Hi guys,
I'm looking to engage some hard money lenders to refinance my portfolio of SFR's that are held in cash (I'm looking to do a loan of $400-$500k on a 30 year fixed rate). I wanted check in with you guys:
1) What kind of rate can I expect to get on a 30 year fixed for $500k loan?
2) What costs are there involved in closing? (I have on my list 2-3 points, valuation of $500 per property, closing costs of 1%, is this roughly correct)
3) Most importantly I have never done hard money lending only convential. This may be a stupid question but what happens if I forget to make a payment for say 2 months because my auto payments failed and I forgot to check. I know a bank will never forclose on me, but will a hard money lender do so? I'm based in Atlanta and thats where all the properties are. I'm trying to avoid a situation where a lender can catch me off guard and forclose on me.
Thanks in advance!
@Brit Foshee
Hello Tim
Banks loan to US residents and are now required to get a 4506(t) from the IRS on loans they close...if they are Federally insured and regulated. So the Hedge funds and Finance companies have come in and do what the banks cannot. The are not as cheap as the banks but will still do 30 year fixed loans under 7% where as banks are under 5% for the same loan. A bank will not make a commercial loan for longer then 10 years...so you will get a 30 year loan with a 10 year adjustment or call. (This way they place the interest rate risk on you)
-----------------------------
I have closed loans with all the Stated (NO Doc) money portfolio lenders out there...
B2R and Dwell (Blackstone Hedge fund subsidiaries) are only one of them but they just upped their minimum loan amount to to $1 million for their portfolio loans.. In Dec 2015 I closed a 500K loan with 8 Milwaukee properties....Stated income for a new LLC..through them.
I am now placing another such portfolio of 13 properties in Dekalb and Decatur counties (Decatur and Atlanta) and these are my findings....
B2R is no longer the cheapest as they price off the 10 year swap rate...so you will end up at about 7.75 - 8.5%.
B2R will cost you $700.00 for a legal review to review the LLC docs and they also hit you you for some excess massively expensive insurance requirements - and you will NOT be able to sell any part of the portfolio off as they do not allow for deed releases....
So you have to hold all the properties and NOT sell one until you sell them all as B2R prices then as one security.
There are better sources that will give you a commercial loan and price it close to 6.5% if you have good scores...
Given your scores a portfolio loan should price around 6.5% to a foreign national or LLC with no tax returns and NO SSN---
As most banks who will loan at 4.5 - 5% may not loan to a LLC and foreign NON US national with no SSN. Banks are now required to obtain a 4506(t) through the IRS on all loans they close if they are Federally regulated or insured. So they are less able to make Stated Income loans with no documentation. Graham Dodd and the mess of 2008 changed all that.
Anyhow Tim.... ...
Question for you...
How were you able to get those good credit scores built up with no Social Security Number...for consumer accounts??
These are the parameters you may find better...
As a mortgage broker....we get paid by the lender -- so your cost to use usr is no more expensive than had you approached the lender direct. It was that way with B2R and the portfolio loan we did in December....same with SE Capital and Civic and Velocity Capital and Regis and others....
Email me the property addresses and we will send you a complete written proposal....of costs and rates etc...
Regards
Richard Scholtz
Commercial Lending
To draw a distinction- A hard money loan is different than a portfolio loan. Portfolio loans generally are originated on a portfolio of cash flowing properties. The underwriter will evaluate the cash flow and value of each property and determine whether or not it is lendable.
Although you could use a hard money loan on a cash flowing property, they are typically used on bridge type of scenario. Where you intend to refinance or sell rather quickly.
For a portfolio loan I think you could expect mid 4's on rate. I think 2-3 points is high. You should be able to get around 1 point and and 1-2 in closing costs.
B2R is a competitive, portfolio lender. They advertise all over BP. Give them a shout and they will at least give you an idea of what it would look like for you.
If you're late on payment you should get some type of notice so that would tip you off if somehow your autopay screwed up.
Best of luck.
Awesome thanks @Brit Foshee do you know any portfolio lenders that will finance non-us nationals but have a FICO score of 720 (no social just ITIN). Properties held under LLC
I would check with B2R. I believe they do finance foreign nationals.
@Brit Foshee
Hello Tim
Banks loan to US residents and are now required to get a 4506(t) from the IRS on loans they close...if they are Federally insured and regulated. So the Hedge funds and Finance companies have come in and do what the banks cannot. The are not as cheap as the banks but will still do 30 year fixed loans under 7% where as banks are under 5% for the same loan. A bank will not make a commercial loan for longer then 10 years...so you will get a 30 year loan with a 10 year adjustment or call. (This way they place the interest rate risk on you)
-----------------------------
I have closed loans with all the Stated (NO Doc) money portfolio lenders out there...
