Paid off all AOR money, Going to try a new direction.

In the last month I finished paying off over $200k in the money I accumulated from my rolling AOR. Figured I have a good amount of money locked into decent CDs and this liquid cash is an accounts heading down. I am now looking into buying some commercial properties and want a spotless report, My real Fico's weren't bad ranging from 762 to 789 but Experian is still showing 11 inquires and don't want to spook banks because of that. Today is the first day that I checked report with all paid off and total debt of minus .78c. Will be interesting to see the effect this has on my Fico's. Before I started this game I had 2 cards and about $80k total credit but never showed debt because of paying in full. Now I have 11 cards and a bit over $630K in available credit. My goal is to be able to go into a bank and get a million + loan at the best rate possible, Will that available debt hurt me or help me? Not sure if I should close some of them and thats where I could use advise from some of you here. Thanks

scott1961 said: Will that available debt hurt me or help me? Not sure if I should close some of them and thats where I could use advise from some of you here. Thanks

Good question. I curious to know as well. My guess is that in 4-6 months I think It would help.

btw: are you buying commercial property locally? Why not REITS?

scott1961 said: Have a brother who owns an RE management company in Boston, He has asked me to go into some deals with him for awhile and I think the time might be right now.
With the recent drops in RE value, I agree with you that now may be a good time to gamble. Good luck. I doubt that they'll be spooked by 11 Experian inqs, considering your scores/CL/outstanding debt. Why not call the bank in advance and inquire if closing any cards would have any impact on their loan decision.

gatzdon said: I was always under the impression that with a bank (not a broker), you would be asked to close accounts during the application process if the bank felt that was necessary. Times have changed and I don't know if that is still true.
Probably best to just do nothing now and if they want some closed then I would. Not sure if I ever remember seeing anybody here going from a lot of AOR debt to zero in a matter of a month, since most try to roll to a new card, So hope I can get some useful info on how this impacts reports.

How bad does your credit score get hit with all the AOR credit checks? i assume your score drops pretty quickly with all the inquiries done by CC companies?

It's a very good question whether available credit can hurt you. % utilization is IMO meaningless once you hit a decent combined credit card limit. Say you got about $100-200k, even if you make a purchase of say $2-3k, it still going to be pretty low and I don't think that having a 0.5% utilization vs a 1-2% utilization is gonna make a difference for your score.

But if financial review for a $1M loan is done carefully (and I'd bet it would in the current market conditions), then all that available credit has got to have lenders worried. On one hand, it's great to see that a borrower got the nod for financial responsibility with that high available credit. They just want to make sure you're gonna keep paying them the interest on that loan. But assuming something goes wrong for you financially, which debt are you likely to pay off first, the 10+% credit card debt or the 6% loan? That kinda risk has to carry a premium. On the other hand, it also depends on how much you're putting down. Say you put down 30% for that property, they're not gonna be that regarding about your finances otherwise since there's equity to tap if push comes to shove.

Still, it's pretty hard to know the right answer. Beyond the FICO score, lenders often have their own proprietary models for evaluation lending risk.

I'd apply with several lenders and see if they give me competitive rates, then if need be consider closing some of the short credit lines if you think they didn't give you the best rate you could qualify for. You can always reopen them later on (and maybe get signup bonuses again).

vrb747 said: CRE is in a downward spiral, ce bareful. Im sure u can find the rare good deal though.
I know very little about it, Would be more a silent partner. my Brother has done very well buying buildings and either converting to condos or just fixing up and selling. He has a crew of Brazilians who do excellent work and cost is low for him compared to other contractors

scott1961 said:
Probably best to just do nothing now and if they want some closed then I would. Not sure if I ever remember seeing anybody here going from a lot of AOR debt to zero in a matter of a month, since most try to roll to a new card, So hope I can get some useful info on how this impacts reports.

Scott, I have done some utilization experiments with the TC/ PM123 FAKOs (starting at 89% individual utilizations and overall utilization likely around 70%... and paying off to low amounts), and posted the results here.

Best of luck.

scott1961 said: vrb747 said: CRE is in a downward spiral, ce bareful. Im sure u can find the rare good deal though.
I know very little about it, Would be more a silent partner. my Brother has done very well buying buildings and either converting to condos or just fixing up and selling. He has a crew of Brazilians who do excellent work and cost is low for him compared to other contractors

Scott

Stall as long as you can, with more rumors of emergency rate cuts before the next fed meeting, it can't be good. You will get much better bargains a few months from now.

The market is predicting a 100% chance of 3/4% rate cut at or before the next fed meeting. Parts of the economy are DESPERATE, You'll be paid well if you rescue a property at the right time.

