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Looking for better financial options for an investment property.

Agustin Conti
Member since 2021 · 79 posts · 25 votes

Hi, I do have 2 rental units doing well in dif. states (I am from Florida) and I am looking to buy a Single Family Home for LTR in the Greenville Area of SC. I know these are not the best times for getting good financing deals and interest rates but I am ready to to move on and planning to refinance as soon as things get better. I have a credit score of 815-825, I am currently pre-approved for a 30-year fixed loan with 20% down payment at the following rates: (with an online bank) 

8.125% Rate
8.708% APR

Plus! 3.4 points ($7,648) These numbers are crazy specially compared with 2 years ago when I got the 2 properties I have under 3% each.

IF the numbers allow for self support and or minimal cash flow I want to go for it and refinance later BUT the question is:

Is there realistically anything better than this out there? as of now (AUG 23) if not, when is the expectation for these numbers to get better?

Thanks a lot!

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Robin SimonBusiness Member
Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
3y
Quote from @Agustin Conti:

Hi, I do have 2 rental units doing well in dif. states (I am from Florida) and I am looking to buy a Single Family Home for LTR in the Greenville Area of SC. I know these are not the best times for getting good financing deals and interest rates but I am ready to to move on and planning to refinance as soon as things get better. I have a credit score of 815-825, I am currently pre-approved for a 30-year fixed loan with 20% down payment at the following rates: (with an online bank) 

8.125% Rate
8.708% APR

Plus! 3.4 points ($7,648) These numbers are crazy specially compared with 2 years ago when I got the 2 properties I have under 3% each.

IF the numbers allow for self support and or minimal cash flow I want to go for it and refinance later BUT the question is:

Is there realistically anything better than this out there? as of now (AUG 23) if not, when is the expectation for these numbers to get better?

Thanks a lot!


Can you clarify the difference between the rate and APR structure? shouldn't these be the same? I think if that is truly your credit then you can probably find some better options here on BP

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  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    3y

    No one knows and anyone that's says it will be better by xx date is just guessing.

    If your other properties are doing well and have low interest rates then why do you want to give that up?

    Maybe just wait till rates are more favorable to buy something in Greenville?

    You could also keep those properties and use a HELOQ against them to have the downpayment for your Greenville property. Then payoff the HELOQ as quick as possible. 

    0Reply
  • Devin PetersonBusiness Member
    Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 664 votes
    3y
    Quote from @Agustin Conti:

    Hi, I do have 2 rental units doing well in dif. states (I am from Florida) and I am looking to buy a Single Family Home for LTR in the Greenville Area of SC. I know these are not the best times for getting good financing deals and interest rates but I am ready to to move on and planning to refinance as soon as things get better. I have a credit score of 815-825, I am currently pre-approved for a 30-year fixed loan with 20% down payment at the following rates: (with an online bank) 

    8.125% Rate
    8.708% APR

    Plus! 3.4 points ($7,648) These numbers are crazy specially compared with 2 years ago when I got the 2 properties I have under 3% each.

    IF the numbers allow for self support and or minimal cash flow I want to go for it and refinance later BUT the question is:

    Is there realistically anything better than this out there? as of now (AUG 23) if not, when is the expectation for these numbers to get better?

    Thanks a lot!

    Agustin, there are definitely better options out there for you, especially in the world of a DSCR one thing. I would recommend that you find an experienced debt service coverage ratio/investor broker to help you shop a myriad of different programs across the country. 3.4 points is also a lot I do not believe even the best of brokers that should be charging 3.4 points if they want to maintain mutually beneficial arrangements amongst them and their clients. Find someone who is going to save you some dollars on the back end as well.
    [email protected]860-538-3672
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    0Reply
  • Agustin Conti
    OP
    Member since 2021 · 79 posts · 25 votes
    3y
    Quote from @John Underwood:

    No one knows and anyone that's says it will be better by xx date is just guessing.

    If your other properties are doing well and have low interest rates then why do you want to give that up?

    Maybe just wait till rates are more favorable to buy something in Greenville?

    You could also keep those properties and use a HELOQ against them to have the downpayment for your Greenville property. Then payoff the HELOQ as quick as possible. 


    HI, I never said I want to give up 2 good properties?! how did you get that?. I just stated the fact that I have 2 and want to get a third one, a bit info about myself thats all. Thanks for the comment!

    0Reply
  • Agustin Conti
    OP
    Member since 2021 · 79 posts · 25 votes
    3y
    Quote from @Devin Peterson:
    Quote from @Agustin Conti:

    Hi, I do have 2 rental units doing well in dif. states (I am from Florida) and I am looking to buy a Single Family Home for LTR in the Greenville Area of SC. I know these are not the best times for getting good financing deals and interest rates but I am ready to to move on and planning to refinance as soon as things get better. I have a credit score of 815-825, I am currently pre-approved for a 30-year fixed loan with 20% down payment at the following rates: (with an online bank) 

    8.125% Rate
    8.708% APR

    Plus! 3.4 points ($7,648) These numbers are crazy specially compared with 2 years ago when I got the 2 properties I have under 3% each.

