist 17:40
Yes. And I can’t speak for them. But our portfolio product allows us to do another four after you’ve reached that 10 threshold, we can do another four you can have up to 20 finance properties, but this particular investor for us will let us do four of those.

Jason Hartman 17:54
And what kind of rates Very

Panelist 17:55
good question the terms of this particular loan are as follows. And one of the bigger I think, deterrence that I’m finding and I can’t get them to budge on it, the minimum loan amount for them is 100,000. So you’re looking at I think, and the LTV maximum, you’re gonna lose some leverage on this is 65. So I believe I’ve done the math $154,000 purchase price is what you would be at a minimum to qualify for this particular product, six and a half percent interest rate. This is a 30 year fixed. Not bad at all. The only other thing that I’d like to mention as a bullet point is this particular product has a three year hard prepayment penalty. So what that means to you is that for three years, 36 months, it’s really doesn’t mean much, but you should be aware, it’s a three to one. So in year one, if you go to sell or refinance that property, which isn’t going to happen, you’re going to pay 3% of your existing balance as a penalty. So if you owe 100,000, you’re paying 3000 in the first year, second years 2% 2,003rd year is 1% 1000. But you’re not going to be doing anything refinancing or selling that property in the first 36 months. almost guaranteed. 35 Yes. 65%. LTV 35%. Down.

Jason Hartman 19:01
Yeah, LTV means hard to value ratio loan

Panelist 19:04
to value. Yep.

Jason Hartman 19:05
Okay, wait, not yet. We have one over here. Yeah, you may not know this, because probably none of you listen to the podcast like you should. Okay. So, so mortgage sequencing. So what I’ve talked about on the show several times is something I just gave it the name mortgage sequencing, meaning when you’re trying to execute a plan and buy, you know, a whole bunch of properties, it’s how you sequence the mortgages. And the advantage there may be if you know, if you can only get 10, regular Fannie Mae loans, you want to buy more expensive properties like plexes. So for example, you know, you want to get as much since they go by loan number of loans rather than loan amount, it might be better to buy 10 for plexes and get 40 units. That would be and you know, maybe those are more expensive than buy 10 single family homes and only get 10 units, you still have only 10 loans, you see what I mean. So, you know, we’ve talked about that and then and they really can’t necessarily address this, although they can have added a moment. But the reason that mostly came up is because we had some special financing at the time, which has now run out. So far as I know, maybe Sarah Stever already can address this in Dallas. And with that lender doing these, it was a small community bank, they didn’t care how many financed properties you had. So the first thing you want to do is run out and get your 10, Fannie Mae financed properties and not buy in Dallas First, you want to buy after that? Okay, because you don’t want to have other finance properties, where they the Fannie Mae would say, Well, you’ve got four, you can only do six more. So that was kind of the mortgage sequencing thing. You guys may have some stuff to say about that. And I’m sure you do. But that’s where why he’s asking the question, I think, right?

Panelist 20:45
Well, it is it is a common question. And that is how do you get past 10? And and it’s, it’s it right now is tough. I mean, it really is. But the solution is, and that is that you have to get out of the mindset of thinking yourself as a single family, real estate investor and quit thinking Fannie Mae, because once you go past 10, you’re really into the commercial realm. And that’s really the the mindset that you have to put yourself in 10 years ago, I started working with a guy through foreclosure auctions in Seattle, came to me, he had had half a dozen restaurants, he was working, he wanted to buy a bunch of properties. So we got him to 10 banks at that point in time, and that what they would do is I took him to a community bank that I had some relations with, and what they would do and as they went ahead, they bundled them together, he formed an S corporation. He dumped him into there, we started the cycle over again, six years later, he owns 44 houses. Now, he’s not going to get the same terms. Just absolutely not. You’re definitely not as you’re not going to find 30 year money. If you’re dealing with some of the smaller community banks. Yeah, seven to 10 years, they’re going to reprice

Jason Hartman 21:48
it and I want to give a shout out to to Zach Henderson, over there, St. Robert in the corner, because he’s got an excellent community bank. And Joe has taken advantage of that. I think you have, I think so where he can do some commercial financing on non commercial properties, which, of course isn’t as good as the fant the Fannie Mae thing is the best it’s subsidized by the stupid government take advantage of socialism, real estate here has always been subsidized by the government. Since the depressions, that’s the thing, but your mortgage sequencing? Yeah, I

Panelist 22:15
have some comments on that. But quickly, are you guys is anyone aware of how many countries in in the world that actually offer a 30? year fixed mortgage?

Jason Hartman 22:23
Think one the United States?

Panelist 22:25
Yeah, there might be one other in in one of the European countries. I’m not remembering which one it is. But everybody else’s? I’m 10 years is a long time even or any mortgage at all, right?

