Tapping Equity with DTI Hurdle

6 Replies

Hi,

I've got around $1.5 million in equity in a few properties around Denver, Colorado. Without selling, I want to tap into some of it for investing purposes, but I've got the good old favorite DTI hurdle that's preventing me from more easily accessing it from a conventional lender (I checked with a credit union already). My wife and I are in a transition period -- one in which I retired my decade-long business, became a stay-at-home dad for our 2nd child, and am now doing RE investing fulltime (managing my local properties and making good progress on remote-investing in other parts of the country).

What are some ideas for tapping into that -- which would include reasonable terms (not interested in hard money, e.g.)? Please share thoughts here or feel free to contact me with any leads for local lenders. Thanks!

Originally posted by @Brian Kraft :

Hi,

I've got around $1.5 million in equity in a few properties around Denver, Colorado. Without selling, I want to tap into some of it for investing purposes, but I've got the good old favorite DTI hurdle that's preventing me from more easily accessing it from a conventional lender (I checked with a credit union already). My wife and I are in a transition period -- one in which I retired my decade-long business, became a stay-at-home dad for our 2nd child, and am now doing RE investing fulltime (managing my local properties and making good progress on remote-investing in other parts of the country).

What are some ideas for tapping into that -- which would include reasonable terms (not interested in hard money, e.g.)? Please share thoughts here or feel free to contact me with any leads for local lenders. Thanks!

There are portfolio lenders out there that don't require income docs.  They're a little pricier than traditional conventional rates, but with good credit they are in the high 6's, low 7's on a 30 year fixed. 

Originally posted by @Stephanie P. :
Originally posted by @Brian Kraft:

Hi,

I've got around $1.5 million in equity in a few properties around Denver, Colorado. Without selling, I want to tap into some of it for investing purposes, but I've got the good old favorite DTI hurdle that's preventing me from more easily accessing it from a conventional lender (I checked with a credit union already). My wife and I are in a transition period -- one in which I retired my decade-long business, became a stay-at-home dad for our 2nd child, and am now doing RE investing fulltime (managing my local properties and making good progress on remote-investing in other parts of the country).

What are some ideas for tapping into that -- which would include reasonable terms (not interested in hard money, e.g.)? Please share thoughts here or feel free to contact me with any leads for local lenders. Thanks!

There are portfolio lenders out there that don't require income docs.  They're a little pricier than traditional conventional rates, but with good credit they are in the high 6's, low 7's on a 30 year fixed. 

 Thanks, Stephanie. Any advice on how to track those lenders down? 

Originally posted by @Brian Kraft :
Originally posted by @Stephanie Potter:
Originally posted by @Brian Kraft:

Hi,

I've got around $1.5 million in equity in a few properties around Denver, Colorado. Without selling, I want to tap into some of it for investing purposes, but I've got the good old favorite DTI hurdle that's preventing me from more easily accessing it from a conventional lender (I checked with a credit union already). My wife and I are in a transition period -- one in which I retired my decade-long business, became a stay-at-home dad for our 2nd child, and am now doing RE investing fulltime (managing my local properties and making good progress on remote-investing in other parts of the country).

What are some ideas for tapping into that -- which would include reasonable terms (not interested in hard money, e.g.)? Please share thoughts here or feel free to contact me with any leads for local lenders. Thanks!

There are portfolio lenders out there that don't require income docs.  They're a little pricier than traditional conventional rates, but with good credit they are in the high 6's, low 7's on a 30 year fixed. 

 Thanks, Stephanie. Any advice on how to track those lenders down? 

 The market isn't big enough for many to actually "specialize" in the alt-doc loan programs.... Basically you've got to call someone licensed to broker and say "hey I'm not super rate sensitive, open your junk mail please" since all of us are inundated with spam from these outfits on a daily basis, and for the most part aren't super enthusiastic about working with them. If they are going to broker it to an outfit that starts with S and ends in T, or that's two words with the first two letters being D and H respectively, you're doing OK. Avoid two words, 1st letter A and 2nd letter O. Not posting names directly because I do not want to be seen as endorsing any alt-doc non-qm lender. 