    IF the numbers allow for self support and or minimal cash flow I want to go for it and refinance later BUT the question is:

    Is there realistically anything better than this out there? as of now (AUG 23) if not, when is the expectation for these numbers to get better?

    Thanks a lot!

    Agustin, there are definitely better options out there for you, especially in the world of a DSCR one thing. I would recommend that you find an experienced debt service coverage ratio/investor broker to help you shop a myriad of different programs across the country. 3.4 points is also a lot I do not believe even the best of brokers that should be charging 3.4 points if they want to maintain mutually beneficial arrangements amongst them and their clients. Find someone who is going to save you some dollars on the back end as well.
    Hi David, I am not familiar not know anything about DSCR or how to find someone who is going to save me some dollars on the back end. Any tips?  thanks for your post!
    0Reply
  • Robin SimonBusiness Member
    Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
    3y
    Quote from @Agustin Conti:

    Hi, I do have 2 rental units doing well in dif. states (I am from Florida) and I am looking to buy a Single Family Home for LTR in the Greenville Area of SC. I know these are not the best times for getting good financing deals and interest rates but I am ready to to move on and planning to refinance as soon as things get better. I have a credit score of 815-825, I am currently pre-approved for a 30-year fixed loan with 20% down payment at the following rates: (with an online bank) 

    8.125% Rate
    8.708% APR

    Plus! 3.4 points ($7,648) These numbers are crazy specially compared with 2 years ago when I got the 2 properties I have under 3% each.

    IF the numbers allow for self support and or minimal cash flow I want to go for it and refinance later BUT the question is:

    Is there realistically anything better than this out there? as of now (AUG 23) if not, when is the expectation for these numbers to get better?

    Thanks a lot!


    Can you clarify the difference between the rate and APR structure? shouldn't these be the same? I think if that is truly your credit then you can probably find some better options here on BP

    [email protected]
    Harpoon Capital514 Reviews
    WebsiteView Page
    1Reply
  • Agustin Conti
    OP
    Member since 2021 · 79 posts · 25 votes
    3y
    Quote from @Robin Simon:
    Quote from @Agustin Conti:

    Hi, I do have 2 rental units doing well in dif. states (I am from Florida) and I am looking to buy a Single Family Home for LTR in the Greenville Area of SC. I know these are not the best times for getting good financing deals and interest rates but I am ready to to move on and planning to refinance as soon as things get better. I have a credit score of 815-825, I am currently pre-approved for a 30-year fixed loan with 20% down payment at the following rates: (with an online bank) 

    8.125% Rate
    8.708% APR

    Plus! 3.4 points ($7,648) These numbers are crazy specially compared with 2 years ago when I got the 2 properties I have under 3% each.

    IF the numbers allow for self support and or minimal cash flow I want to go for it and refinance later BUT the question is:

    Is there realistically anything better than this out there? as of now (AUG 23) if not, when is the expectation for these numbers to get better?

    Thanks a lot!


    Can you clarify the difference between the rate and APR structure? shouldn't these be the same? I think if that is truly your credit then you can probably find some better options here on BP

    Without the particular details of this loan offer, I understand that the the basic/standard difference between rate and APR is that the APR in the rate + all costs/fees for the loan including points you pay to get that rate.
    0Reply
  • Nick BelskyBusiness Member
    Residential and Commercial Broker · Member since 2021 · 1k+ posts · 704 votes
    3y

    @Agustin Conti

    Rate is relative and they change all the time.  You can always change the rate.  You cannot change the location or market that a property sits in though.  The rate you note is a little high given your FICO, but points is where I see a larger issue.  I don't see many deals where clients are buying more than 2 points in this market.  That is usually a split between the broker and lender, all broker, or all lender.  As far as back end fees, such as YSP, this is something you've got to ask about.  Few will tell you upfront.  By adding YSP, the rate goes up and the loan officer/broker gets a percentage cut on the back side of the deal in addition to whatever points are negotiated up front.  I don't operate this way, but many do.

    I priced out a DSCR deal with a 1.12 DSCR at 80LTV yesterday at 7.6% at par. No lender points at all. So better rates are definitely out there. But where you fit all depends on the whole picture. There are lot of variables and not all lenders will accommodate.

    Cheers!

    [email protected]
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  • Agustin Conti
    OP
    Member since 2021 · 79 posts · 25 votes
    3y

    @Nick Belsky

    Thanks, but what is YSP and can you explain this: "I priced out a DSCR deal with a 1.12 DSCR at 80LTV yesterday at 7.6% at par"

    Also, were can I find these type of brokers and deals?

    0Reply
  • Nick BelskyBusiness Member
    Residential and Commercial Broker · Member since 2021 · 1k+ posts · 704 votes
    3y
    Quote from @Agustin Conti:

    @Nick Belsky

    Thanks, but what is YSP and can you explain this: "I priced out a DSCR deal with a 1.12 DSCR at 80LTV yesterday at 7.6% at par"

    Also, were can I find these type of brokers and deals?