Jason Hartman 22:34
I mean, I, you know, I’ve said this on the show folks, exactly what Charlie’s saying. I’ve been to 64 countries and I have looked at real estate, I’ve gone around with real estate brokers, a lot of them aren’t licensed. They just saw I’m a real estate broker. And I’ve gone around and looked, I did it all over eastern Europe, Central America, South America. And mortgages are like a totally foreign concept to them, even any mortgage at all.

Panelist 22:55
So we’re very lucky to have an opportunity. I mean, think about what the difference between a 15 year mortgage and a 30 year fixed mortgages, it’s huge to have that amortization at 30 years makes a big difference to what we’re talking about today. Huge difference. It’s the difference between $300 a month in cash flow and maybe 100. It’s a big deal. So I have a

Jason Hartman 23:15
massive amount of inflation that will take place in that second 615 years.

Panelist 23:19
Right. But just to go back to your question about sequencing, that’s a fantastic question. And a lot of what we do, I was touching on earlier about the education, sequencing is actually pretty important. So let’s just assume that the scenario is we have an investor that wants to get to 10. And they have a primary residence. And that’s all they have to start with their clean slate, they’re new to this, the first thing we’re going to do is we’re going to take your blood type and some DNA samples already qualified, right, we’re going to go through all of that we require what most might consider an inordinate amount of information upfront, we do a tremendous amount of due diligence on the front end, so that hopefully in the middle, in the end, it’s a little less painful. So we go through that. And then we spend some time talking to you about what your strategy is giving you the information about where your qualification is today. So that when we talk about that sequencing, the first four, let me give you a just a quick if anyone wants to write this down, this may be important for those that don’t know, properties one through four financed and that is one to four units that include your primary residence does not include commercial or bare land, you can leverage as an investor to 80% loan to value on a single family residence. So which properties Do you want to get in spots 123, and four, if you can leverage to at the most expensive exactly, you want to get the highest end properties in those first four spots. If you can, then you’ve got five through 10 properties five through 10, you’re going to lose 5% of leverage, you’re at 75%. Again, we’re talking to single family residents. These numbers are different for plexes. So it’s it’s really important to work with somebody that really understands the non owner occupied model because if you just go to your VA loan officer that’s sitting there counting paperclips here, she’s probably not going to be able to help you strategize this The other thing I want to mention you guys real quickly and I’ll turn it over to somebody else. One of the things I want to mention you guys and this is a pretty big deal and if you want to take notes, great, we can talk about it. One on One qualification. The acquisition here is very simple when you’re calculating a debt to income ratio specific to the rental income that we can use to offset that debt to income ratio. This is a little off off topic, but it’s very important in the acquisition year of purchasing property, the formula for calculating the rental income is a very simple 75% of your rents. You take your rental income, the gross rental income and multiply it times 75%, then you take that number and subtract it from your principal interest tax and insurance. Very simple, right? What happens though, when those properties hit your schedule, if your tax return, very different, very complicated, these guys can probably speak to this financial formula that is going to potentially inhibit you from getting to that number 10 goals. So it’s very important that working with someone that knows what they’re doing related to non owner occupied, so that they can set up that appropriate strategy. So for example, we’re in the beginning of 2013. Okay, you bought three, four properties last year, we want to look at a draft copy of that tax return before it’s filed to make sure that those losses that you’re going to be taking, cuz you’re going to take your depreciation, there’s going to be some maintenance, let’s say that those properties went on rented for two months last year, you’re gonna have less income to offset those things. We want to look at that draft copy to make sure that before it’s filed once that bell is rung, that’s it, it’s done. But we want to make sure that you’re positioned in that debt to income ratio to be able to achieve what goals you have planned for this year. So that’s a really important piece, and it kind of plays into the sequencing.

Panelist 26:33
So to repeat the question, sorry, she asked if you were on the fourth property, you had four properties already going on to the fifth and you’re going to buy another primary? Are you stuck that 25% down? And the answer is no, you’d fall into the primary guidelines, no matter how many properties you have, you can have 40 properties, and the primary is still your primary, you can still get away with 5%, down 10% down whatever your intentions are.

Jason Hartman 26:55
So the primary residence loan is much more desirable than your investment property loans. And it’s the same, regardless of the sequence is what he’s saying. Right?

Panelist 27:04
Exactly. doesn’t fall into that one.

