FranLab is getting evicted

[EEVblog]

It's the same everywhere. If you're a "standard issue" employee with a steady income and a good credit record, you'll get a mortgage (10 years fixed interest rate) for reasonable conditions. Especially with your house as a safety. Even better if you're state employed. Self-employed is a real issue. Even if you have 50 employees and turn over a million each year, banks are going to add a premium to cover their risks. A sketchy setup like FranLab doesn't stand a chance, unless you're desperate and ready to accept completely unreasonable conditions. Hasn't gotten easier after the Lehman Brothers defaulted.

I can remeber getting our first place. We were DINKY (Double Income No Kids), both with professional jobs. Every bank said they would loan us over $1M no questions asked (that was huge back then), no haggling or anal probing.
Forward to the Youtube era when we refinanced and practically owned our home, just wanted an 80% line of credit. None of the main banks would touch a "self employed" person, had to go to a smaller place through a broker and get analy probed. Credit card with a $20,000 limit even though we had a 20 year track record of paying it off in full every month, nope, that will stop you getting the loan, drop it to $10k limit and we can talk. No amount of cash in the bank or savings history mattered, they simply assumed you were going blow it all on Lambo's.
At the same time DINKY relatives with normal jobs were handed money like candy.

Self employed sucks, and I can testify that the income coming from Patreon donations matters a lot. In fact I'm sure Fran is right when she says they class her as unemployed.

[EEVblog]

But up to what extend? It also looks like Fran hasn't been able to save up for a downpayment. I'm also not convinced that it is impossible for her to get a mortgage. Likely she is presenting her income the wrong way to banks; as if it she is not running a business but messing around a bit with Youtube and Patreon. In the end all banks care about is that you have a steady income from an activity you are serious about.

I can testify to the opposite, she is right when she says they want to know the source of the income. I have been speciicaly told that Patreon and other donation income, and even Youtueb ad revenue is not counted.
Doesn't mean there isn't a bank or credit union out there that can help, but the struggle is real.

[EEVblog]

FYI, I have just spoken to Fran and it's Philly or bust for reasons I won't go into.
She did say in the video she can afford a mortgage, so I presume she has done the numbers on a place, but I'm not sure I see how she can afford that amount of space in Philly.
She'll be lucky if she can find another space big enough at the current rent, which I think is the most likely outcome here, back on the rent wheel 

Speaking of the rent wheel, I've had a video on the cards for while about rent vs buy, might have to do that. It was actually in response to a Louis Rossmann video.

[themadhippy]

Youtueb ad revenue is not counted.

But the us treasury is  quick to  tax it ,even if your not a us citizen

[bdunham7]

FYI, I have just spoken to Fran and it's Philly or bust for reasons I won't go into.
She did say in the video she can afford a mortgage, so I presume she has done the numbers on a place, but I'm not sure I see how she can afford that amount of space in Philly.
She'll be lucky if she can find another space big enough at the current rent, which I think is the most likely outcome here, back on the rent wheel

Lots of people don't want to pack up and move to the middle of nowhere to save a buck.  And nobody wants to move to Camden....

Forget a mortgage, she may have enough trouble getting landlords to rent to an unconventional business.  Here the typical light industrial condos are full right now except for the crappy ones, and if they do happen to have an odd unit available here or there, they want full financials and so forth just for a crummy glorified storage unit.

[EEVblog]

FYI, I have just spoken to Fran and it's Philly or bust for reasons I won't go into.
She did say in the video she can afford a mortgage, so I presume she has done the numbers on a place, but I'm not sure I see how she can afford that amount of space in Philly.
She'll be lucky if she can find another space big enough at the current rent, which I think is the most likely outcome here, back on the rent wheel

Lots of people don't want to pack up and move to the middle of nowhere to save a buck.  And nobody wants to move to Camden....
Forget a mortgage, she may have enough trouble getting landlords to rent to an unconventional business.  Here the typical light industrial condos are full right now except for the crappy ones, and if they do happen to have an odd unit available here or there, they want full financials and so forth just for a crummy glorified storage unit.

When your back is up against the wall, sometimes you have to make big changes. THis is not just about saving a buck, it's about keeping what she loves.
She is single, works for herself from her own space, and AFAIK doesn't have any major family ties to Philly. Technically there is nothing stopping her buying a cheap place outside of Philly, she could probably even crowd fund the entire place, or maybe half of it for a desposit. But unfortunately she has completely ruled that out. She has explained her reasoning to me, but I'm convinced the reasoning is sound. Having said, it's easy to say that not being in someone else's position.

