Looking for creative savvy REI friendly mortgage broker

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Looking for creative savvy REI friendly mortgage broker

Jasmine Cotes
Rental Property Investor · Wayne, NJ · Member since 2015 · 26 posts · 3 votes

Hey looking for a mortgage broker who knows the deal when it comes to REI, creative financing, the work arounds on how to avoid the traditional 20-25% down and any other loop holes there may be out there.

I'm trying to get my second home I currently live in a small 2 fam, I plan on upgrading to a larger two family now that the kids have outgrown sharing a room. I know i should be able to get a 2nd FHA loan under this condition but what happens to the 1st home (any penalties?) and how will i get myself into the 3rd property which i plan on obtaining shortly after, can i keep upgrading and keep the older properties at the same time, when does that plan run out? I'm just clueless when it comes to getting creative i need a guy or gal who knows the ropes and is willing to help my situation. Please Refer!

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y

@Jasmine Cotes  you can find all sorts of these mortgage brokers at CLUB FED IE in jail

what your asking people to do is mortgage fraud and any lender worth his salt would not give you the time of day.  but lets see what others think there are always crooks out there that are happy to scam the system like you want to do

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Jasmine Cotes  you can find all sorts of these mortgage brokers at CLUB FED IE in jail

    what your asking people to do is mortgage fraud and any lender worth his salt would not give you the time of day.  but lets see what others think there are always crooks out there that are happy to scam the system like you want to do

    @?bill Gulley

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  • Account Closed
    Investor · Princeton, TX · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    @Jay Hinrichs  You are just so picky tonight.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Account Closed LOL anyone who things there are work arounds and short cuts for FHA loans has been living under a rock and hopefully my comments will spark some interest to understand that what they propose is not really feasible unless you find that RMLO who wants to wear some stripped cloths.

    I know a few.. who went that route took the feeds 5 to 7 years but they are now incarcerated. never would listen to me. LOL

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  • Jasmine Cotes
    OP
    Rental Property Investor · Wayne, NJ · Member since 2015 · 26 posts · 3 votes
    10y

    Is it really? @Jay Hinrichs i thought upgrading was a perfectly acceptable reason for obtaining another FHA especially if i actually intend to live there, please elaborate! I definitely don't want to be dealing with anything risky just creative workarounds that are legal and make sense.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Jasmine Cotes creative and FHA government backed loans do not go in the same sentence.. all mortgage lending on the conventional side these days is HIGHLY regulated.

    and any RMLO committing Fraud or ( CREATIVE WORK around would have to have a screw loose)...

    You must work with in the rules this is creative owner financing  this is the federal Gov

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  • Account Closed
    Investor · Princeton, TX · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    @Jay Hinrichs  Totally agree. 

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  • Jasmine Cotes
    OP
    Rental Property Investor · Wayne, NJ · Member since 2015 · 26 posts · 3 votes
    10y

    Ok i get that they should be considered two entirely different things. but creative does not mean illegal, sorry your just not being clear, i'm pretty sure you mean well and are not trying to trash everything i say so please help! you are waaay more advanced in this game and i honestly don't care that i sound ignorant in this subject because i'm trying to learn, no same in this learning game at all!

    Are you saying upgrading more than once would be prohibited? could i do this at least once since I am honestly upgrading!?

    And are there real legal options I can look into that don't require 20% down, 6 months reserve on the current home and 6 months reserve on the new home? That is just not possible for me at this stage , whats out there any helpful suggestions welcomed please!

    Copy paste a link, recommend a book anything please!

    @Jay Hinrichs

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Jasmine Cotes its often thought on BP that he very best way to start is to buy a 4 plex in a great area with your FHA loan... this allows you the low downpayment as for reserves and such you simply need to talk to your mortgage lender but yes you will need some.

    I believe you can only have one FHA loan in your name at a time.. so the idea is you would refinance this 4 plex using its current equity if any as your collateral.. the you could buy another one with the FHA loan rinse repeat.

    you must live in the property for at least one year.  mortgage fraud these days ( and I know you don't mean to defraud anyone)  is very serious many mortgage brokers ended up in Prison doing creative deals that cratered.

