Post: #1

Alright fellas, I am going to drop some real estate info for those of you looking to make some moves in Real Estate investments.

Premise: Using first time home buyers programs to establish a real estate portfolio without using too much of your own capital, while taking advantage of favorable interest rates/terms.

Limitations: This applies to the USA only. Is a one time deal that can jump start your investment portfolio.

Legality: This information is solely for entertainment purposes only. This does not constitute advice, legal or otherwise.

Capital Required: USD $10-20K (depending on Locality).

Credit: Fair to Excellent.

Strategy: In order for you to execute this strategy, timing is of the essence. The goal of this strategy is to buy and hold multi-family cash flow producing properties that will start providing you with income from the first day. I recommend that you look at 3-4 unit (triplex or quads) properties for investment. You should be looking at several bordering states for these types of properties (more on that later).

Basically, there are numerous first time home buyer programs (HUD, Fannie Mae/Freddie Mac, State level) that allow buyers to purchase real estate (1-4 units) with minimal down payments (as low as 3%), many with no closing costs (they are rolled into the loan). Most importantly, the interest rates are lower and the underwriting standards (weaker credit, smaller assets/saving requirements) are looser.

You should start looking for not 1 but 2-3 multi family properties (preferably in adjoining states). Make sure that you have obtained preapprovals from 2-3 different lenders/programs. Instead of making an offer on 1 property and being happy that it was accepted, you will be making offers to get 2-3 multi family properties. Timing here is critical: You will need to have the Purchase and Sales agreements staggered in such a way that all two (or three) closings are within a 30 day period. You will want this to be the case because 1. Mortgages don't show up on the credit reports until 30 days after, 2. You will need to prove a first time homebuyers status at each closing.

I recommend different states because you don't want be putting in 2 loans in the same state that can be tracked back in their computer system. Also try to mix between federal and state programs. Once you have closed on the properties, the lender will not be checking your credit reports.

Advantages: instead of starting out with 1 3-4 unit deal, you will have a nice portfolio of 9-12 units from jump, having more units = less risk (if you have purchased them correctly) , your $10-20K down payment goes farther.

Disadvantages: You could end up with more unit (= tenant headaches) than you bargained for. You could be caught on your second or third closing, which would entail you losing the deal. Stress of staggering the closings within 30 days (shit happens, inspections delay things, issues pop up).

Risks: Basically you'll need brass balls on making these deals happen and be prepared to be busted. If you do get caught, it'll be before you sign the papers at closing, which means that you're subsequent deals will fall through but you won't be in trouble with the law because you had not signed anything except for the preapprovals. Even with a pre-approval, you could justify it by saying that "I WAS a first time home buyer at that time."

I am happy to answer any questions/concerns.

Post: #2

(10-29-2012 09:45 AM)BostonBMW Wrote:  Risks: Basically you'll need brass balls on making these deals happen and be prepared to be busted. If you do get caught, it'll be before you sign the papers at closing, which means that you're subsequent deals will fall through but you won't be in trouble with the law because you had not signed anything except for the preapprovals. Even with a pre-approval, you could justify it by saying that "I WAS a first time home buyer at that time."

I am happy to answer any questions/concerns.

How about the fact your getting into a investment deal with the Government?

One thing the Govt is good at is loosing money, they are even better at loosing other peoples money.

I'll take a Gov't contract to offer them services/expertise but its a fools game getting into bed with them with your money.

No closing costs? So essentially a 103% leveraged loan/deal WITH THE GOV'T?

Give me that 10 Grand. I will do a better job with it.

Post: #3

Pretty sure this is mortgage fraud, and if you pile on any phone calls or mailings, it's wire and mail fraud as well.

