Love Austin Homes Investing Blog

A Mexican couple is looking at buying a condo/apt/townhouse in San
Antonio as a weekend home. Since they are Mexican nationals, they have
no Social Security numbers or an available credit report in the US, or
any other way that we would consider standard to evaluate their credit
and prequalify them for a mortgage loan.
However, they are financially responsible and very well off in Mexico,
and they will have no problem presenting paycheck stubs or letters from
their banks, employers, credit cards, etc, verifying their good credit
to any US lender.
Have any of you worked with Mexican nationals before? What are the
requisites/paperwor­k that they need to provide in order to apply and
qualify for a mortgage loan?
They are coming up to San Antonio from March 1st through the 6th with
the intention of looking at properties and making offers, so they want
to get the prequal process started as soon as possible prior to their
trip.
Any advice would be greatly appreciated!
Thanks,
Helena

ANSWER

Helena,
You are looking for something called a “Foreign Nationals Mortgage”. Just do a search on-line and/or call some mortgage brokers.

Lending is become so competitive, that many lenders are now starting to offer these products, although because of higher risk, they will likely require a large down-payment, and only loan up to 70% Loan-To-Value.

Interestingly enough, there are also a growing number of loan products available for “Undocumented Aliens”. These are called ITIN (Individual Tax Identification Number) Mortgages, and require the illegal alien to get an ITIN number from the IRS (apparently you can do this without getting deported). Like a social security number, an ITIN allows someone to pay taxes.

Phill

Can anyone recommend a good contractor or company that can re-plaster a pool for a good price? Also need to get some clean-up work on the deck, and some basic electrical to get the pool light working. Pump and all is in good working shape.

Thanks,
Brad

ANSWER

Brad,
I use Apex Pools. The owner’s name is Gary Puryer. You can reach him at (512) 656-8460.

I recently had to rebuild a pool with several problems and I called every pool company in town. Needless to say, half of them never showed up to their appointments, many of the bids were crazy, and the rest were so unresponsive, I did not hire them. Gary was professional, solved every problem I threw at him, and gave me a fair bid.

Gary is the man. Tell him I sent you.

Phill

Phil:

I am writing to you directly for several reasons. I have been reading your posts for almost a year. My impression is that you are one of the most successful investors in Austin and your emails are always polite, articulate, very informative and to the point.

I moved to Austin last year and just made a verbal offer that was verbally accepted yesterday to a FSBO for a home that will be my residence. Unfortunately, the seller does not have any contracts, thus my reason for writing to you.

Since I have purchased many homes in other states, both for personal and investment reasons, I don’t think I need an attorney, but I do know I need the proper contracts. I have a copy of the Texas Real Estate Commission contract, but was wondering what specific contract and amendments you recommend and if you could share a copy of what you would use.

If I do need an attorney, Charles Brown was highly recommended. Is there another you would recommend? Also, I was planning on using Brett Reed or HomeCritic as my inspector. I noticed you use Eduardo Reash with Wells Fargo. Any other inspector, banker or mortgage broker you would recommend? Any other suggestions?

I know I am asking alot of questions of you this morning, and please know that I thank you in advance and appreciate your help greatly.

Sincerely,

Teresa

ANSWER

Theresa,
I only use the standard TREC contract. On some occasions, I use a subject-to contract (for assuming a loan) or other special purpose contracts depending on the situation. For your application the standard TREC contact sounds perfect.

As for addendums, you will need an HOA addendum if there is an HOA, and a 3rd party financing addendum, if you are getting a loan. There are other addendums also listed on the TREC contact that may or may not be of interest.

I always recommend you also have the owner fill out and complete a TREC seller’s disclosure form. It states what is and is not included, and what works and what does not work. It’s for both of your protection. It also requires the seller to list known problems and past inspections.

In general, a realtor will complete all of this for you. By not working with a realtor, you may miss a thing or two depending on your experience. In most cases there will be caught by the title company and/or lawyer. If you need a lawyer and a title company all in one, you might try Wally Tingley and Associates. I don’t use them, but a lot of investors in your situation do for exactly this sort of deal.

I also do my own inspections, but I’ve heard of Brett Reed and HomeCritic, and both are good.

As for lenders, Wells Fargo is great for this, but if you want to look at a larger variety of products, I would suggest a mortgage broker – Carrie Richards 512-258-4605. She can make any loan happen.

My only significant remaining concern for you on this is that you are paying the right price. FSBOs are notoriously miss-priced. Usually overpriced. Please make sure you get some advice as to what the home is worth in the event that you don’t have the expertise to determine this on your own.

Regards,
Phill Grove

I need some advice. I just closed on a property last Friday. The seller had abandoned the property and wanted to sell quickly and leave town for various personal reasons.

Every few days he would contact me from a different cell phone number and ask me to write it down since his cell phone was disconnected and he was staying with various friends around town in the meantime. Throughout the entire option period the seller had been telling me that he was making arrangements to come collect his personal belongings and have them placed in storage. At closing he told me that he was coming for them on Saturday. Suffice to say, Saturday has come and gone. I have tired to contact the seller numerous times at the various contact numbers that I was given, but everyone says he skipped town after he picked up his check from the title company.

Now I have a 2 car garage filled with literally an entire house-worth of furniture, clothes, personal items, yard equipment, etc….