    And Frankly if you don't have reserves or cash then you should not be buying real estate as the risk of failure is very real and the banks have figured that out. You should save your money work hard then invest when your properly capitalized

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  • Jasmine Cotes
    OP
    Rental Property Investor · Wayne, NJ · Member since 2015 · 26 posts · 3 votes
    10y

    Thanks so much for that advise ! @Jay Hinrichs

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  • David GunkelPro Member
    Pennsauken, NJ · Member since 2015 · 20 posts · 9 votes
    10y
    Check out your 203k loan options. They only require 3.5% down and rehab costs are included in the loan. You would need to live in it for, at least, a year but it sounds like that's what you are planning to do anyway.
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  • Angelo Mart
    Professional · Parsippany, NJ · Member since 2013 · 384 posts · 262 votes
    10y

    @Jasmine CotesWow these guys are rough on you in here lol. So here it is....FHA mortgages are for Owner Occupancy only. In the event you purchase a 2nd home and claim occupancy of that home in order to obtain FHA financing that would be illegal as FHA/HUD only allows you to have 1 property of Owner Occupancy at a time.

    Next FNMA has very strict guidelines and requires 20% down. 

    So the way investors have tons of properties at once is through PRIVATE lending through companies such as B2R Finance. Such companies require a little bit down but mostly look at the cash flow of the asset. Many investors in Newark, Paterson JC will purchase a damaged Multi Family, repair it and then Refinance with a Private lender which grows the equity in it from fixing it up. Now you are going to need some money to put down, not a billion in the bank but something. Any questions let me know I work with a lot of investors in North Jersey

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  • Alex Franks
    Rock Hill, SC · Member since 2015 · 1k+ posts · 597 votes
    10y
    Originally posted by @Jasmine Cotes:

    Hey looking for a mortgage broker who knows the deal when it comes to REI, creative financing, the work arounds on how to avoid the traditional 20-25% down and any other loop holes there may be out there.

    I'm trying to get my second home I currently live in a small 2 fam, I plan on upgrading to a larger two family now that the kids have outgrown sharing a room. I know i should be able to get a 2nd FHA loan under this condition but what happens to the 1st home (any penalties?) and how will i get myself into the 3rd property which i plan on obtaining shortly after, can i keep upgrading and keep the older properties at the same time, when does that plan run out? I'm just clueless when it comes to getting creative i need a guy or gal who knows the ropes and is willing to help my situation. Please Refer!

     How to get in trouble, but I don't need to say anything else. I  see Jay has already spoke here on this topic

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  • Jasmine Cotes
    OP
    Rental Property Investor · Wayne, NJ · Member since 2015 · 26 posts · 3 votes
    10y

    yes @Alex Franks jay definitely did! but he came around and decided to give me some good advise after a few jabs!

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  • Alex Franks
    Rock Hill, SC · Member since 2015 · 1k+ posts · 597 votes
    10y
    Originally posted by @Jasmine Cotes:

    yes @Alex Franks jay definitely did! but he came around and decided to give me some good advise after a few jabs!

    Jasmine he is a very smart man. I been doing business with here and there for about 10 years. A lot of so called gurus out there. Jay him self has been in the business for a long time. No I don't work for him promise. He is a good person to follow if you want the truth about investing and what does and does not work.

    At the same time if I can help answer any questions ask away.

    Alex

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  • Andy Luick
    Real Estate Investor · atlanta, GA · Member since 2013 · 456 posts · 237 votes
    10y

    The 203 is a great loan for what you are trying to do.  There is also a 203 refi product available that I wasn't even aware of.  You can't take cash out with it but you can make repairs & improvements.  I believe you can use a 203 every two years.  I'd talk to a couple of 203k lenders.  I can refer you to a national lender for a chat if you wish.  How long have you been in the current house?  If your credit and equity in the current property is decent, I'd look at getting a lease for a renter on the unit you're living in and refi it or sell it off.  Then you could use the 203 to purchase a quad instead of a duplex to accomplish the same purpose of buying a 3rd property.  I'm not a lender and others can chime in....there are lenders floating around on the site.  You're in a major metropolitan market so there's a way somewhere to get it done...provided the numbers are right and your income & credit are solid.

    Beyond that, you can always keep the unit you are in and seek another unit with owner financing....where someone is sick of it or is retiring.  Alot of the retiring owners don't mind holding private paper...and it pays them more than cash sitting in the bank at less than 1%.

    There are some bright stars in here and some thugs...don't be discouraged.  There's nothing wrong with being creative...it will lead to your best returns but, when it comes to federal loan programs...it's strictly by the book.  Most of us who have been around long enough have seen plenty go to jail for mortgage fraud so that is the concern raised by others.  Luck!!