Many people have asked me why I don't move into a bigger home and consolidate my home and lab. And I think I have sound reasoning, it's because of my kids (mostly) and my wife. If it was just me, it would certainly be an option.

[EEVblog]

I just watch the video again and realised that she currently has 4 spaces. The home/lab, the factory, and two storage spaces.
She is just being booted out of the home/lab, so the problem seems to be getting another live/work space big enough. And as she said in the video, those places are all vanishing from Philly.
I think the factory might be a co-working space, so she proably has friends and a community there she doesn't want to leave, so that's fair enough.
I think even if she bought a place in Philly, she'd still be renting the factory and maybe the storage spaces.

[Ed.Kloonk]

It's the same everywhere. If you're a "standard issue" employee with a steady income and a good credit record, you'll get a mortgage (10 years fixed interest rate) for reasonable conditions. Especially with your house as a safety. Even better if you're state employed. Self-employed is a real issue. Even if you have 50 employees and turn over a million each year, banks are going to add a premium to cover their risks. A sketchy setup like FranLab doesn't stand a chance, unless you're desperate and ready to accept completely unreasonable conditions. Hasn't gotten easier after the Lehman Brothers defaulted.

I can remeber getting our first place. We were DINKY (Double Income No Kids), both with professional jobs. Every bank said they would loan us over $1M no questions asked (that was huge back then), no haggling or anal probing.
Forward to the Youtube era when we refinanced and practically owned our home, just wanted an 80% line of credit. None of the main banks would touch a "self employed" person, had to go to a smaller place through a broker and get analy probed. Credit card with a $20,000 limit even though we had a 20 year track record of paying it off in full every month, nope, that will stop you getting the loan, drop it to $10k limit and we can talk. No amount of cash in the bank or savings history mattered, they simply assumed you were going blow it all on Lambo's.
At the same time DINKY relatives with normal jobs were handed money like candy.

Self employed sucks, and I can testify that the income coming from Patreon donations matters a lot. In fact I'm sure Fran is right when she says they class her as unemployed.

A couple of things. Sydney banks are threatening to tighten the rules drasticly yet I still see some people with jobs scoring some very worrying loans that are precarious.

As for being self employed, you have to understand the bank's standpoint. No offence but youtubers do have a nasty habit of blowing it all. I realise that it is often because of a change in y/t policy. Youtube success is like lightning and you won't convince the bank that you'll rebuild everything instantly on another platform. Unlike a regular job that even if you're fired, you could have a new job within a day and the bank wouldn't be any the wiser in regards to repayments.

I was self employed, so I'm not attacking you.

[nctnico]

It's the same everywhere. If you're a "standard issue" employee with a steady income and a good credit record, you'll get a mortgage (10 years fixed interest rate) for reasonable conditions. Especially with your house as a safety. Even better if you're state employed. Self-employed is a real issue. Even if you have 50 employees and turn over a million each year, banks are going to add a premium to cover their risks. A sketchy setup like FranLab doesn't stand a chance, unless you're desperate and ready to accept completely unreasonable conditions. Hasn't gotten easier after the Lehman Brothers defaulted.

I can remeber getting our first place. We were DINKY (Double Income No Kids), both with professional jobs. Every bank said they would loan us over $1M no questions asked (that was huge back then), no haggling or anal probing.
Forward to the Youtube era when we refinanced and practically owned our home, just wanted an 80% line of credit. None of the main banks would touch a "self employed" person, had to go to a smaller place through a broker and get analy probed. Credit card with a $20,000 limit even though we had a 20 year track record of paying it off in full every month, nope, that will stop you getting the loan, drop it to $10k limit and we can talk. No amount of cash in the bank or savings history mattered

That is normal. There simply is a limit to what you can lend and a credit card (and other credit facilities) typically take away a large sum (much larger than the limit) of what you can lend as a mortgage. Getting a loan is all about cash flow in and cash flow out. If your new mortgage combined with existing loans / lines of credit can result in a larger cash flow going out, then the lender won't give it to you. Money in the bank doesn't matter because they have to assume you are going to spend it all. Why would you need the loan if you have money to spend?

A way around Youtube / Patreon is likely to form a company that receives the money and then get paid by that company. When I refinanced my mortgage (being 100% self employed!) the bank didn't ask how I made the money. They just wanted the tax records to show a steady income for the past couple of years.

[Ed.Kloonk]

If you want a lesson in how not to do real estate look up Nile Niami. He built a house worth(?) 500 Million in LA, a modern day playboy mansion. Half way through building, metoo happened. Then the coof hit.