WIA

Post: #4

(10-29-2012 10:14 AM)kosko Wrote:  

(10-29-2012 09:45 AM)BostonBMW Wrote:  Risks: Basically you'll need brass balls on making these deals happen and be prepared to be busted. If you do get caught, it'll be before you sign the papers at closing, which means that you're subsequent deals will fall through but you won't be in trouble with the law because you had not signed anything except for the preapprovals. Even with a pre-approval, you could justify it by saying that "I WAS a first time home buyer at that time."

I am happy to answer any questions/concerns.

How about the fact your getting into a investment deal with the Government?

One thing the Govt is good at is loosing money, they are even better at loosing other peoples money.

I'll take a Gov't contract to offer them services/expertise but its a fools game getting into bed with them with your money.

No closing costs? So essentially a 103% leveraged loan/deal WITH THE GOV'T?

Give me that 10 Grand. I will do a better job with it.

I can't speak for other governments, but getting US government deals are lucrative, however fraught with red tape. Unless you know and can game the system, it requires higher level expertise, contacts that need to be built up.

Post: #5

(10-29-2012 10:20 AM)WestIndianArchie Wrote:  Pretty sure this is mortgage fraud, and if you pile on any phone calls or mailings, it's wire and mail fraud as well.

WIA

I am neither confirming or denying that matter. Caveat emptor.

Post: #6

Its a Bear Trap that's why its so lucrative.

Post: #7

(10-29-2012 10:58 AM)kosko Wrote:  Its a Bear Trap that's why its so lucrative.

Agreed. Bust out a data sheet chief, if you have some tips.

Post: #8

I'm Canadian so I can only over generally views on stuff. I don't know specifics on the American system I can only view trends on a Marco level. But getting into bed with the Gov't on a * illegal* deal is asking to have your ass roasted.

IF you have you eye on RE I would go for a REIT. You get returns payed out with standard appreciation in the fund. No headache of tenants. They do all the hard work for you and only go after performing sectors of the market. Most REITS if they wern't slumming it in Florida or Vegas are still hold up well in the USA. The money in those days was to sell the debt, not to manage to properties and collect leases.

If your handy then go after small multi-rentals. If your in Boston (Assuming from your name) go look at dumpy properties along corridors that will surly see increases. I do know Boston well but the MTBA is running expansions which will increase property values in the expansion corridors ten-fold. This Blue line is just waiting for funding (the hardest part)

Blue Line Expansion

This is how the big dogs make money. They get insider information and are scooping up dumpy tracts of land the Gov't comes around and buys off them to build stuff like Transitlines or Gov't complexes. Or they are buying complexes with the intention of changing the Zoning and then up-selling it to somebody that wants build a larger Apartment complex. This information is *generally* accessible to the public, if not some cash to a firm, or paying some nerd a grand at MIT or UMASS Development and he will get you all the info you need.

Post: #9

Wait, so is this legal or not? Defrauding the government out of hundreds of thousands of dollars can't be good for your freedom.

Post: #10

(10-29-2012 11:25 AM)kosko Wrote:  I'm Canadian so I can only over generally views on stuff. I don't know specifics on the American system I can only view trends on a Marco level. But getting into bed with the Gov't on a * illegal* deal is asking to have your ass roasted.

IF you have you eye on RE I would go for a REIT. You get returns payed out with standard appreciation in the fund. No headache of tenants. They do all the hard work for you and only go after performing sectors of the market. Most REITS if they wern't slumming it in Florida or Vegas are still hold up well in the USA. The money in those days was to sell the debt, not to manage to properties and collect leases.

If your handy then go after small multi-rentals. If your in Boston (Assuming from your name) go look at dumpy properties along corridors that will surly see increases. I do know Boston well but the MTBA is running expansions which will increase property values in the expansion corridors ten-fold. This Blue line is just waiting for funding (the hardest part)

Blue Line Expansion

This is how the big dogs make money. They get insider information and are scooping up dumpy tracts of land the Gov't comes around and buys off them to build stuff like Transitlines or Gov't complexes. Or they are buying complexes with the intention of changing the Zoning and then up-selling it to somebody that wants build a larger Apartment complex. This information is *generally* accessible to the public, if not some cash to a firm, or paying some nerd a grand at MIT or UMASS Development and he will get you all the info you need.