Jason Hartman 27:06
We need to belabor that. Okay, you

Panelist 27:08
know that that what he said was, if you’re if you’re married, and you can both qualify separately, that might be a strategy to look at. And again, talk up front with somebody and let’s talk about the goals. Let’s talk about the options, let’s get the strategy down. Let’s talk about the sequencing. Too often, you guys start seeing the the dollar sign signs in your head and you get excited, you start signing contracts like crazy and buying property like crazy, without taking the time to look and see what you’re doing. So then it’s left up to us after the fact. And those that you’re working with, whether it be Ari or, or Sarah, whoever you’re working with to sit down and try and help you strategize with what you already have this got closing dates coming up. So it’s important that you sit down and get the strategy put together first, and decide what your end goal is, and how to get there in the smartest way possible, and not just start shotgunning property, you start doing that there’s a lot of opportunity missed. Yes, I’ve got several clients going in tandem like that. As long as you guys are not on that, I mean, you may have a different situation, how we how I have we’ve done up to this point, this how I have done to this point, if you guys are completely separate, are both separate on your on your your credit reports, filing, and I’ve actually seen him file jointly, we’ve had to file jointly and be able to make that work, we just have to separate get all the paperwork, it’s a paperwork nightmare. So if you’re all about paperwork, and you just get off on that kind of thing, you can do it. There’s a cost to getting off on 20 properties, and it’s called paperwork.

Panelist 28:33
I’ve talked on this subject for several years right now. And when I tell married couple a significant other, if you’re going to buy separate you build a wall. I mean, that’s exactly what you build a wall. So and when I say that, because what I’ll see is clients, what they’ll do is they’ll come back and they try and get sophisticated, their tax attorney, their accountants told him to set up an LLC, they do this, and the husband is 99, you know, 99.9%, owner of the LLC, and the wife’s got a 10th of a percent ownership in the LLC, guess what? You just knock your wall down. Because now all of a sudden, you’ve tied it back. I had a gentleman and that that the he created a corporation Good move, moved all of his properties into the corporation. Guess when the corporation his trust? And so guess what, guess who was on the trust him and the wife? So you’ve really got to think this thing you really think it through the end? What what what Fannie Mae is looked at and is it they’re looking at the obligation, they’re looking at seeing who’s obligated on it. Now, the other thing to take into consideration and add is if you’ve got a joint mortgage, and that’s one of the things that I look at, can this spouse qualify with the mortgage and the debt that she has? And if the answer is no, then it’s probably not going to work. But again, it’s very, very important in that that you create that division between the two of no assets. Majority of the married couples that I deal with, they have joint joint accounts. And so what we’ll do And as we’ll have the the non borrowing spouse sign Access letter that they’ve got access to the funds in the account. And then we’re good for the good for the funds. But again, there’s got to be that division, if you’ve got anything that ties the two of you together, we’re probably going to find it because somewhere it’s going to be in your tax returns, there’s going to be a document that’s floating out there, that’s going to tie the two together. So you’ve really got to be careful with that with him

Panelist 30:19
bring up the asset thing that brings another thought process into this, that’s not to say down the road, they’re not going to say, well, you guys have a joint account, and you’re making the payments on all 20 properties out of that account. So in reality, she does have a stake in it. So yes, we’re going to count that as part of it. So they’re getting really picky. And again, like I said, before moving target. So think about that, even though up to this point I’ve been able to do it with on joint tax returns, it’s you know, others have a different situation doesn’t mean tomorrow, they’re not going to pull the rug out from underneath me because they’ve been doing it on other things. So quite literally, Steve’s advice on build a wall is build a wall and make that sucker really thick

Jason Hartman 30:53
back here. Yes.

Panelist 30:55
The over 10 I want to be able to do that. I do right now I’m in a unique position of I am not affiliated right now I was was with a lender, and they successfully screwed me out of a lot of things in the last 1215 days. So I am I’m in negotiation with two entities right now one of the ones I’m working with, we’re actually working with a fund on 20. I don’t know if it’s going to come through we’re working on it. So that’s my take on it. It’s something I’m working towards, but whether I’m going to I’m going to get there. I can’t say the 10 is still an attainable thing.

Jason Hartman 31:27
So in other words, you’re saying in the mortgage sequencing issue, buy your primary residence is property number 11. Is that

Panelist 31:35
property number anything?

Panelist 31:38
Are you willing to rent out to buy the last, right?

Panelist 31:42
I don’t think for a primary, there is no limitation to how many that you can own as long as you still qualify. And that’s something that we would want to look at closely. It’s going to be individual. Did everybody hear his question? I’m bad about that. I’m sorry. Now the quote his question was, at what point do you want to buy let’s say you’re renting right now? When do you buy the owner occupied? When do you buy the primary residence? Do you buy it first? Or do you buy it last? I would say you probably want to buy it last because the primary will eat up one of those 10 spots. So yeah, number 11. Seems like a good spot to me. Because the four number after the fact for us can go to 20. So it wouldn’t, it wouldn’t mess that up. And I say rent your own high end primary and rent lots of low end properties to other people. But you already heard that one. Can you do a 1031 exchange on property? 11? Yeah, if you’re paying cash, yeah, so you can take let’s say property number 10. You mean right, and sell it and into a 1031 exchange, you’ve got one spot for conventional financing. The rest of it would be cash, or the for portfolio.