FYI: Now that the LO comp rule is in effect it's illegal for a lender to get paid more or less depending on your specific interest rate, so there's no reason not to get you the best rate out there among alt-doc loan programs, if that makes sense, meaning you're not exposing yourself to predatory behavior by being upfront about not being rate sensitive, like you would have been had you said that in 2006. By saying that, you're just communicating that you're not a waste of time since you know upfront that 5% on a 30YF isn't going to happen.

Originally posted by @Chris Mason :
Originally posted by @Brian Kraft:
Originally posted by @Stephanie Potter:
Originally posted by @Brian Kraft:

Hi,

I've got around $1.5 million in equity in a few properties around Denver, Colorado. Without selling, I want to tap into some of it for investing purposes, but I've got the good old favorite DTI hurdle that's preventing me from more easily accessing it from a conventional lender (I checked with a credit union already). My wife and I are in a transition period -- one in which I retired my decade-long business, became a stay-at-home dad for our 2nd child, and am now doing RE investing fulltime (managing my local properties and making good progress on remote-investing in other parts of the country).

What are some ideas for tapping into that -- which would include reasonable terms (not interested in hard money, e.g.)? Please share thoughts here or feel free to contact me with any leads for local lenders. Thanks!

There are portfolio lenders out there that don't require income docs.  They're a little pricier than traditional conventional rates, but with good credit they are in the high 6's, low 7's on a 30 year fixed. 

 Thanks, Stephanie. Any advice on how to track those lenders down? 

 The market isn't big enough for many to actually "specialize" in the alt-doc loan programs.... Basically you've got to call someone licensed to broker and say "hey I'm not super rate sensitive, open your junk mail please" since all of us are inundated with spam from these outfits on a daily basis, and for the most part aren't super enthusiastic about working with them. If they are going to broker it to an outfit that starts with S and ends in T, or that's two words with the first two letters being D and H respectively, you're doing OK. Avoid two words, 1st letter A and 2nd letter O. Not posting names directly because I do not want to be seen as endorsing any alt-doc non-qm lender. 

FYI: Now that the LO comp rule is in effect it's illegal for a lender to get paid more or less depending on your specific interest rate, so there's no reason not to get you the best rate out there among alt-doc loan programs, if that makes sense, meaning you're not exposing yourself to predatory behavior by being upfront about not being rate sensitive, like you would have been had you said that in 2006. By saying that, you're just communicating that you're not a waste of time since you know upfront that 5% on a 30YF isn't going to happen.

 Thanks, that's helpful. Would you mind PMing me the rest of the letters (not following). 

I would think there are local Denver folks who know some of those lenders. Anyone? I wonder if there's a better forum for me to ask in. 

Maybe Merchants might have something for you. I'm paying 8% for hm right now, and I'm not sure  a non-conventional lender would go into a backup position for this type of loan for much less. Could you move some debt around to payoff some properties to put someone in 1st? 

What about private individuals that you know? I have a few I use that like their money being deployed at rates higher than the .5% their bank was giving them. There is a ton of money out there. 

Originally posted by @Matt M. :

Maybe Merchants might have something for you. I'm paying 8% for hm right now, and I'm not sure  a non-conventional lender would go into a backup position for this type of loan for much less. Could you move some debt around to payoff some properties to put someone in 1st? 

What about private individuals that you know? I have a few I use that like their money being deployed at rates higher than the .5% their bank was giving them. There is a ton of money out there. 

I'll check out Merchants. 

Yeah, I'll also look into moving debt -- I only have around $75k left to go on one. I'll think about it and maybe talk with some PML family/friends about that specifically. So, yes -- I've used/am using some private money, but I have barely done the real work of reaching out to my bigger circle. I'm also on that asap.

Is a cashout refi an easier path around lower DTI?