Anyway. Now they think the house would sell for pennys on the dollar and the guy is selling gold-plated credit cards.

The other lesson to be learned is don't do coke.

[bdunham7]

That is normal. There simply is a limit to what you can lend and a credit card (and other credit facilities) typically take away a large sum (much larger than the limit) of what you can lend as a mortgage. Getting a loan is all about cash flow in and cash flow out.

There's another example where rules vary a bit globally--and even from state to state in the US.  All of that would be incorrect in a US context.  High but unused credit lines are almost always a help, not a hindrance in obtaining credit.  And getting a loan, especially residential, is about satisfying the specific requirements of the ultimate underwriter of the loan, which is usually not the bank itself.

Amusingly I'm actually stuck in that it would be inconvenient and difficult to refinance the small remaining balance on our house due to a quirk of how it was financed in the first place.  Fortunately I'm only losing out on a miniscule savings since rates were astonishingly low when we bought in 2012.  But there are always snags that can hamper any financing process, and here for the self-employed or business owner, those snags are a whole bramble bush.

[cdev]

OTOH you can see it as an investment to make new content. The question however is what the cost versus benefit is. I don't know the exact costs but business wise it likely is a large risk. In that light Dave is pretty clever with his test equipment review, mailbag and dumpster-diving repair videos. Costs him next to nothing in materials to make.

That is a valid point, although it seems like a bit of a risky investment. There are some fascinating videos she has done, I liked the series in the Apollo DSKY, and the various esoteric display technologies are fascinating. Those sorts of topics are relatively low cost (and thus low risk) and fairly high reward in that they are interesting content.

Either way if I were in her position with regards to housing, I would put the youtube channel on the back burner and look for a job, any job that will pay the bills. There is a massive labor shortage across the USA right now. We need truck drivers, that doesn't need any kind of degree or even a whole lot of training. We need people in the trades, that usually needs an apprenticeship but you get paid. On the engineering side we need software engineers, my employer has been hiring like crazy and can't find enough senior SDEs, they can even be approved to work fully remotely if desired. Her living situation has already been discussed to death but sometimes the simple reality is that a person has to find somewhere different to live, something she has apparently been totally unwilling to do. There are numerous solutions to the problem and yet from my admittedly limited view of the saga, it appears she is trying the same thing over and over expecting different results.

When you dig, the wages they want these workers at are unrealistic. A lot of these alleged jobs are not good jobs at all. They are not even real jobs where they intend to hire people. They just want to document how they failed at hiring Americans. Its for some work visa form.

If Fran looks for work judging by where she is, a signifcant number of advertised jobs will be these fake jobs. As a trans person my hunch is that that fact also is going to limit her job opportunities significantly, here in the tradition bound East Coast. I would hope that wouldnt be the case but I suspect it might be.  Does she have transportation? if she doesnt own a car, maybe she should buy a motor scooter.

If she buys a car, It needs to be reliable.

[nctnico]

That is normal. There simply is a limit to what you can lend and a credit card (and other credit facilities) typically take away a large sum (much larger than the limit) of what you can lend as a mortgage. Getting a loan is all about cash flow in and cash flow out.

There's another example where rules vary a bit globally--and even from state to state in the US.  All of that would be incorrect in a US context.  High but unused credit lines are almost always a help, not a hindrance in obtaining credit.

That is not the issue. The question is: do you get to keep those high credit lines together with the mortgage? I would be highly surprised if that is the case because it would allow you to accumulate more outgoing expenses than your income can support.

[bdunham7]

That is not the issue. The question is: do you get to keep those high credit lines together with the mortgage? I would be highly surprised if that is the case because it would allow you to accumulate more outgoing expenses than your income can support.

Yes, they're generally a non-issue.  I've never heard of anyone being asked to close or reduce credit card lines in order to get a mortgage--or another credit line.

[Caliaxy]

$79k for an almost 3000sqft place if she moves to Reading 80km out from Philly.
https://www.loopnet.com/Listing/1262-Cotton-St-Reading-PA/23133224/

Reading even has a local LGBT centre
https://www.lgbtcenterofreading.com/

To me that's an absolute no-brainer unless there are drive-by shooting every weekend or something.
She could probbaly crowd source the entire $79k to buy it.

If you scroll down a bit there's another $45,400 in property taxes - I presume annually (James, care to offer an explanation of how property taxes work in the US?).

  for a property valued at $80k? How is that even possible?
 I knew property taxes are a PITA in the US, and many people move states beceause of it, but I thought like 10% was considerd very high?

