Need Hard money Loan for Multifamily
Investor · Tacoma, WA · Member since 2015 · 20 posts · 3 votes
I need a 300k loan to buy & rehab a duplex I want to add to my portfolio I am not going to live in it so I am looking for a landlord loan for an initial purchase & rehab. Need at least a yr to refinance as I want to us rental income to qualify.
Questions:
1. Has anyone used InTrust Funding (Bellevue Washington) or Core Vest Financing? What was your experience with initial funding, preapproval and payouts.
2. Does anyone know a private lender in Tacoma WA or surrounding area who will let landlords use a property with 100% equity in portfolio in lieu of down payment.
3. Any other advice is welcomed
Thanks in advance for input.
Cheri
I've used Intrust before, as well as a couple dozen other hard money lenders. I know about CoreVest, but haven't specifically used them so I can't provide insight on their pros and cons. I can tell you that there isn't a perfect HML that can do everything you want (low rates, low points, long terms, low down payment, quick closing, easy docs, etc.) so you have to decide what's important to you. Intrust is on the higher end of cost and down payment, but they are fast and have the easiest and fastest draw process of any HML that I've seen. They might not be the best choice if you need to have a loan that runs for at least a year as they typically don't do 1-yr loans or will charge a very hefty fee for it. This is the case with a lot of the local HMLs as well.
You're essentially doing the BRRRR strategy here, which I usually recommend folks figuring out their refinance first before looking at hard money to buy it. Most BRRRR investors are more concerned about the 6-month cash-out seasoning period to use appraised value (as opposed to cost), but it looks like you're concerned about DTI and not being able to get a conventional loan at all. Have you already spoken to a mortgage officer about this and have them pre-qualify your income and debt? I'd definitely do that before anything else. Depending on how you set it up, you can use rental income right away, or you might need to show 1-2 years of tax returns.
If you can't get a conventional loan, you may be able to get a commercial loan for the refinance, depending on how well the duplex will cashflow after you fix it up. Some commercial lenders aren't keep on cash-outs on the refinance though, although I'm not sure how important that is to you or what your BRRRR goals are in general.
If you have a free and clear property, it's not hard to use the equity there as down payment for your purchase. You can do it as a single cross-collateralized loan or in two separate loans - one to cash out the money you need for down payment, and one to buy the duplex you want.
Hope that's helpful. Feel free to call/text/e-mail me if you wanted to dig a little deeper into your specific situation.
I've used Intrust before, as well as a couple dozen other hard money lenders. I know about CoreVest, but haven't specifically used them so I can't provide insight on their pros and cons. I can tell you that there isn't a perfect HML that can do everything you want (low rates, low points, long terms, low down payment, quick closing, easy docs, etc.) so you have to decide what's important to you. Intrust is on the higher end of cost and down payment, but they are fast and have the easiest and fastest draw process of any HML that I've seen. They might not be the best choice if you need to have a loan that runs for at least a year as they typically don't do 1-yr loans or will charge a very hefty fee for it. This is the case with a lot of the local HMLs as well.
You're essentially doing the BRRRR strategy here, which I usually recommend folks figuring out their refinance first before looking at hard money to buy it. Most BRRRR investors are more concerned about the 6-month cash-out seasoning period to use appraised value (as opposed to cost), but it looks like you're concerned about DTI and not being able to get a conventional loan at all. Have you already spoken to a mortgage officer about this and have them pre-qualify your income and debt? I'd definitely do that before anything else. Depending on how you set it up, you can use rental income right away, or you might need to show 1-2 years of tax returns.
If you can't get a conventional loan, you may be able to get a commercial loan for the refinance, depending on how well the duplex will cashflow after you fix it up. Some commercial lenders aren't keep on cash-outs on the refinance though, although I'm not sure how important that is to you or what your BRRRR goals are in general.
If you have a free and clear property, it's not hard to use the equity there as down payment for your purchase. You can do it as a single cross-collateralized loan or in two separate loans - one to cash out the money you need for down payment, and one to buy the duplex you want.
Hope that's helpful. Feel free to call/text/e-mail me if you wanted to dig a little deeper into your specific situation.
What is the breakdown of your deal? Purchase Price Rehab Costs and ARV on your deal?
Corevest is a legit company and not too difficult to deal with
@Cheri Crane You can certainly find reputable HML here on the directory associated with BP:
https://www.biggerpockets.com/companies/hard-money
Thank you all for your help. We are asking for preapproval for 300k. InTrust Funding said:
5 month 2pts, 7 months 3pts, 9 months 4 pts
Fees $2k
Interest 1% per month
Problem is by time hard money loans approved - property already sold InTrust says they can fund in 48 hours still talking to them
Feedback?
@Dan Handford I don't think the HML directory is very reputable. Whoever pays the most gets to be shown on top, and they're almost always non-local lenders. Most of the local HMLs in WA aren't even in the directory.
@Cheri Crane Most of the local HMLs in our area charge the same: 12% interest (which is 1%/month) and 2pts for 5-6 months. Most of them can close in 2-3 days as well. A lot of them even fund same-day at the auction. This not something the national lenders can do because they'll all require an appraisal (whereas the local lenders usually don't need one).
However, where the national lenders compete is pricing. If you're a new investor, you can expect rates around 9-10% interest and 2-3pts for a 1-yr loan. If you're experienced (i.e. have done at least 3-5 deals in the past couple of years), you can get rates in the 7's and 8's with 1-2pts for a 1-yr loan.
If you need to close fast (in less than a week), I'd stick with Intrust just to get your deal done. One of our partners has gotten loan docs out in less than 24 hours before, but it's really rare to see that (the stars really have to align), especially if you're a newer investor.
Thank you Nghi Le! Really appreciate it.