B2R and Dwell (Blackstone Hedge fund subsidiaries) are only one of them but they just upped their minimum loan amount to to $1 million for their portfolio loans.. In Dec 2015 I closed a 500K loan with 8 Milwaukee properties....Stated income for a new LLC..through them.
I am now placing another such portfolio of 13 properties in Dekalb and Decatur counties (Decatur and Atlanta) and these are my findings....
B2R is no longer the cheapest as they price off the 10 year swap rate...so you will end up at about 7.75 - 8.5%.
B2R will cost you $700.00 for a legal review to review the LLC docs and they also hit you you for some excess massively expensive insurance requirements - and you will NOT be able to sell any part of the portfolio off as they do not allow for deed releases....
So you have to hold all the properties and NOT sell one until you sell them all as B2R prices then as one security.
There are better sources that will give you a commercial loan and price it close to 6.5% if you have good scores...
Given your scores a portfolio loan should price around 6.5% to a foreign national or LLC with no tax returns and NO SSN---
As most banks who will loan at 4.5 - 5% may not loan to a LLC and foreign NON US national with no SSN. Banks are now required to obtain a 4506(t) through the IRS on all loans they close if they are Federally regulated or insured. So they are less able to make Stated Income loans with no documentation. Graham Dodd and the mess of 2008 changed all that.
Anyhow Tim.... ...
Question for you...
How were you able to get those good credit scores built up with no Social Security Number...for consumer accounts??
These are the parameters you may find better...
As a mortgage broker....we get paid by the lender -- so your cost to use usr is no more expensive than had you approached the lender direct. It was that way with B2R and the portfolio loan we did in December....same with SE Capital and Civic and Velocity Capital and Regis and others....
Email me the property addresses and we will send you a complete written proposal....of costs and rates etc...
Regards
Richard Scholtz
Commercial Lending
To draw a distinction- A hard money loan is different than a portfolio loan. Portfolio loans generally are originated on a portfolio of cash flowing properties. The underwriter will evaluate the cash flow and value of each property and determine whether or not it is lendable.
Although you could use a hard money loan on a cash flowing property, they are typically used on bridge type of scenario. Where you intend to refinance or sell rather quickly.
For a portfolio loan I think you could expect mid 4's on rate. I think 2-3 points is high. You should be able to get around 1 point and and 1-2 in closing costs.
B2R is a competitive, portfolio lender. They advertise all over BP. Give them a shout and they will at least give you an idea of what it would look like for you.
If you're late on payment you should get some type of notice so that would tip you off if somehow your autopay screwed up.
Best of luck.
Brit
Man I was just feeling smart, and was about to jump in and scream BR2 out there.
You beat me, but yes I would look into them.
Alex
@Richard Scholtz debt to income for borrower "no".
Is that to say you loan 75% LTV for 30 years fixed with no borrower qualifying except fico?
@Eric H. - Yes...... that is 75% L.T.V and loan based on cash flow of the property NOT your debt ratio as many times loan is made to a LLC. No borrower qualification besides score.
B2R is too expensive and has very high insurance requirements that suck and a =$750 legal review fee on the LLC docs....and their minimum Portfolio Loan size is $1 million.
The lender above is not B2R..but there are a few out there better than B2R.
@Richard, I didn't know these types of loans existed with single digit interest.
Is there a loan to cost component to the qualifications to insure "skin in the game"?
Is 75% based off of the ARV, so rehab may be rolled into the loan, or is it based off of the present state where rehab should be done with hard money first?
@Eric H. This is not the loan to rehab the property with as that needs cash draws and an exit strategy --- Those get priced as a construction loan and are short term.
This loan is the exit strategy to a rehab project - as the loan based on rental income....and a stable lease...not a vacant shell with all the windows broken out
To get a REHAB interest only loan .... will be a short term 12 month or less loan interest only at 10%+ rates....and your skin in the game will be needed to acquire and fix the property.
We have a lender that does both --- and that saves $ on the costs as the same final appraisal is used and only one underwrite...but these are two different kinds of loans....with very different terms...
The costs of the rehab loan drops with each finished rehab completed....as experience and track record are rewarded.
--------------> This is a the takeout 30 year fixed loan to cash that out once the rehab is complete and based on 75% of the final valuation. (ARV)
If you get rehab loan and put yourself in TITLE for 90 days then the final loan will be determined from the final (rehabbed) appraised value ...so a good chance you can recoup MOST if not all your original costs if done right.
What happened is the banks got stopped from doing the Stated Income loans since 2008 --so hedge funds and commercial finance stepped in. So they priced themselves about 2% over bank rates and about 4% below traditional "short term" hard money loans...
This final loan it is supported by rental cash-flow and the underwrite still depends on good credit and DSCR of 1.20% as most commercial loans are.
Send me an email so I can attach files....for your review.
Regards.
Richard