New Jersey one would likely be the state average of 2.4%?

I think you're confusing yourself with the word "assessment", probably because of usage differences on your sides of the pond. In this case, it refers to what the property is currently assessed (=valued) at (land+improvements), for tax purposes. However, a sale usually generates an automatic reassessment to the purchase price, so it's a moot point for the buyer. Worth noting that New Jersey is one of the highest property tax states in the US. Significantly higher than Pennsylvania anyway.

Right. Just to clarify, for that particular property, the annual taxes to be paid by the owner are about $2000.

[bdunham7]

That is not the issue. The question is: do you get to keep those high credit lines together with the mortgage? I would be highly surprised if that is the case because it would allow you to accumulate more outgoing expenses than your income can support.

Yes, they're generally a non-issue.  I've never heard of anyone being asked to close or reduce credit card lines in order to get a mortgage--or another credit line.  They'll let you have as much rope as you want.  I have an absurd amount of credit card credit line that stays unused.  OTOH, it is common for cash-out refinancing to demand that you pay down actual debts on credit lines.

[EEVblog]

As for being self employed, you have to understand the bank's standpoint. No offence but youtubers do have a nasty habit of blowing it all. I realise that it is often because of a change in y/t policy. Youtube success is like lightning and you won't convince the bank that you'll rebuild everything instantly on another platform. Unlike a regular job that even if you're fired, you could have a new job within a day and the bank wouldn't be any the wiser in regards to repayments.

Yes, I'm not really compaining, I'm just saying it is a big problem, and that Fran is right.
The problem I have is that the fear on the banks side is (supposedly) that you can't repay your loan if that income falls through, but they will refuse to consider your other liquid assets like cash, gold, crypto (maybe fair enough), stocks (except dividend paying ones which is income) etc. It's bullshit. I could have millions in liquid cash and gold savings, yet I would find it hard to get a $500k loan if Youtube was my only income.

[EEVblog]

That is normal. There simply is a limit to what you can lend and a credit card (and other credit facilities) typically take away a large sum (much larger than the limit) of what you can lend as a mortgage. Getting a loan is all about cash flow in and cash flow out.

There's another example where rules vary a bit globally--and even from state to state in the US.  All of that would be incorrect in a US context.  High but unused credit lines are almost always a help, not a hindrance in obtaining credit.

That is not the issue. The question is: do you get to keep those high credit lines together with the mortgage? I would be highly surprised if that is the case because it would allow you to accumulate more outgoing expenses than your income can support.

The thing is they will usually refuse to acknowledge that you have a long track history of paying off the credit card on time every month. You are actually better off having a debit card. And in fact we have just ditched our credit card in favour of a debit card for this very reason, it's one less thing they can hold against you when you apply for a loan.

[blacksheeplogic]

There's another example where rules vary a bit globally--and even from state to state in the US.  All of that would be incorrect in a US context.  High but unused credit lines are almost always a help, not a hindrance in obtaining credit.

The thing is they will usually refuse to acknowledge that you have a long track history of paying off the credit card on time every month. You are actually better off having a debit card. And in fact we have just ditched our credit card in favour of a debit card for this very reason, it's one less thing they can hold against you when you apply for a loan.

No, I lived in the US for many years, having credit & using it to maintain a credit history was vital to getting a loan, renting an apartment, or buying a house.

[Ed.Kloonk]

As for being self employed, you have to understand the bank's standpoint. No offence but youtubers do have a nasty habit of blowing it all. I realise that it is often because of a change in y/t policy. Youtube success is like lightning and you won't convince the bank that you'll rebuild everything instantly on another platform. Unlike a regular job that even if you're fired, you could have a new job within a day and the bank wouldn't be any the wiser in regards to repayments.

Yes, I'm not really compaining, I'm just saying it is a big problem, and that Fran is right.
The problem I have is that the fear on the banks side is (supposedly) that you can't repay your loan if that income falls through, but they will refuse to consider your other liquid assets like cash, gold, crypto (maybe fair enough), stocks (except dividend paying ones which is income) etc. It's bullshit. I could have millions in liquid cash and gold savings, yet I would find it hard to get a $500k loan if Youtube was my only income.

Yeh. That's the bank manager's predicament. Why do you need to go into debt when you have so much equity or indeed liquid assets? That kind of thinking is reserved for a different income class to you and me.   

You have to demonstrate that you can make money in your sleep and not just ride a bull market. When gauging repayment ability, the capital you have has no bearing because who knows how you acquired said capital: inheritance, insurance payout, stock market jackpot. There is a different type of investor you need to back you in this field. Banks aren't interested, as we know.

