Chattanooga, TN · Member since 2010 · 319 posts · 100 votes
Hey Guys
I'm new here and would love to answer any questions you have regarding getting financing for investment properties.
I'm an underwriter at a bank that specializes in real estate investment properties.
I'm also an real estate investor myself.
NOTE FROM MODERATOR: "ANYTHING" DOES NOT INCLUDE "WHERE CAN I GET A LOAN", "WHAT ARE YOUR TERMS FOR ..." OR "WHAT LENDER DOES..." OR ANY SIMILAR QUESTIONS. SUCH POSTS MUST GO INTO THE MARKETPLACE.
When flipping houses how do you avoid the objections that pop up regarding the low acquisition price and a much higher selling price? And the appraisal comes in at the asking price. How can you flip the house as soon as possible at market value and have lenders approve the mortgage? Is there a percentage of mark up that they feel is acceptable?
Jimmy Moncrief -- I will take a shot, although this isn't a straight financing question:
What do you think the "real" risk is that banks will attempt to call mortgages using the "due on sale" clause if properties move from single-owner into single-member LLC? How do you think banks think about clause on a practical basis? (e.g., in 10 years if rates are very high.. will they ensure servicers dowhat they can to force refis? or is the legal area so grey, that its not on their radar screen at all?)
Hi Jimmy, do you know of anyone who would do a cash out refi on a portfolio of cash flowing mobile homes each on their own land? All late medel doublewides. Permanent foundations.
George P. Not understanding your question, but you could use lendable equity in another property (even your own house) to pledge so you could be at 80% for an investment property.
Jon Klaus Sorry I don't. I was on a recent conference call with http://www.rocusa.org/about-us/
They know a ton about getting appraisals in your favor. I would reach out to them
Mike B. Thanks!
Arjun K. That question sounds more like a legal question than a financing one. However, why not just get permission from the lending institution to do this? We do this all the time (note we are a community bank that doesn't sell off our loans.
When flipping houses how do you avoid the objections that pop up regarding the low acquisition price and a much higher selling price? And the appraisal comes in at the asking price. How can you flip the house as soon as possible at market value and have lenders approve the mortgage? Is there a percentage of mark up that they feel is acceptable?
John Moore The short answer is no. However, if you use a good title company I would simply mark this up (this is what wholesellers do to hide their profits)
My name is Isaac and I am a potential new investor. Very cool that you offered to answer questions...
My question is this....
If I want to buy a rental property for 100,000, conventional loan, I would need 20% down, how much extra do I need in my account after the 20,000 down for the lender to feel comfortable on average?
Thanks for the offer Jimmy.
Here is my question....
I own a two family as a rental property and a single family that I live in... (it was a two family but have converted it too a single to fit my family)... My personal home has maybe 30k in equity.. my rental has 120k in equity... I wanted to use the equity in the two family rental to buy another property... maybe a flip maybe another rental... In speaking with the bank they will not lend me money on the equity of the rental.. only on my personal home. I have an LLC that I was going to transfer the two family into but the bank will not lend me money commercially because my LLC is less than 2 years old... Needless to say I'm VERY FRUSTRATED with this type of information... I am born and raised in my town 43 years old I'm not going anywhere... what do I have to do to try to use the large amount of equity in that two family so I can move forward with my investments??
Hey Jimmy, how can I become pre-approved for my primary if my main job is inconsistent income where I have reported $100k one year and 0 the next? I have 3x the value of the house in assets but the first lender didn't seem to care becuase of my tax returns.
I'm trying to avoid the need of a co-signer & don't want to make myself get a "behind the desk" job. Should I seek more lenders to see if this works elswhere? I can't think of another option.
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I own a two family as a rental property and a single family that I live in... (it was a two family but have converted it too a single to fit my family)... My personal home has maybe 30k in equity.. my rental has 120k in equity... I wanted to use the equity in the two family rental to buy another property... maybe a flip maybe another rental... In speaking with the bank they will not lend me money on the equity of the rental.. only on my personal home. ...
John D. - I would suggest you try Wells Fargo to try to get a HELOC on your investment property; several other forum members (and I) have a Wells Fargo HELOC on investment property.
John D. why not change banks? Community bank? You could even do a cash-out refinance?
Matt Lawrence What do you live on if you have zero income for some years? Schedule C income? Need some more data to give a good answer. Until then, understand the bank wants to see two sources of repayment. For you currently, you could make the argument for rental property and liquidation of collateral.
"What do you live on if you have zero income for some years? Schedule C income? Need some more data to give a good answer. Until then, understand the bank wants to see two sources of repayment. For you currently, you could make the argument for rental property and liquidation of collateral."
I live off of my other money/savings when I have a down year. I'm a professional poker player but I file as a professional gambler for tax purposes - more write-offs. What do you mean by 2 sources of repayment? I have my money pretty well diversified if that has any merit.
I live off of my other money/savings when I have a down year. I'm a professional poker player but I file as a professional gambler for tax purposes - more write-offs.
It doesn't matter what your net worth might be, it's going to be near impossible for you to get a federally insured mortgage if you file as a professional gambler.
I was actually having this discussion with a well known poker pro a couple months ago -- apparently he was able to get a couple mortgages on a primary residence and vacation houses back in the mid-2000s and to this day has never missed a payment...but mortgage brokers are telling him that his only option these days are portfolio lenders (who would likely require him to collateralize the loans).
Is this scenario possible? Use hard money to buy a discounted property, then do a non-cash out refi to pay off the hard money lender? If so, what type of LTV would you have to have? And would there be any waiting period to refi?
Rob S YES - this is very easy - we do it all the time. We do 80%, but 75% LTV is better. Make sure you have a solid lease in-place and can bring verified bank statements to prove rent and cash flow for the perspective property.
If I could add, I would highly recommend at the very least talking to a community banker, before buying the property. It is VERY hard to make money dealing with hard money lenders.
Jimmy Moncrief Say I were looking to buy a property and do a gut/rehab with a HUD 203k loan. Would the time the property spends under construction count towards the 1 year of living in the property before being eligible for another FHA loan?
It is VERY hard to make money dealing with hard money lenders.
Jimmy, you are unnecessarily dissing on HMLs again. The fact is that a rehabber may never get a deal dealing with the long closing period of a conventional bank. It's a cash and quick-close market for picking up distressed properties, and banks can't close fast enough. Also, banks will require a rehabber to put a lot more of their own cash in typically, so this waters down the ROI. A rehabber could potentially do two deals at once with a HML, versus only one with a bank, for example. And VERY FEW banks make purchase+rehab loans these days.
I'm not sure you have a sense of how much community banks have battened down the hatches on rehab lending on distressed properties.
Enter hard money lenders, as well as private lenders.
A hard money loan might cost 7% of the sales price, versus 4% for a bank loan. If a property was properly acquired such that purchase+rehab is no more than 70% of exit price, then there is PLENTY of margin to cover the extra 3% to the HM lender. So saying that it is VERY hard to make money dealing with HML's is just flat wrong. Without private money and HMLs, most rehabbers are out of business.
David Beard Thank you for your criticisism. I genuinely appreciate it. You are right, I have probably thrown the baby out with the bathwater and like banks there are good HMLs and bad HMLs. Are you a HML?