Jason Hartman 32:41
The 1031, though, really has nothing to do with it. We’re just talking about lending it’s 10 properties. So what’s the question LTV, so debt to income ratio, dti?

Panelist 32:52
Well, 50% is where we cap in other words in that I cannot get I don’t care how good your net the D you stops at 50%

Jason Hartman 33:00
desktop underwriter desktop underwriter is no acronyms folks come on

Panelist 33:04
Fannie Mae’s fanmade is automated underwriting system. So 50% if you’re 50.01, I don’t care if you got 3 million bucks in the bank, you got 850 credit score, it is not going to prove it. Okay, right now. Now, that’s not to say it wasn’t interchange, because back in 2007, and 2008, we were going 65. I mean, it was I mean, it was just it was to the point of being stupid is what it was,

Jason Hartman 33:27
of course, obviously, the results. Wow.

Panelist 33:29
Yeah, that’s true. But 50%. That’s what that’s where we stopped at.

Jason Hartman 33:32
Let me take a brief pause. We’ll be back in just a minute.

Panelist 33:38
What’s great about the shows you’ll find on Jason hartman.com is that if you want to learn about some cool new investor software, there’s a show for that. If you want to learn why Rome fell, Hitler rose and Enron failed. There’s a show for that. If you want to know about property evaluation technology on the iPhone, there’s a show for that. And if you’d like to know how to make millions with mobile homes, there’s even a show for that. Yep, there’s a show for just about anything, only from Jason hartman.com or type in Jason Hartman in the iTunes Store.

Panelist 34:21
I just I had a comment to your question. I think that what you should do before you file 2000 twelves is speak to someone and have them look at your schedule E and calculate the rental income for you figure out where you are and how it’s affecting you. And you know, you can make adjustments. You can make adjustments to your tax return before it’s file.

Jason Hartman 34:41
And what I think what she’s saying is that your dti may be better than you think if you add up all those schedule, ease and count the income. What’s the limit on how many properties I can acquire. His issue is that it’s not really the limit of 10 Fannie Mae, it’s that he’s bumping up the debt to income ratio limit So there are different limits. I got a question I don’t want to forget to ask. So just to hang on to that for a second, what about credit repair? A lot of people have done some strategic defaults. Are these all scams? or do any of them work? Do you have anyone that you want to refer? I mean, I know some of them really work out their credit repair issues. I guess since you got them though.

Panelist 35:19
There was word in our industry that for a while there, I don’t know what the the standing is now, but that it was illegal, they were actually calling the credit repair companies, they were driving them out of town faster than you can please. This has been some years ago. I’m not sure the status on it right now. But I can just tell you, the guidelines will tell you if you had issues in the past, I’m one of those, I lost several properties of short sale and things like that. The rule of thumb is for a short sale, you’ve got 24 months from the sale of that short sale before your mortgage eligible again, if by chance in that short sale process, you went into foreclosure or pre foreclosure, that two years goes to four. So if that is the case, just

Jason Hartman 36:00
okay. Let’s just define this a little bit. So if you did a strategic default, and the property went to foreclosure now that here’s where people get confused. The foreclosure actually stays on your credit report for I believe, seven years, but you can get a new mortgage in four years, even though it shows up on the credit report. Okay, so people always ask that question that confuses people. Aaron, do you want to dress the credit repair,

Panelist 36:25
just to define one the foreclosure thing that’s if you ever made it to the point of 90 days delinquent, that’s when they could go to the point of being able to go into foreclosure didn’t have to walk in and take the property, you just had to be in the position where they could exercise that had they wanted to. So if you’re 90 days delinquent, while you’re doing a strategic sale, a short sale something to that effect, then you are subject to foreclosure roll. Now, on the credit repair thing, if you’ve got somebody that can get it done, that’s great, cuz I’ve never seen it happen. I’ve talked to 1000s of these guys have come to my office, they sent me stuff I’ve never seen one actually repaired. I’ve seen people spend a lot of money on repair, but ended with the exact same thing they would have otherwise, really? Yes, that’s that’s my experience. I’ve never seen it happen. Now the credit repair that I have seen done is stuff that’s just stuff that should be repaired. They send me the paperwork. I have my credit reporting agency, cleaned it up. It takes five days to do a rescore and we’re done with it. It’s stuff that’s erroneous. But if it’s something that you committed, I mean, it’s something that you literally did that would that it should be on your credit report. I’ve not seen anybody magically erase it yet.