Thanks for the tips. I am definitely taking action on sine insider tips in the New England region not just Boston. In fact most of Boston has already "come up" in terms of prices and it will only get worse (higher prices).

So I have shifted towards satellite cities. My problem right now is getting enough capital for each deal, while maintaining some reserves. Working two jobs to save as much as possible. Already seeing RE dividends that being plowed back into new deals.

Post: #11

speeding isn't legal either. A think a little more expansion on risk and consequences is warranted. I have worked for state government before and it really depends on the grant system, some are well audited, some are not. Example, the economic development commission in Wisconsin did a re-org and someone forgot to assign staff to support a grant program with $60 some million dollars in outstanding loans. No monitoring, no checks for repayment, no checks for fraud, nothing. I managed a 50 million dollar budget and we had some shady grants that we were obligated to turn over to private parties with no audit and only a slight audit risk every 10 years.

Gaming a poorly designed grant system is ok if you're legally confident in the loopholes your using and that, from the state employee's perspective seems to be a function of your risk aversion, how good your lawyer is and how well connected you are to a state representative or senator who will pressure the overseeing agency to not pursue the issue.

Post: #12

(10-29-2012 03:31 PM)RioNomad Wrote:  Wait, so is this legal or not? Defrauding the government out of hundreds of thousands of dollars can't be good for your freedom.

Rio, I am not about to play morality police here so let me break it down:

- Essentially you are taking advantage of first time home buyers programs that make it easier to qualify for a loan, pay a lower down payment, pay lower interest rates. At best you are getting favorable deals, not too different from the contracts that Kosko mentioned or those who are "connected" might be able to enjoy.

- This plan does not advocate walking away from your investments or not paying the government backed loan. With the favorable terms and informed deal selection you should not only be able to pay your mortgage and other bills but also extract a tidy profit.

With all due respect to WIA (who is a valued member and a lawyer by training, I believe), I came across this program from a lawyer friend of mine. Numerous clients and several individual have already tried it with much success. Even when things have gone bad, at most they have lost the mortgage on their second or third purchase.

All this program does is accelerate your investing. Instead of being a landlord of 3-4 units, you'll be starting out with 9-12 units. Hopefully that means higher cash flow, more equity, and jump start to a career in RE investing.

Some of the people who have done this program have ended up refinancing a few years later and paid off the govt back mortgage in full. Call it an assist.

Post: #13

(10-29-2012 04:30 PM)wiscanada Wrote:  speeding isn't legal either. A think a little more expansion on risk and consequences is warranted. I have worked for state government before and it really depends on the grant system, some are well audited, some are not. Example, the economic development commission in Wisconsin did a re-org and someone forgot to assign staff to support a grant program with $60 some million dollars in outstanding loans. No monitoring, no checks for repayment, no checks for fraud, nothing. I managed a 50 million dollar budget and we had some shady grants that we were obligated to turn over to private parties with no audit and only a slight audit risk every 10 years.

Gaming a poorly designed grant system is ok if you're legally confident in the loopholes your using and that, from the state employee's perspective seems to be a function of your risk aversion, how good your lawyer is and how well connected you are to a state representative or senator who will pressure the overseeing agency to not pursue the issue.

Exactly my point.

I think that caveat emptor applies in this case. I do believe that there is greater risk between grants versus govt back mortgages. After all, you are going to be making payments and its not "free money" but rather "cheap money."

One can use a combination of Loans (city, state, federal) and be able to evade detection. However, all of this depends on the research that one might be willing to put in.

As for visibility, we're talking about 2-3 mortgages, hardly a blip on the balance sheets. Its not a Solyndra or TARP debacle that occurred because the banks had an overlooked their toxic assets and overlevergaed themselves.

