Send me your financing questions

Buying & Selling Real Estate
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Send me your financing questions

Jonathan Taylor
Lender · Los Angeles, CA · Member since 2017 · 916 posts · 647 votes

Hello BP community,

I have observed a lot of confusion on the forums about financing options and the availability of programs for RE investors. As I have gained a ton of knowledge from the forums in my own journey, I would love to give back and answer any questions you have about the financing world. If I don't know the answer, I'm sure the community can step up and help as I am by no means the end all, be all of info. 

So, what do you have questions about?

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Melanie Lashus
Rental Property Investor · Centreville, VA · Member since 2020 · 6 posts · 10 votes
6y

@Jonathan Taylor

I’m very new to all this and am in the “educate thyself” phase. I currently own two properties.

I appreciate your offer of information!

What I *think* I understand:

- there are MANY ways to finance deals.

- small banks/etc can be more flexible in terms

- there is a limit (10?) to the number of bank mortgages a person can have.

What I’m confused about:

So much of what I read/listen to is experienced investors (with way more than 10 properties) talking about buying properties with a variety of creative financing strategies) and then “Refinancing” the property into a “traditional” mortgage later on.

So- what kinds of refi’s are these? Don’t they count against the 10(?) loans you can have?

What am I missing? This is never explained in the podcasts or books...

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  • Jonathan Taylor
    OP
    Lender · Los Angeles, CA · Member since 2017 · 916 posts · 647 votes
    6y

    @Nathan S. Shoot me a DM and I’d be happy to run through the numbers with you

    1Reply
  • Daniel DeGallery
    Member since 2020 · 1 post · 0 votes
    6y

    What would you recommend someone who is under 18 to do until I can buy my first rental property or the house flipping thing.

    0Reply
  • Faruk Al-Hassan
    Rental Property Investor · St. Louis · Member since 2019 · 13 posts · 6 votes
    6y

    @Jonathan Taylor

    Hi Jonathan, Thanks so much for taking the time to reply to these posts. I currently own a duplex with an FHA loan and 10% equity. Now that I've completed my 1yr residency, how can I fiance another owner occupied multifamily with less than 20% down? I have high credit and solid w2 income.

    1. Can I refi my FHA duplex to conventional if I only have 10% Equity?

    2. Is there any conventional loan without income limits that I can purchase another multifamily with >85% LTV? If owner occupied

    3. Can I purchase and move to a smaller multifamily and still get owner occupied financing? Ie. Quadplex or smaller duplex, my current lender said most underwriters wouldn't go for that.

    1Reply
  • Michael Bramante
    Boston, MA · Member since 2017 · 7 posts · 2 votes
    6y

    Hi Jonathan,

    I have a financing question pertaining to condominiamizing a multifamily. I am looking at purchasing a beautiful 2 family that has all the "guts" completely redone (all new electrical, plumbing, utilities). I'm planning on purchasing this property with owner occupy FHA financing and living in one of the units while I do some cosmetic updates.

    My plan is to condo it and sell off one of the units to provide as a down payment for another project. Will this require the condos to be refinanced as two separate loans or can I sell unit 1 to pay down the existing mortgage then do a cash out refi on the second unit that I will be holding?


    Thanks,

    Michael

    0Reply
  • Marcos Murillo
    Member since 2019 · 6 posts · 0 votes
    6y

    @Jonathan Taylor

    Hey Jonathan, thank you for taking the time to educate and informing us!

    My question is, what route should one take when looking to get a pre-approval for an out of state conventional loan? Should I go with a loan from the state in which I’m looking to invest in or simply shop around online? Currently live in California but looking to buy investment property out of state.

    0Reply
  • Susie Evans
    Rental Property Investor · Brighton, MI · Member since 2020 · 30 posts · 33 votes
    6y

    @Suzan Richardson My guess is you are paying for the land. A 1987 mobile home is pretty much worth nothing. Finding tenants to do repairs and not charge a deposit??? May I ask where ( what state) the trailer is located? Is the home fully rehabbed -modern?

    0Reply
  • Susie Evans
    Rental Property Investor · Brighton, MI · Member since 2020 · 30 posts · 33 votes
    6y

    @Anthony Brown The seller of the property essentially is “the bank” .You work out the terms with them. The down payment/deposit and all terms are between You & The Seller.

    0Reply
  • Susie Evans
    Rental Property Investor · Brighton, MI · Member since 2020 · 30 posts · 33 votes
    6y

    @Rachel Black Hi Rachel, May I suggest finding a partner. Myself, I have low credit score 550, but I have cash.. One thing I don’t have is good credit ( yet). This has been a issue for a few deals. Find a partner that can bring something to the deal. You have great credit, therefore you need a partner with money. The partner isn’t out there doing deals because they don’t have the credit. It’s basically a Win/Win when you find the right partner.