Panelist 37:26
I’ve got I’ve got a credit repair guy that I do work with it. But but let’s face it in that if you’re 38 lights on something and you think your credit repair guy is going to get a remote is not going to happen. If that if there’s a judgment on your report, and it’s valid. They’re not going to remove it. I mean, it’s there. What I’ve utilized my credit repair gentlemen for and that is stuff that is a ruinously been put on your credit report, I’m working with the lady in Chicago right now had a judgment and she had a rental property. She was sued by her tenant. And she interned countersuit. And so it basically wiped the judgment out, but they still recorded it on her on her credit report. And if you call if you call the Cook County Magistrate’s office, they’ll tell you that a judgment was never entered. So they give me the they give me the document, they sent it to me, guess who wouldn’t accept it, the Bureau’s will absolutely will not accept it, because it was handwritten. So now what I did was I talked to my credit repair guy, and I said, and I talked to her attorney, and I said, you guys figure it out? I mean, because I’m, you know, I mean, there’s nothing I can do. But that’s where I’m gonna utilize a credit repair. I mean, I’ve seen a lot of people that have promised the world they can’t deliver anything, the only thing they do is have you open up your checkbook and start writing a bunch of checks,

Jason Hartman 38:38
just so you know, I know there’s a ton of those that are scams out there. But some of our clients have had some success without they pay $700 or $800. And then they do like a one year program where they’re dinging the credit report agencies sending the letters and they have to respond. And a lot of times they will the way it works. Basically, I’m no expert, but the way it works is if the creditor that put the derogatory thing on the report doesn’t respond in 30 days, it automatically comes off. And so you know, it’s playing a game, there’s no question about it. But the fact is, they sometimes win,

Panelist 39:09
though, but again, where I’ve where I’ve utilized them, and that is if there’s if there’s errors on the credit report, it shouldn’t be there. Right. That’s right. Yeah.

Jason Hartman 39:16
And they’ve been really good. Our question was over here,

Panelist 39:19
the typical the typical rule is two years.

Jason Hartman 39:22
The question is how many months income to qualify for mortgage? It’s, they average it over two years, right? Yeah,

Panelist 39:27
self employed net, they’re gonna look at two years, but typically, in that you’ve got to have two years on your application. And that’s what they’re going to look at two years of income.

Jason Hartman 39:35
So if you started making a bunch of money,

Panelist 39:37
there’s exceptions to the rules. Okay. And now, where you know, you get a teacher just recently graduated, and that from college, okay, so she’s when she’s got a contract for September, they’ll utilize that I’ve got a guy that just finished up his residency. Now he’s a doctor, he went to an ER he’s only been an ER doctor for three months. Those are,

Jason Hartman 39:55
those are pretty secure jobs though. Medical, you know, Doctor, dentist, that kind

Panelist 40:00
But the normal role is two years, right? Oh, so

Jason Hartman 40:02
that’s a good question. So to do a cash out refi How long do you have to have that loan or let it season? That’s the terminology. How long do you have to let the loan season before you can do a cash out? refi? Or can you even do a cash out refi anymore? Does anyone have any equity do cash out refi, but

Panelist 40:20
cash out refinance, you’ve got got to be entitled for six months. And the other thing is, you cannot own more than four finance properties. And so that’s very, very important to do. Now, Fannie Mae came out about a year and a half ago. And with with investors that pay cash for their properties, now they’ve got a program is called the delayed financing exception, which states that if you pay cash for the property, you can get your original purchase price back, plus rolling your closing cost, and we can utilize the appraised value to drive that loan to value. You’ve got a six month window to accomplish that.

Jason Hartman 40:53
Oh, that’s really interesting. So this is right away.

Panelist 40:55
Yeah, correct. Yeah, yeah. So I said, You’ve got a six month window that completed in once you go past six months, then it falls. Let me

Jason Hartman 41:02
frame this for people. So if you buy a property with cash, and I know a lot of you are doing that, and you want to finance it, this is not a refinance. It’s a delayed financing, you’ve acquired the property with cash. And then you finance it after the fact. And you have up to six months to direct. But is it 10 loans for loans, you can

Panelist 41:21
have up to 10 loans. And so that’s what that’s what the variation comes in. And that’s the distinction between that and an actual cash out refinance. Okay.

Jason Hartman 41:28
And shaylee, it looks like you had something to say about that.

Panelist 41:30
Yeah, just I just wanted to clarify the wait time on the delayed financing rule, there is no seasoning, there’s no six months, you have to wait or have ownership for six months. And you can actually use the delayed financing rule. Even if you don’t have more than four finance properties, you could use that for property two or three so that you wouldn’t have to wait. And the rule of thumb is is that 70% loan to value. And let’s say that your property appraises for more than what you paid for it. You figure what 70% of the appraised value is as long as you’re not getting back more than what you put into it originally, you could theoretically get back every penny that you stuck in. If it’s on the HUD,

Jason Hartman 42:05
if there is so the question was does it sorry, rehab in the purchase price? And yes, if it’s on the HUD, side of escrow or settlement, is that? Okay, I’ve got a

Panelist 42:16
question. One thing that a ridiculous amount of paperwork still applies. Yeah. So just because you own it, for some reason, people getting the idea because they already own it, and that it’s worth more than what they paid for it that all sudden, it lightens the load, no, the load is still just as heavy if not heavier.