Personally, I want to keep some of the nicer pieces of furniture, put all the comic books and collectibles on Ebay, Craigslist the rest of the stuff, then haul whatever’s left to the dump, but I’m not sure if there is a “right” way to do this, or if there would be any legal consequences in case the seller decides to just show up out of the blue a month from now and expect me to hand over his things? Sould I consult a RE lawyer?

I’m sure some of you must have had experiences with seller’s leaving personal items behind. Could anyone offer some advice on how to proceed?

Thanks!
-Mark

ANSWER

Mark,
I had a similar situation, and my attorney suggested I do an eviction. Yes, I know there is nobody left to evict, but you still are safer evicting the possessions.

The reasoning is this: If you buy a home at auction that still has people in it, or if you, say, buy a property with tenants in it and want the tenants out, in either case, you have only legally transferred ownership but not possession. Going through the process of posting an eviction notice, waiting the appropriate few days, and carrying the stuff out to the curb will provide you with the appropriate cover in the possible, though unlikely event that the guy comes back after you.

My attorney also told me some funny stories about throwing out an old dressers. Apparently, there is a chance that the previous owner will come after you in court asking for restitution, complaining that the dresser was a rare antique, and that it had gold bars and expensive jewelry in all the drawers. So, if you ever witness am eviction, and someone’s stuff being carried to the curb, be sure to check the dresser drawers – apparently they are always filled with gold bars

Would I do an eviction every time? No, I’d try to judge risk on a case by case basis.

Phill

Has anyone done a “find and assign”? If so, this is my question; Is
it necessary for the eventual buyer to know the price I purchased the
property for? I’m assuming that there is a simultaneous double
closing in which my option contract is taken by the title company and
processed along with my contract with the seller and I’m cut a check
for the difference and the buyer is none the wiser (as long as he’s
getting the property at a price he can live with).

ANSWER

In a simultaneous double closing, the end buyer IS NOT exposed to any of the terms of your purchase contract (other than when you closed), unless you allow them to be. In other words, you could purchase a home for $1 in the morning, and turn around and sell it for $100K in the afternoon, and you would receive the difference less some transfer costs (escrow and nuisance fees, and the delta in title insurance expense plus a title insurance transfer fee).

The problem is… most lenders will not fund this type of transaction, or if they do, they may ask to see the terms of the purchase contract (which you don’t have to provide), and in some cases, they may even have rules about how much profit, if any, you are allowed to take (typically <15%). So, if your end buyer is buying with a loan, these deals will get very tricky. There are work-arounds, but that is a very advanced topic…

If you do an assignment of contract, everything is transparent from the start. Essentially, the end buyer is putting their name on your contract and excepting ALL TERMS (not just price) of your contract. If you are taking an assignment fee, I recommend you document that fee in a separate contract/agreement. The assignment fee can then be transacted by the title company at the closing (with everything transparent)­, however, THIS TOO can (and probably will) trigger a red flag with the buyer’s lender, who may well not fund a deal that includes an assignment fee. The work-around here is to transact the assignment fee outside of closing. Unfortunately, this means it probably can’t be financed, which means many buyers won’t be able to pay it.

In the end, the easiest way to flip a house is always to a cash buyer… like me

Phill

I’m seeking some advice on how to structure, and what to be careful of in refinancing an all cash purchase.

In the past when buying RE I’ve put 20% down on a unit. My real estate criteria / investing system requires that I have 20% equity in a property for any number of reasons: avoiding PMI, better rates, ensure that the property cash flows, to protect myself against the vicissitudes of life, etc. My system is to hold units long term (10-20 years) as rentals. In the questions that follow I’m thinking of a single family detached unit.

This time I’d like to buy a unit for all cash, and at some point after purchase, i.e., within 30 days, I’d like to get my cash back out of the property. What should I consider in this scenario?

Is there a seasoning requirement?

I.e., do I need to own the property for some time before I can refinance? I’ve heard that I might but I don’t know under what circumstances / type of loan, etc.

Suppose that I buy the property substantially below market (e.g., 60-70% of market after fix-up costs) can I refinance at 80% of the unit’s appraised value? Again, what seasoning restrictions might exist in this scenario?

Are refinances more expensive, or less expensive than traditional financing?

Esp. when considering there are two transactions: one to purchase the property for all cash, and one to refinance the property.

Are refinance rates generally cheaper or more expensive than traditional loan rates?

How might refinance rates differ for owner occupants vs. investors?

Forgive me if these are naïve questions, because all my investing to date has been normal 80/20 type loans.

Thanks for you consideration and responses.

Brian

ANSWER

Brian,
Unfortunately, in Texas, refinancing is a royal pain in the rear.

Almost all lenders will have seasoning requirements and almost all lenders will refinance based on the purchase price and not the appraisal. I bought a home for $150K that was worth $250K, and I still had to put down $30K to avoid PMI. In other words, I could only get a $120K loan on a home worth $250K. Crazy!!

The only lender product I know of that allows you to easily get your cash back is a Wells Fargo loan that will lend up to 90% of the appraised value of a home you already own. The only catch is that you have to own it for 6 months, and they will only refinance 4 properties per customer with this product. If you need this product, I recommend my banker, Eduardo Reash, 794-4026.

Other products I have seen loan only lend 70% or 80% of the appraisal, or 80-95% of purchase price and require 9-12 months of seasoning. If someone out there knows of some other loan products for this type of refi – please let us all know.

Phill