Fed funds 3%
short term 1.3%
5 year notes 2.35%

I suspect you won't get anywhere near those rates, which only tells me the rates will come down even more. Some banks will only loan at the 5 year rate for example. 30 year Commercial mort. are pretty much unheard of.

Good luck and be careful, their are alot of crooks in the mortgage business, commercial or not!

scott1961 said: vrb747 said: CRE is in a downward spiral, ce bareful. Im sure u can find the rare good deal though.
I know very little about it, Would be more a silent partner. my Brother has done very well buying buildings and either converting to condos or just fixing up and selling. He has a crew of Brazilians who do excellent work and cost is low for him compared to other contractors

Investing in something you know very little about doesn't seem like a great idea to me. But to each his own.

Woodchuck312 said: scott1961 said: vrb747 said: CRE is in a downward spiral, ce bareful. Im sure u can find the rare good deal though.
I know very little about it, Would be more a silent partner. my Brother has done very well buying buildings and either converting to condos or just fixing up and selling. He has a crew of Brazilians who do excellent work and cost is low for him compared to other contractors

Investing in something you know very little about doesn't seem like a great idea to me. But to each his own.
I would never attempt this on my own, This is my brothers line of work and has been very successful at it. My other brother and mother both went in on some deals with him and did well. I just figure bank rates will be crappy for awhile and since I have great credit and a good amount of liquid cash I need to find some way to use it.

Scott, why is your brother eager to cut you in? Has he maxed his own borrowing power? Why wouldn't he want to keep all the profits for himself?

My brother loves me, but he hasn't sent tens of thousands of bucks my way.

Also, be wary as any souring of the business deal will hurt your relationship with your bro. Not worth it.

Cheers,

scott1961 said: VanceWade said: Scott, why is your brother eager to cut you in? Has he maxed his own borrowing power? Why wouldn't he want to keep all the profits for himself?

He has pretty much maxed out, He owns a number of apartments and Condos but wont sell them right now. They are in good areas in Boston like Beacon Hill and up and coming areas like South Boston and Somerville. Big reason he wants to buy more is to keep his crew working, They are excellent and have done many projects at my house. They really keep his costs down on rehabbing properties.

In Boston and surrounding areas right now, people are buying up the old houses and converting to condos and they are selling like crazy. We bought our Condo in last year and have already seen 3 "crack" houses bought and redone to be nice condos.

If you can swing it, I would recommend it. Especially in the Boston area...

Good luck!

Scott, just curious, do you think the real estate market has bottomed? Or you just think you can buck the trend? Your bro is tapped out, but is he cash flow positive or sitting on a bunch of liabilities? Let us know how your investment works out. Personally I think its a good time to enjoy free money and risk free returns, but maybe taking a little more risk will end up being rewarding too.

If he's doing as well as you say in this market, then he sounds like a winner to me! Probably a good investment as long as he doesn't take more risk with your money than he has with his own.

Last year I paid off about 150k revolving, and scores jumped about 60 pts. With my CRE loan, they didn't care much about personal credit, except that I wasn't a bum. What they wanted was a business plan, 25% down, positive cash flow, my paycheck big enough to live on, life insurance payable to them, and long term disability insurance,

and I take out their trash twice a week.

If rates drop again, I think you're smarter to be a borrower than a lender (like most of us).

elleve said: Woodchuck312 said: scott1961 said: vrb747 said: CRE is in a downward spiral, ce bareful. Im sure u can find the rare good deal though.
I know very little about it, Would be more a silent partner. my Brother has done very well buying buildings and either converting to condos or just fixing up and selling. He has a crew of Brazilians who do excellent work and cost is low for him compared to other contractors

Investing in something you know very little about doesn't seem like a great idea to me. But to each his own.

Well, you can't go wrong with converting buildings to condos. Those will always be profitable if in a decent area.

The phrase "always be profitable" related to condo deals (or any deal for that matter), regardless of location, is very dangerous. The investment group I work for has seen many busted condo deals (partially complete, slower than expected sales, overbuilt, overpaid for land and construction, etc.) in the past, even in very decent areas. These borrowers still lost a lot of money when the bank (or investment group that buys the loan) forecloses and sells the condos at a discount to get rid of them.

If anyone tells you that a particular type of deal will "always be profitable", run away and find someone else to work with.

scott1961 said: gatzdon said: I was always under the impression that with a bank (not a broker), you would be asked to close accounts during the application process if the bank felt that was necessary. Times have changed and I don't know if that is still true.
Probably best to just do nothing now and if they want some closed then I would. Not sure if I ever remember seeing anybody here going from a lot of AOR debt to zero in a matter of a month, since most try to roll to a new card, So hope I can get some useful info on how this impacts reports.Scott, my scores jumped from around 680s to 760s by paying off most of my debt. On the credit score circles that was "fair" to "very good".