Post: #14

(10-29-2012 04:34 PM)BostonBMW Wrote:  Rio, I am not about to play morality police here so let me break it down:

- Essentially you are taking advantage of first time home buyers programs that make it easier to qualify for a loan, pay a lower down payment, pay lower interest rates. At best you are getting favorable deals, not too different from the contracts that Kosko mentioned or those who are "connected" might be able to enjoy.

- This plan does not advocate walking away from your investments or not paying the government backed loan. With the favorable terms and informed deal selection you should not only be able to pay your mortgage and other bills but also extract a tidy profit.

With all due respect to WIA (who is a valued member and a lawyer by training, I believe), I came across this program from a lawyer friend of mine. Numerous clients and several individual have already tried it with much success. Even when things have gone bad, at most they have lost the mortgage on their second or third purchase.

All this program does is accelerate your investing. Instead of being a landlord of 3-4 units, you'll be starting out with 9-12 units. Hopefully that means higher cash flow, more equity, and jump start to a career in RE investing.

Some of the people who have done this program have ended up refinancing a few years later and paid off the govt back mortgage in full. Call it an assist.

Ok, but what I'm asking is can you go to prison for this? Is it illegal, or is it legal?

Post: #15

(10-29-2012 04:50 PM)RioNomad Wrote:  

(10-29-2012 04:34 PM)BostonBMW Wrote:  Rio, I am not about to play morality police here so let me break it down:

- Essentially you are taking advantage of first time home buyers programs that make it easier to qualify for a loan, pay a lower down payment, pay lower interest rates. At best you are getting favorable deals, not too different from the contracts that Kosko mentioned or those who are "connected" might be able to enjoy.

- This plan does not advocate walking away from your investments or not paying the government backed loan. With the favorable terms and informed deal selection you should not only be able to pay your mortgage and other bills but also extract a tidy profit.

With all due respect to WIA (who is a valued member and a lawyer by training, I believe), I came across this program from a lawyer friend of mine. Numerous clients and several individual have already tried it with much success. Even when things have gone bad, at most they have lost the mortgage on their second or third purchase.

All this program does is accelerate your investing. Instead of being a landlord of 3-4 units, you'll be starting out with 9-12 units. Hopefully that means higher cash flow, more equity, and jump start to a career in RE investing.

Some of the people who have done this program have ended up refinancing a few years later and paid off the govt back mortgage in full. Call it an assist.

Ok, but what I'm asking is can you go to prison for this? Is it illegal, or is it legal?

Borderline. It's exploiting the loopholes. You won't go to jail but will be denied the mortgage if they find out if you have another mortgage already.

Post: #16

This will not work with 20% down conventional mortgages let alone FTHB programs. This type of hustle was very common in NYC among immigrants during the housing boom so now banks pay very close attention to your credit report. Boston have you done this recently (in this year?) I doubt what you wrote has worked in the last 3 years.

*Each time you apply for credit a credit inquiry/pull is generated on your credit report. Also, each credit pull lowers your FICO score.

*All first time home buyer program run your credit when you first get into the program. All credit inquiries during the look back period (6 to 12 months in past) require a LOE (letter of explanation) with supporting documentation.

*they require all your financial statements and go thru them with a fine tooth comb. All withdraws and deposits over certain threshold have to be explained.

*Once you admitted into the program you can not apply for new credit until after closing. Almost all first time home buyers program have this as a requirement.

*they run your credit every month,when you go into contract, during tittle search and 24 hours before closing by the settling agent.
Unless you have a connect who can delete credit inquiries from your credit file as they appear what Boston wrote above is just not possible.

Post: #17

What's up with con artists overtaking the forum with advice on how to commit felonies?

Post: #18

Anyone want to back up to just straight First Time Home Buyer programs? Its amazing how many options there are in the US to do this. In Ontario its considered awesome that you can just borrow from your RRSP (think 401k) to buy a home. Can you apply to all state, HUD, fannie mae programs or just one?