Is The Real Estate Back Flip Letter to Clients A Scam?
This is a sample letter written by one of our students who is working with us on real estate back flips and no its not scam. I think that it provides TOO much detail, but it does a good job of explaining what a back flip deal is to the general public.
Dear George, We are working with a group of private lenders who have found a way to help many homeowners and commercial business people who are experiencing the difficulties of upside down mortgages, negative equity, and many of whom are facing the threat of short sale and foreclosure, with resulting credit damage!
Residential Underwater Home Program: We provide short term bridge loans collateralized by real estate or other quick-sale collateral. The bridge loans are designed as an interim solution prior to the client obtaining long-term financing. Currently, we are targeting the purchase and restructure of Residential Jumbo Loans in the greater Atlanta area.
Specifically, we target residential loans that meet the following criteria: 10 to 20% below current market value Primary Residence and/or Non-Owner Occupancy Non-Conforming, Jumbo Loans only.. Starting at 417,000.00 up to 5,000,000.00. Performing and Non-Performing borrowers
Overview of Program: We purchase the underlying loan for 60% to 65% of CMV (Current Market Value). Once the loan is acquired, the borrower’s principal balance is restructured (modified) to 75% of the CMV, at which point, we execute a temporary bridge loan for up to one year depending on the borrower’s ability to secure long-term exit financing. We also assists the borrower in obtaining the permanent take out loan.
Deal Case Study: A Jumbo Loan that had a mortgage for $1,200,000 was purchased at a discount and a new loan was restructured for the borrower for $800,000.00 . In the process, the borrower kept her home, didn’t damage her credit and realized a debt reduction of approximately $400,000.00 with no capital gains.
Please contact me if you need additional information, and to discuss any properties and clients that might fit these criteria.
Commercial Business w/ Real Estate Underwater Program: Our bridge loan program is also designed for commercial property owners who are in need of restructuring their existing debt, or where the current lender desires to offer a settlement at a reduced principal. Our bridge loan provides the conduit to take out the existing over-leveraged debt, and “bridges” note on the property into a new, traditional long-term debt. This is accomplished by using cash to purchase the note at a discount from the current lender, then we restructure a short-term bridge loan with the existing owner, typically with little to no out-of-pocket expense. Finally, we provide a traditional long-term exit lender to refinance out the bridge loan; significantly lowering the overall debt, often as much as 20 to 50%.
Overview of Commercial Bridge lending criteria: Acquisitions up to $10 million. Principal(s) must have credit and financial standing to qualify for refinancing within 6 to 12 months. Property must be income producing and support bridge loan debt service with at least a 1.2 Debt Coverage Ratio Property must be located in a class A, B, or C market area and capable of supporting the business. Loan to value (LTV) based on exit lender LTV requirements (typically ranges from 50 to 70%). Verification of business financials required. For more information and to discuss how we can help your existing clients in need of debt restructure, please contact me at 555-1234.
To make this a better explanation of real estate back flips I would make it much shorter.
This article is by Peter Conti – Investor, Author, and producer of the Flip Guys Podcast