Kansas City · Member since 2018 · 14 posts · 2 votes
Hi there - I have completed my first two deals, which are going better than anticipated, and am trying to keep carrying this momentum. I had a discussion with my lender yesterday about preparing my finances so that I can jump at an opportunity if it chooses to present itself. I was asked what funds I had available and I mentioned around $75k (which does not go far at 25% down). I have access to funds through friends and family that I fully intend to leverage; only problem is that I informed that large deposits would need to sit in my account for 60 days to season and for the bank to permit use of the funds for underwriting. Any advice to circumvent this? It is had to foresee when the next purchase will be and I would like to avoid paying interest on idle cash.
If you are borrowing the funds to leverage a loan from the bank why not just use those funds to pay the down payment? I mean either way you are using them and paying interest on them. Then use your existing funds to leverage the bank loan?
Kansas City · Member since 2018 · 14 posts · 2 votes
7y
@Matthew Jacobsen That would be the purpose, using the funds for a down payment. With a traditional investment property loan via bank, I was told you can not use gifted or use non-certified loan monies on the down payment (note that this is different if you are planning to inhabit the building). What I am running into is: If I take a loan from a friend or family member, that is a non-certified loan and therefore can not be used for underwriting unless that money has 'seasoned' in my bank account for at least 60 days. Or the friend/family member must be on the loan with me, which is something that I will not consider.
I could explore the idea of a commercial loan, but I worry that they will not be interested in carrying a note under $500k.
Hi there - I have completed my first two deals, which are going better than anticipated, and am trying to keep carrying this momentum. I had a discussion with my lender yesterday about preparing my finances so that I can jump at an opportunity if it chooses to present itself. I was asked what funds I had available and I mentioned around $75k (which does not go far at 25% down). I have access to funds through friends and family that I fully intend to leverage; only problem is that I informed that large deposits would need to sit in my account for 60 days to season and for the bank to permit use of the funds for underwriting. Any advice to circumvent this? It is had to foresee when the next purchase will be and I would like to avoid paying interest on idle cash.
Thanks!
If your DTI is solid, you can borrow the funds. As a private 2nd mortgage secured by one of your existing properties. Not all lenders will allow. Everything must be legit/recorded/notarized/etc, no "gentlemen's agreements."
Kansas City · Member since 2018 · 14 posts · 2 votes
7y
@Chris Mason DTI is strong and assuming the next multi-family will have some level of occupancy, the DTI will not be a factor in this.
So friends and family may not be the best route to additional funds needed as down payment.. I am concerned that a second mortgage will not be sufficient as my previous two deals were closed in early march of this year (not a lot of equity on the bone right now), a HELOC requires 6+ months of ownership to be appraised at anything other than purchase price, and a refi would be expensive...
That leaves me with a personal loan, just pay the interest on idle money from friends and family, or waiting for HELOC/refi/2nd mortgage to make more sense? I suspect each property will appraise for $165k+ - outstanding loans on each are $89k and $101k.