Jason Hartman 42:31
Now, here’s one that I really want you to address, because I know everybody in this room, you know, one time or another is having a challenge with this one. I know our local market specialists are and that is the issue of appraisals. Ah, nobody’s asked this. This one needs to be discussed for sure. So appraisals are they’re just tough. It seems like the banks are just there. They’ve overcorrected. At the height of the financial stupidity, they were valuing properties way higher than they should have been. And now the pendulum instead of swinging to the middle, it swaying back completely the other way. And property value is there, and they won’t even give you an appraisal so you can get the loan.

Panelist 43:09
Yeah, that comes up. A lot of some of the changes to the industry include big changes to the appraisal h back h Vcc. And what does that mean? Home valuation?

Jason Hartman 43:21
Oh, someone actually knew that. Who said that? Okay. Are you in the business? Okay, well, no acronyms, folks.

Panelist 43:32
So now all all appraisals are ordered through third parties called a MCs appraisal management companies, all of them, one of the things that we’ve been able to adopt is we have our own self managed amcs, in many of the markets that we’re in. So we have been lucky in being able to do that, because what happens is, is that we maintain just a little bit extra control. When you’ve got the problem. I think, in a lot of cases, with the appraisals coming in low or having issues with that, as you’ve got appraisers that are first of all, they don’t really understand rental properties, they don’t understand the rehab that goes into it. They’re scared of their own shadow these days, because of all the new regulations. And maybe they live 100 miles from the subject property, they don’t know the area, they don’t know the neighborhoods. So it’s, it’s problematic. So we were able to adopt our own self managed AMC. And in certain markets, what we’ve done is we’ve gone to our vendors and our agents that are on the ground and said, give us five or 10 appraisers that you know, that are within a 10 mile radius that know your work that know the market that know the neighborhoods, and we put them on our panel. So it’s still a random selection. But we’ve narrowed the playing field a little bit so that we’re getting nine times out of 10. We hope, good solid appraisals. I mean, it still happens but that’s helped us kind of combat that kind of touchy issue. Anybody else

Panelist 44:48
lucky to have the same situation we self managed our own ordering. Talk to the people in marketplaces, find out who is doing a good job in that area. Have them send those names in have our appraisal ordered. review them, put them on the panel. Again, we can’t pick the exact appraiser. But at least we’ve been able to narrow it down to the six eight people that know what they’re doing in that area. That is a huge difference. So I haven’t seen a lot of problems with appraisals lately. I don’t know about you guys, I don’t know I’ve had one or two in the last five, six months that’s had this come in lower than the than the purchase price. I think also, the individual selling the homes are getting realistic about what they’re selling it for. And the appraisers that we’re choosing are a little bit better than what we had in the past.

Panelist 45:29
We don’t we don’t have our own internal AMC, we actually use a company out of Canada called solidified. But what I what I’ve done, and that is every one of the markets that I work in, and that I’ve done basically the same thing, set up a panel, we put them on the podium on the approved list, and those are the only people I traveled all my markets, I know all my appraisers. And and they have to understand because the product that you folks are buying is unique. And when I won’t mention any names here, but when we had some of the other appraisal management companies that were out there, what they would do is, you know, you’d get an appraiser would go out there and say okay, so if you buy it for 40, you put 10 into it, it’s only worth 50. And that’s not the case, because a lot of times these may, you know, these properties are bought or foreclosure auctions are bought from banks, the banks themselves that when they sell and they can’t make a profit, they can only sell it for what’s worth what the property is owed to them. So if they’ve got a property that’s 40, that’s worth 60, there’s a perception or at least some equity that’s in that property, that’s not being taken into account. And so I ensure that the appraisers that we have in that, you know, they recognize that they they’ll get the information as far as like the sales history, they’ll see that is and we’ll get, you know, get some good values. The other thing that I see right now, and as I’m seeing a little bit more prevalent in we’ve seen with some, you know, other companies is is sometimes lenders charge, you know, they’ll have two appraisals done, or maybe they’ll do a desk review. Now, one of the issues that you have right now is when you send an appraiser, another appraisers work over to see like a desk review, or he may not see at the same. So I’ve had a few issues in that area, not a lot of them. But we can still continue to see that because an appraisal really is it’s just an opinion of value. But sure,