    I hope this helps.

    2Reply
  • Yaron Avidan
    Investor · Tel-Aviv, ---- · Member since 2016 · 18 posts · 6 votes
    6y

    @Jonathan Taylor

    Hi Jonathan, great thread!

    Are you familiar with financing options for foreign nationals?

    I have a house in Texas and would like to do a cash out refinance. I find that many lenders won’t do it if it’s not your primary residence. But in any case, require a SSN which I don’t have.

    The lenders that do work with foreign nationals offer about 6.5% for 30 years.

    Any thought would be appreciated.

    If I partner with a friend who is American and form an LLC, would that work and give access to more conventional lending options?

    Thanks in advance

    0Reply
  • Marieke Van der Graaf
    Member since 2020 · 2 posts · 0 votes
    6y

    @Matthew Duch I would be ready if I only need to

    Put 10% down. So if there are lenders out there, would love to know. I’m in Orange County, CA so similar area

    0Reply
  • Naresh Maragh
    Rental Property Investor · Tampa, FL · Member since 2020 · 25 posts · 2 votes
    6y

    Thank you for creating this thread.

    I would love to get as many eyes as I can before I make my next move. I just finished a deal and will have 50k cash to put into my next deal. I live in the Tampa Florida area and I’m looking in a pretty good radius. Our market here is pretty good and I would say I’m keen on which areas work in addition to what the trends are here. My plan is try to get a reputable wholesaler buy cash then find some sort of bridge loan to pay for the rehab. I think this is where I need more information when it comes to financing that rehab. After rehab I would refinance

    0Reply
  • Denise Murray
    Member since 2019 · 2 posts · 0 votes
    6y


    Hello Jonathan

    Here is my question/situation:

    I currently have one commercial loan on four buildings: one is an 8-plex and three are four-plex units. I would like to restructure/refinance my loan - paying off the eight-plex and borrowing against the three four-plexes individually on a residential loan. The four buildings all have a separate tax deed. My goal would be to get each four-plex on a 30 year fixed mortgage. I have worked with local banks on this but so far am not finding someone to take this on even though my husband and I are both 800 plus credit scores and have cash to meet the 75% LTV. Can you refer me to someone who may know how to put this together for me? (I live in rural Montana) Thank you

    Denise

    0Reply
  • Bobby Burlas
    Real Estate Broker · Indianapolis, IN · Member since 2019 · 1 post · 0 votes
    6y

    @Jonathan Taylor

    Hi Jonathan,

    My question is specific to financing related to the BRRRR strategy. I am a beginning investor trying to plan how to transition from a Corp job to full time real estate investing. However, I am unsure how to proceed as I am not sure how likely banks would be willing to refinance the hard/private money loans when BRRRRing, if I don't have a full time job with steady income.

    I know in the future when my rental portfolio is larger, I would be able to leverage that rental monthly income to qualify for the refinance. In the short term, is it normal for banks to refinance if I don’t have the steady W2 income? Any information or tips on refinancing with banks without a corporate job would be greatly appreciated!

    Thanks in advance for your insight.

    0Reply
  • Natalia Filipof
    Member since 2019 · 1 post · 0 votes
    6y

    @Jonathan Taylor I would like to invest in a real estate private placement syndication. Should I invest as an LLC or personal?

    0Reply
  • Anthony Hawkins
    New to Real Estate · Meriden CT · Member since 2020 · 11 posts · 3 votes
    6y

    @Jonathan Taylor when using private investors, what is the typical return % offered to the investor and time frame?

    0Reply
  • Jay Yoo
    Investor · Seattle, WA · Member since 2019 · 139 posts · 54 votes
    6y

    @Jonathan Taylor hello. Is LOC required to register to invest other States besides where Im living?

    0Reply
  • Brian ValdiviaBusiness Member
    Investor · Kingsville, MD · Member since 2017 · 102 posts · 20 votes
    6y

    @Jonathan Taylor  I want to grow at a faster rate than I currently am.  I am currently waiting for a seasoning period to end in order to refi cash out and growing. 

    I am considering using a HELOC on my primary as a downpayment on a BRRRR property. My question is this: theoretically, at the end of the rehab/refinance I would take the cash out and pay myself back on the HELOC (likely to do it all over again). Have you seen this done in practice versus just the theoretical situation? Aside from the potential downturn in the market, are there any glaring downsides that I am missing?

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    0Reply
  • Shalom Benton
    Rental Property Investor · Tallahassee, FL · Member since 2020 · 38 posts · 5 votes
    6y

    @Jonathan Taylor

    I want to purchase a house...but will a lender utilize my rental income (for income eligibility) if I have a lien on one of my properties?

    For details: the lien is on a property that is being developed, but it spreads two 2 other properties that are developed.

    I know that a Lien will stop me from SELLING my properties until it’s lifted. But will it stop me from PURCHASING, as well?

