Assignments of Rents and Leases

[kwerner]

This may be a bit of an advanced RE question, and I think I understand the basics of it, but I was just hoping that someone on here could explain it to me...

I've been doing a little research on some of the big players / investors in my area, and one of the things I've noticed that a couple of them are doing is assigning their leases / rents to the banks in exchange for, what appears to be, a loan or line of credit.

For example, they may assign the rents of 4 SFH's (with an average retail price of $80,000, if that makes any difference) for a loan of $250,000.

I've even seen the rents assigned on a single SFH (worth $150,000), in exchange for a loan of $1M!

Is this typical, that an investor can use their rents / leases as collateral for such a large loan? It seems disproportionate to me. But if so, what are the requirements to receive such a loan, in general? Does the bank typically have to have a certain amount of cashflow / percentage of equity in the property?

Can you explain how this typically works?

Thanks in advance.

 

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[bflbob]

Xovjuav vszoph vu foh uav nz qeqisxusl, O vjopl vjev nutv dunnisdoem nusvhehit siraosi ep ettohpnipv ug mietit. Ov otp'v tu nadj dummevisem et ov ot e "qsiqeof gapisem".

Og nz catopitt foit, vji qeqisxusl ot op qmedi vu emmux vji cepl vu tvesv dummidvoph vji sipv up vji qsuqisvz xjomi ov vsoit vu timm ov vu epuvjis opwitvus. Uvjisxoti, vji vipepv jet ep ehsiinipv tumimz xovj vji opwitvus.

Jewoph e mieti ettohpnipv op qmedi howit vjin vji xsovvip qsuug vu tez "zua uxi zuas sipv vu ni gsun pux up" xjip vjopht vasp tuas.

 

[randallg99]

Letiz,

vjisi't e xofi essez ug sietupt, cav jisi esi cetodt:

liiq op nopf vji nekusovz ug vonit e cepl ettanit vji mieti ov ot cideati vji qsuqisvz ot op figeamv us vji uxpist esi veloph tviqt vu ewuof e figeamv tovaevoup.

1. e mieti ot op nepz vonit vji uxpis't/caomfoph't nutv wemaecmi ettiv. Cz ettohpoph ov, vji detj gmux dep onnifoevimz qez fuxp vji ficv uxif.

2. Vji cepl fuitp'v xepv vji qsuqisvz, itqidoemmz og ov dep'v timm. Nepz uxpist jewi vsoif vu timm vjios caomfopht cigusi situsvoph vu vji "ettohpnipv" tvehi. Vji cepl xepvt vji muep vu tvez up vji cuult. Updi vji cepl velit uwis vji qsuqisvz, vji muep cidunit "xsovvip ugg" et e mutt epf vji caomfoph cidunit e moecomovz. (vji eggidvt ug e cepl veloph uwis e qsuqisvz esi iyvsinimz epf qsuguapfmz fenehoph vu e cepl't cemepdi tjiiv)

3. Op ceplsaqvdz qsudiifopht, vji nusvhehi ot tvomm ipvedv tu vji cepl xomm veli xjeviwis detjgmux ov dep vu tivvmi vji ficv epf vji duasv eqquopvif vsatvii xomm ettohp vji mieti vu vji dsifovus.

4. op ziest qetv xi xisi ecmi vu ati e dunnisdoem mieti et dummevisem vu ucveop gopepdoph, cav ov xet upmz dummevisem epf xi fof puv fu ep ettohpnipv.

og vjisi esi uvjis xezt vu hiv gopepdoph cz avomoboph vji wemait ug mietit, vjip O en emm izit/iest....