    Many will see your post and reach out via PM.  Brokers are all around the forums as well as many lenders.

    Cheers!

    [email protected]
    Belsky Mortgage, LLC527 Reviews
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    0Reply
  • Stacy RaskinBusiness Member
    Lender · Member since 2022 · 1k+ posts · 501 votes
    3y

    @Agustin Conti, the rate will depend on when you lock the loan but probably can do better than that. Either way 3.4 points is on the higher side. DSCR loans could be a good option as you can get those rates or better with less paperwork.

    DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth.

    Here's a bit more in detail about how rates are calculated for DSCR loans:

    1. Credit score- the higher the best. 760+ generally gets best pricing for investment property loans with most lenders

    2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.

    3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.

    4. Are you cash flowing the property? Is your DSCR ratio greater than 1-meaning are you cash flowing. Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit.

    I've included an example below to help illustrate this.

    So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.

    See example below:

    DSCR < 1

    Principal + Interest = $1,700

    Taxes = $350, Insurance = $100, Association Dues = $50

    Total PITIA = $2200

    Rent = $2000

    DSCR = Rent/PITIA = 2000/2200 = 0.91

    Since the DSCR is 0.91, we know the expenses are greater than the income of the property.

    DSCR >1

    Principal + Interest = $1,500

    Taxes = $250, Insurance = $100, Association Dues = $25

    Total PITIA = $1875 Rent = $2300

    DSCR = Rent/PITIA = 2300/1875 = 1.23

    DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new deals.

    [email protected]818-770-0340
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    0Reply
  • Darryl Hoelscher
    Member since 2023 · 2 posts · 0 votes
    3y

    Hey Agustin, 3.4 points is definitely on the high side. With your excellent credit score and prior experience, we might be able to get a lower rate as well. However, it is difficult to give any specifics before the underwriting team takes a look at your pre-approval form. It doesn't hurt to shop around, and we do not do a hard credit pull for a pre-approvals. 

    0Reply
  • Brayden Hrycko
    Lender · Allentown, PA · Member since 2023 · 207 posts · 38 votes
    3y

    Hey @Agustin Conti,

    As many have already said, 3.4 points seems a bit high. Reach out to some lenders here and any of us would be happy to give you more options.

    0Reply
  • Timothy Hero
    Lender · United States · Member since 2020 · 1k+ posts · 499 votes
    3y

    My DSCR options are offering 80% LTV around 8% with 1 pt for your tier of credit.

    0Reply
  • Jamie Jones
    Lender · Nashville, TN · Member since 2017 · 205 posts · 107 votes
    3y

    Hi @Agustin Conti, the rate itself looks about right for 20% down on conventional loan but points are a bit high. For reference, I'm at 8.125% with 2.5 points today. Just FYI, if you are able to swing 25% down, the points go down to less than 1%. 

    Keep in mind that mortgage rates can change intraday, depending on economic date that influence mortgage bond prices. Today has been a good day for mortgage bonds, leading to lower rates. 

    0Reply
  • Dave Skow
    Lender · Seattle, WA · Member since 2014 · 2k+ posts · 899 votes
    3y

    @Agustin Conti- thanks   1) consider putting 25% down  as this will improve the pricing   2)  ask your lender  if you can consider  taking a higher than 8.125% rate  in order to get the loan fee  lowered  from 3.4%  3)  as you  dont have a  property  yet - these  rates  are  subject to change ..rates dropped  nicely today 

    0Reply
  • Jayson Cain
    Lender · Manhattan Beach, CA · Member since 2017 · 423 posts · 268 votes
    3y

    Hi @Agustin Conti,

    I'm based in Southern California, but I have started my out-of-state real estate journey in Indianapolis. Now, I have a portfolio of Short Term Rentals and Long Term Rentals.

    I've also helped other investors with their DSCR loans and flip projects. Happy to share my experiences and chat with you more if you're interested.

    0Reply
  • Debbie FalesBusiness Member
    Lender · Annapolis, MD · Member since 2018 · 141 posts · 47 votes
    3y

    As many have already mentioned, rates are variable and depend on a lot of factors — borrower experience, credit score, leverage requested, money down, and, of course, property details. 

    For our most experienced clients, our current DSCR rates are starting around 7.5%.

    Good luck!! 


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  • Jesse Holsapple
    Lender · Fountain, CO · Member since 2022 · 124 posts · 32 votes
    3y

    Depending on what your existing properties are cash flowing, I could possibly help you look at Pref equity that wouldn't effect your existing interest rate, but also wouldn't be a second lien on the property. Let's connect.

    0Reply
  • Ruchit Patel
    Bay area, CA · Member since 2021 · 383 posts · 306 votes
    3y

    rent to retirement has many creative financial options for an investment property, YouTube it. 

    1Reply
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