    Thanks in advance!!!

    0Reply
  • Charles Alexander
    Seattle, WA · Member since 2019 · 5 posts · 2 votes
    6y

    @Jonathan Taylor I currently own a house hack in Seattle, WA. I live almost free right now but even counting rental income I’ve got a debt-to-income ratio of about 42%. I’m interested in acquiring more real estate and wondering what financing options are available to me. I can come up with:

    *Seller financing with seller carrying the note rather than a bank

    *Partnering with a high income individual who will put their name on the mortgage

    *Private money

    *Possibly portfolio or commercial loans? It seems that the portfolio loans I've found have a max DTI of 50%

    If there are other options available to me, especially for working with banks but without needing partners, I’d love to hear them.

    Thanks so much for doing this!

    Charles

    0Reply
  • Keisha Sykes
    Member since 2020 · 2 posts · 0 votes
    6y

    Hi I paid cash for my home and now I'm looking to buy a building. Is it possible to apply for a equity loan and a conventional loan at the same time. The equity loan will be used to remodel my home and the conventional or FHA loan will be used to purchase and rehab the building .

    0Reply
  • Allison Christine
    Member since 2018 · 7 posts · 1 vote
    6y

    Hi Jonathan! I am targeting SFH or duplexes (house hack) ideally to BRRRR. In my market, MLS properties are flying off market over asking price. I have been diligently driving for dollars, noting properties to target and compiling my cold call list.

    My question is, because I am searching for an off-market property, what type of financing would be best? When I make the owners an offer, do I need the leverage of having hard money?? Because I am a first time buyer, I was planning to use the FHA loan for the low down payment, but am concerned with that approach when not using a realtor and the MLS. 

    I also have a family member willing to lend me 30k of there 401K but hesitant to accept. I have 20K saved up to MAKE A MOVE. I have been researching endlessly, but cannot get comfortable with the financing.

    0Reply
  • Steve Black
    New to Real Estate · Anywhere · Member since 2018 · 2 posts · 0 votes
    6y

    @Jonathan Taylor and anyone else that might know expat mortgage scenarios :-)

    Hey Jonathan, I am an expat living in Australia for the past 10 years. I file my US taxes with my foreign income each year. I am looking to start investing using the BRRRR method. However, I am unsure how easy it will be to qualify for a bank mortgage to either purchase the property and then refi the value out, or purchase the property all cash and then refi out the value after renting the property out? Can I use my foreign income to qualify? How long would I need to have renters in the property to consider the rental income with my foreign income for the refi? Thanks!

    0Reply
  • Jonathan Taylor
    OP
    Lender · Los Angeles, CA · Member since 2017 · 916 posts · 647 votes
    6y

    @Dan K. You're looking at portfolio lending as this loan type is considered commercial financing. If you are using your W-2 income to qualify for this loan then the rates you got quoted are competitivie. I personally think that portfolio loans are very good for very specific borrowers. The costs are higher to originate than standard Biz purpose loans (1-4s) and have different terms like 10 yr fixed amortized over 20 or 25 yrs, program dependent. The lenders I have that do portfolio are in the 5s so you have a good rate. I would ask for a full breakdown of origination costs, specifically lawyer fees, doc fees, etc. 

    0Reply
  • Jonathan Taylor
    OP
    Lender · Los Angeles, CA · Member since 2017 · 916 posts · 647 votes
    6y

    @Simon Obas Fix and flip lenders I work with are at or around 70-80% purchase, 100% reno but no more than 65% ARV not to exceed 70-75% loan to cost. Across the board post covid programs have taken a 5% hair cut and makes tight markets tighter. What you are struggling with is what we all are.

    Your second question is a bit of a gray area. You have to occupy a FHA loan for a min of 1 year (preferably longer) and when you convert it to a rental you technically need to refi it because you are no longer occupying it per the terms of your loan. Now this puts you at higher risk since IF the lender WANTED to call your note due to owner occupancy requirement they could, but reality is different... its up to your discretion and I do not advise any client to knowingly violate the loan terms.

    0Reply
  • Jonathan Taylor
    OP
    Lender · Los Angeles, CA · Member since 2017 · 916 posts · 647 votes
    6y

    @Clark Harrison The FICO will be an issue, I have lenders raise their minimum for first timers to 680-700. I ran into this issue with a client who owned a rental but not a primary. This prevents you from taking advantage of the first time home buyers benefit since you have your name on Real Estate. EASIEST way to get your first property is owner occupy since you can put less down and buy up to four units on one property. 

    So two things to do here. Figure out if you want to buy your first as a house hack or an rental property, second, work on your credit. The way rates work are tier-based on credit (along with other factors) but credit is important along with income. You CAN use an FHA for a rental (at least here in CA) but Owner Occ provides more benefits to down payment requirements.

    0Reply
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