Panelist 47:11
the question is, he’s getting ready maybe to file his 2012 tax return. And I had mentioned earlier that it’s a good idea to have someone if you’re if you’re building your strategy for where you want to go with your your real estate investments, before that tax return is filed, let us take a look at it. Because the computation for figuring out that schedule a rental income is very specific. And if we don’t look at it, and tell you where you stand, then you may file and be put out of the game for for qualifying this year. Because it’s very difficult to file a tax return and then say, oops, I want to amend it, I, I probably wouldn’t mess with something like that you want to if there are going to be changes made, maybe take less of the the loss last year and forward it over to 2014 if it means that you can continue to invest this year. And that’s the primary goal, then that’s probably what you want to do. And we’re really good about I mean, that’s what we do, we should be able to look at your scheduling and tell you that, um, I would I would rather talk to you about it just so that we can we can get get down to specifics, I’ll answer your questions different to try and answer them. Yeah. Well, and and, you know, I’ll, we’ll talk

Jason Hartman 48:17
sounds like a backroom deal here.

Panelist 48:20
But ultimately, that in that situation, your accountants trying to get you to pay in a position to pay the least amount of taxes by having they’re trying to

Jason Hartman 48:27
get you to pay more so you can qualify for loans.

Panelist 48:29
Yeah, trying to get to the most write offs, we’re trying to show you where sometimes those write offs can impede your ability to show income.

Jason Hartman 48:35
And that is very legit.

Panelist 48:37
Well, let me repeat it, why are theirs? Why are the rules switching so much? So when he started on his path to 10, at one, two, and three, the rules were one way now is getting closer to 10. It seems like it’s changing. He has to provide things differently, things are getting more difficult. The reasons being is we have to keep adapting with what’s happening in the market in the sense that we were not adapting that’s we’re adapting to Fannie Mae and the rules as much as you guys are. What’s happening is you’ve got fraud schemes, things like that. What I’ve been running into, personally was one fraud scheme in a particular area, a lot of some lenders had to buy back and eat some things. So they take a look at and say, What are the elements of all those loans that we had to eat? That several million dollars are going to take whatever element that is and apply it to our guidelines across the board. Now, is that good strategy for them? I don’t think so. But what they’re doing, because what is one What is a wounded wounded animal do it backs into corner and bites everything. That’s what they’re doing right now. It’s a knee jerk reaction. So some of these responses you’re gonna see, you’re gonna see changes that we won’t even know until we get your file into underwriting, it will look perfect. We’re proud of ourselves, we finally got one of these things built because some of you suckers have that deck, and we send it in to get underwritten and it comes back with more conditions than we’d ever seen. And because of situations like that, they adapt things before we have a chance to even see him because of the fact that things go south on other loans. So they’re constantly evaluating the loans on a minute by minute basis. As they take them backwards, they foreclose on them and add those elements into the guidelines and keep adapting them. That’s why I keep saying it’s a moving target. Well, the question is, is you guys will leave here with three people’s contacts? And how do you go into the multiple different markets that you’re going to go into, and not spread yourself between three different people four, or five, because you think one may be better than the other. What I always tell everybody is, it’s a relationship business, you it’s gonna suck, whether you work with me, him or her either, either, it’s just not going to be fun. So pick who you want to deal with, you’ve got to pick up some because when it comes down to it, you’re both you’re going to be standing in the ring next to one of us on our knuckles, we’ll be up there gonna be bloody, we’re going to be hurting, and we’re going to be tired. But you’re going to get to the finish line somehow, but pick who you want to be fighting with. That’s what it boils down to. We’re all bound by some rules. So do you want to fight with me? Do you want to you want to be in the in the ring with me, by your side, her by your side? Or Steve, by your side? It’s up to you. That’s what I say.

Jason Hartman 50:54
Let me mention something about that property tracker. That is, by the way, if you go to Jason hartman.com, and you click on Resources, and you scroll down, property tracking and analysis software, that’s where you get property tracker in holds your entire 1003 loan application. And your schedule of real estate owned, it makes it so much easier. Just use property tracker, I’m telling you, the really you need to use it. So Zack, I think what’s next?