[bdunham7]

The thing is they will usually refuse to acknowledge that you have a long track history of paying off the credit card on time every month. You are actually better off having a debit card. And in fact we have just ditched our credit card in favour of a debit card for this very reason, it's one less thing they can hold against you when you apply for a loan.

That is definitely not the American Way!  In the US system, your credit score--the very first thing lenders look at to classify you--will be the highest if you have 18-20 open credit cards but only use a small proportion of the credit lines.  The more accounts open and the longer the average ages of those accounts, the higher the score (assuming you make each and every payment on time).  Income, assets and money in the bank--not a factor.  Your score will determine not only whether you get a loan, but also whether you can rent an apartment, how much you pay for insurance and in some cases even whether you get a job.  The last two are prohibited by law here in California, but the issue plagues people with credit issues elsewhere in the country.

[Ed.Kloonk]

The thing is they will usually refuse to acknowledge that you have a long track history of paying off the credit card on time every month. You are actually better off having a debit card. And in fact we have just ditched our credit card in favour of a debit card for this very reason, it's one less thing they can hold against you when you apply for a loan.

That is definitely not the American Way!  In the US system, your credit score--the very first thing lenders look at to classify you--will be the highest if you have 18-20 open credit cards but only use a small proportion of the credit lines.  The more accounts open and the longer the average ages of those accounts, the higher the score (assuming you make each and every payment on time).  Income, assets and money in the bank--not a factor.  Your score will determine not only whether you get a loan, but also whether you can rent an apartment, how much you pay for insurance and in some cases even whether you get a job.  The last two are prohibited by law here in California, but the issue plagues people with credit issues elsewhere in the country.

Sometimes here, the lender will encourage you during the application process of a loan to clip the credit limit on a credit card or perhaps even close accounts on all but one. Credit cards have a minimum payment due per month (if you don't wish to pay the full amount). With the loan, those minimum amounts calculated on the max credit limit and that figure is gets deducted from your income figure upon application. It's a waste of time applying for a loan if you have excessive credit card debt.

[bdunham7]

With the loan, those minimum amounts calculated on the max credit limit and that figure is gets deducted from your income figure upon application.

That does make some sort of sense, but nobody does that calculation here.  If I maxed out all my credit cards the minimum payments would be more than double my mortgage.  As I said, they'll let you have all the rope you want.

[nctnico]

That is normal. There simply is a limit to what you can lend and a credit card (and other credit facilities) typically take away a large sum (much larger than the limit) of what you can lend as a mortgage. Getting a loan is all about cash flow in and cash flow out.

There's another example where rules vary a bit globally--and even from state to state in the US.  All of that would be incorrect in a US context.  High but unused credit lines are almost always a help, not a hindrance in obtaining credit.

That is not the issue. The question is: do you get to keep those high credit lines together with the mortgage? I would be highly surprised if that is the case because it would allow you to accumulate more outgoing expenses than your income can support.

The thing is they will usually refuse to acknowledge that you have a long track history of paying off the credit card on time every month. You are actually better off having a debit card. And in fact we have just ditched our credit card in favour of a debit card for this very reason, it's one less thing they can hold against you when you apply for a loan.

That is pretty much the same over over here. To me it is perfectly logical; in the end it is to make sure people can actually pay back the money they borrow. In the NL there is a central register where all loans & credits are registered with the amount and whether you are paying on time or not. But you can only get negative points, no positive points.

[rsjsouza]

FYI, I have just spoken to Fran and it's Philly or bust for reasons I won't go into.

Lots of people don't want to pack up and move to the middle of nowhere to save a buck.  And nobody wants to move to Camden....
(...)

When your back is up against the wall, sometimes you have to make big changes. THis is not just about saving a buck, it's about keeping what she loves.

Well, I wish all the best for her, but it seems this scenario seems to be configuring itself to be a repeat of what I said two years ago, which is also expressed in james_s' and rodcastler's previous posts.

I only hope she does not burn her credibility for new supporters and stretch the patience of her existing ones by having yet another unfallible plan that pretty much resembles the former one. The supporters may feel they are giving money to someone that is not making reasonable monetary decisions and the risk of a steep drop in income is quite real.

Sure, she mentioned not spawning a gofundme this time, but at a certain point some financial plan will have to be put in place to escape this. Ownership and less expensive location are the options with the longest roadmap. The country changed a lot in the past few years w.r.t. acceptance, thus that would be a venue to be revisited.