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Old 10-13-2005, 06:29 AM
prescanmartella
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Default Real Estate Road Block

Hello. I am new to the group, I am just now getting more active with the online
community
of real estate investors. So greetings and looking forward to getting to know
you.

I am in the beginning stages of this career and the education part was going
well, but the
actual get out and do part is struggling. My brother, however, is already ahead
of the
game and owns three duplex homes, each one a rental, each one very much
appreciated in
value since the time of purchase. Because my brother is one kick butt dude, he
wants to
sell one of them to me! YAY!

So I am all excited because this is going to boost my real estate career into
a.c.t.i.o.n.
Not only will be acquiring a property that is located in one of the highest
appreciation
rates in Beaver County, which doesn't say much for the other areas as the
appreciation rate
is only 4%) but I am acquiring a property for only 80% of its entire value!
Yup! He is the best brother in the world. So right off the bat, I have 20%
equity to use for
downpayments on further real estate purchases. Ah life is good.

Until ..........................you go to get a mortgage.
That's where the real estate road block comes in.

Initiallty, the bank that currently holds the note on the property said they
would let me:

B) Use the 20% equity that will be left in the property as downpayment
collateral. (They
were calling it equity gifting as my bro would be "gifting" me this 20%
downpayment.

C) Give me a 5.875% interest rate! Score! Making my payments low enough where
the
whole rental income covers the mortgage thing would happen.


D) AND....du du du .... they were gonna let me roll the closing costs in with
the loan, and
my awesome bro even offered to pay for all of them! Of course, that would just
mean he
would use some of that loan money to pay the closing costs. (Which banks like to
call
them "fees" which make it sound as if they are something tiny and petite.
They're not.
They're monstrous.

ANd the closing was going to be quick and easy. That is until they found out
that this
property was an investment and that I wouldn't be living in it, or should I say
sleeping in it,
since the fact that I use the upstairs as my office didn't seem to give me any
leverage.
Even my interest rate would be higher, so that rental income that was supposed
to take
care of the mortgage debt wouldn't be quite up for the job.
Oh oh and I forgot THE BIGGEST THING: I had to come to closing with a
certifified check,
which couldn't be from MY own bank account, with 20% down. And they wouldn't do
the
"equity gifting" as down payment collateral.

Oh oh oh ...yeah...AND they only offered TWENTY year terms for investment
properties.
So THIS is what Carlton Sheets and Dolf Diroos and Wendy Patton DON'T tell ya
when they
are teaching folks about the game.
Frankly, I don't blame them. This scenario wouldn't excatly be a good selling
point when
marketing the study courses.

So any mortgage brokers or lenders or disgruntled bankers who want to share some
inside
tips on which direction I should go with this one?

And that, my friends, is my first Real Estate Road Block

Thanks for all your replies and like I said before, I look forward to getting to
know the
community.

April
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