Panelist 51:25
Well, depreciation is an item that you can add back. Um, what I what I’m going to do is I’m going to expand upon the tax returns, you know, a lot of times the clients, obviously, I’d love to see a draft, I don’t get to, you know, I don’t get them. And so what I’ll do is I’ll get the finished product. There’s some tricks that I shouldn’t say tricks, but there’s some things that I look at that go back, first thing I go back is I go back to the depreciation schedule and look at when the property is placed in service. So I’ve had people come to me and says, My lender says, You know, I bought it in September, that because it’s on a tax return. And so I’ve got to utilize that figure. And that’s not true, there’s a certain amount of common sense is allowed, because let’s face it, my job or our jobs up here are necessarily disqualify us to try and get your loan. And my I guess my, my comment to the customer, or the underwriters is when I’m looking at this, if you bought a property in September, I know right off the bat, when you had repairs, you probably have some additional constant, you’re not going to incur that one time expenses. And so you’ve had some added expenses that aren’t going to be the norm. The other the other thing that we look at too, and that is is it if I utilize that figure eating and so if I’m only utilizing formulas, is that really a true representation as far as the property’s ability to cash flow? And the answer is probably no, it’s probably not. So in my in my side, what I’ve been able to do, and that is substitute and utilize a rental agreements in those situations. So there’s a little bit more I really don’t feel that when I look at a set of tax returns that I’m looking at somebody there’s my place to tell you how to how your accountant to do your tax returns, because one, I’m not licensed. I’m not definitely not going to prison for that one. But you know, it’s so, you know, my expertise is landing your account and your account, he does your tax returns for you, you know, I’m going to look at him if it works, it works now. Can I give my two cents? Absolutely.

Jason Hartman 53:17
Okay, I think that’s good on that one. Fernando gets the last question. And we’ve got to adjourn for dinner. Okay, so the question is basically, investors, if you’re following our plan, you want to diversify. And maybe you want to be do 10 properties in three different markets, that would be kind of a logical amount of diversification, in my opinion. And the question is, if you go with one lender, and do three properties, and another lender and do four and another lender and do three, there’s your 10. How do you do the closing order of those? Can you do all those apps at the same time pick Tim this weekend? And do that? Is that what you’re getting at? Yeah, you know, in other words, you’re you’re going to be in the purchase process, and closing them all over the map, basically. Yeah,

Panelist 54:04
the answer is yes, you can do that. Do I advise that? No, I think that for ease of brain damage or or limiting brain damage for all of us, you probably want to do some due diligence. And I believe all of us can land in all the markets that you’re going to be in correct? Yes, yes, we’re going to be in all those different markets. So what my recommendation would be is speak to each of us and or a few others, find who you’re comfortable with and that’s where you want to stay. It comes down to ultimately you can do this but it’s going to be very challenging for you to do so. I think you’d be opening up a can of worms that I don’t, I don’t think you would enjoy that process of already a very convoluted process as it is. And the other thing is is very important, you guys this is so important. disclosure. If you do do this, if you decide you want to buy two from Memphis and I’m going to close those for you and and two more in Missouri and Steve is going to close them. It is highly important that you disclose to all of us what going on, because you could lose deals by not disclosing. That’s really a big deal. Fannie and Freddie have gotten really weird about that.

Panelist 55:07
So that type of situation, you’re not going to hide it. It’s like my mom, she always knew. So we’re going to find out, and then it’s going to slow, it’s going to slow down your process. So really a worst case scenario, you tell us that you like chocolate, vanilla, and strawberry. And you’re going to do all three. And so what we’re going to do is, we’re just going to conference call a lot. And we’re just going to need you to say, Hey, you guys are open to talk. And we’re going to share information like crazy that we would get them done on time. Otherwise, I find out two weeks later that she’s got a couple and then two weeks later, I find out he’s got a couple of Well, I’m delaying the heck out of your loans, because I have to keep updating your paperwork. So if that’s the situation, like you were told, just disclose, if you disclose everything and keep it out in the open, and we’re able to do our job because everything’s in the open, then it makes it much easier for you to hit your target date. It’s when we have to start finding stuff out two weeks later, three weeks later, that it just becomes a maddening mess, and you start to hate us,

Jason Hartman 55:56
Steve, any comments? And then we’ll wrap up this is it?

Panelist 55:59
Well, it definitely is a headache. And yes, you can do it. You know, I’ve had a couple of situations now where there’s been a couple of states where I’m not licensed in, they’ve tried to buy a couple properties, they’re they’re doing a couple properties with me say like in Memphis, and their purchase transactions, when I tell him everything’s got to close at the same time, they just have a cow. And it says and working with another lender is not always the easiest thing to do. Because a lot of times those other lenders when these two can probably agree with me on this one. And a lot of the people that out there in the industry just don’t have our level of expertise and just don’t understand how to get this through. So a purchase transaction, they all have to close at the same time. And I know I get a lot of people to come back and say why is that? And I said because really, the only way to paint you paint that picture of you financially is to have them all closed. That means I’ve got to have a settlement statement on the ones that you’re closing with the other lender in the first payment letter to be able to calculate your payments. The other thing we’ve get into an ad if you buy if you buy buy a property cash, I still need to know about it, because they still need to hit you for the taxes and insurance if you utilize private money. Now that’s a little bit different story. So if you’re buying a cup, if you’re buying for properties with private money and they’re spread out, I’ll hit you with the private money payment. I’ll hit you with the taxes on that property. And then I can close a mic and I can stagger to the close.

Jason Hartman 57:19
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