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  • Jasmine Cotes
    OP
    Rental Property Investor · Wayne, NJ · Member since 2015 · 26 posts · 3 votes
    10y

    @Angelo Mart Seriously like i was an automatic scum bag for this question! lol in short i was asking if there was a possibility to make that illegal action into a legal option or for other options that could apply to that scenario. 

    I like the 3rd option you mentioned with private lending a lot and i love the FHA loan rinse repeat thing Jay mentioned , i see both as being the most realistic approaches for me.

    Thanks so much and will do! 

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  • Ro Maga
    Newark, NJ · Member since 2015 · 162 posts · 102 votes
    10y

    I am no expert, but from the way you are phrasing your questions, it sounds to me like you still have plenty of work to do in the learning and research stage. Knowing a little bit more about this will help you realize why saying things like the "possibility to make that illegal action into a legal option" rings alarms to everyone.  

    Sit down with a mortgage broker just to learn about loan products first. Explain your situations in full and figure out what loans may be available to you and their specific requirements. You should also be reading about financing (by which I mean books, not forum posts).

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  • Jasmine Cotes
    OP
    Rental Property Investor · Wayne, NJ · Member since 2015 · 26 posts · 3 votes
    10y

    Yes I definitely do have a lot of learning to do and I am eager and ready!  @Ro Maga, and I don't see anything wrong with my phrase its honest and blunt, i'm trying to find legal strategies, simple as that! sure the FHA scam thing or whatever you call it that makes everyone get all worked up sounds too good to be true but that's exactly what my original question was asking...what are the penalties and what are other strategies ? but I guess some people just like to look at the catastrophe in everything first, its nice to have that perceptive some time, but i personally like to look at all things in a positive light. Its all good though I got some great advise on here and that's what I came here for....and yes I read REI books and listen to the BP podcast all the time (which i love!) this is not the sole source of my education, but thanks for suggesting and i will be sitting with a broker next week!!

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  • Jasmine Cotes
    OP
    Rental Property Investor · Wayne, NJ · Member since 2015 · 26 posts · 3 votes
    10y

    Just did some reading on the 203k it sounds great ! @Andy Luick I've been in my home for 6 years, great credit and income. I would really hate to sell this house so i think i will Refi conventional and do the 203k on the next , i think that will help with building the value of the home for the next refi to conventional down the line.  Im thinking a way in to the third home could be private lending, owner financing always sounds so odd to me , any suggestions on how to even being with that, would that be by a targeted direct mail kind of thing? Thanks sooo much for the help, this goal right now means the world to me and so does your advise!

    1Reply
  • Ro Maga
    Newark, NJ · Member since 2015 · 162 posts · 102 votes
    10y

    @Jasmine Cotes , I still think your best bet is reaching out to mortgage brokers and spent some time loan shopping -- it's a great way to learn too. My husband and I looked into doing something similar to what you want to do, except we were moving from a condo to a duplex and moving to another city because of work. Because we wanted to keep the condo, the first mortgage broker we talked to would only offer us investment loans requiring 20-25% and 6 months PITI reserves for both our old condo and the new house plus we needed funds for closing. In other words to finance a modest $150k duplex, we needed to have close to $70k in the bank. This despite of having excellent credit, solid jobs, and some money saved -- alas not $70k.

    We kept saving and then we talked to a few other mortgage brokers including a couple who specialized in FHA 203K loans. While brokers cannot bend underwriting requirements, your broker should be able to help you understand what you need to do to meet qualifications and find a lender/loan that better matches your situation.

    Among these other brokers and lenders (do talk to your local bank!) we found loans with better terms including 203k loans As OOs, they required 3.5% down, PITI reserves for both properties between 3-6 months, and included the possibility of rolling closing costs into the loan. These loans involved PMI, but that was balanced by a lower interest rate and a much lower cash-in amount than the investment loan. Mind you, we still needed a substantial amount to pull this off (its Jersey after all), but it sure was a far cry from $70k.

    Again, reach out to mortgage brokers and explain your situation clearly, and whatever you do, I'd strongly advise you refrain from using any language that even hints at breaking the rules or finding loopholes or "work-arounds." In fact, if you come across a broker that promises to fit you into loan for which you don't legitimately qualify, RUN! Somebody who thinks they can cheat the feds and the banks won't think twice about cheating you.  

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  • Ro Maga
    Newark, NJ · Member since 2015 · 162 posts · 102 votes
    10y

    For a 203k, you may want to reach out to the folks from Annie Mac in Mt. Laurel, NJ. They are BP-friendly and they service renovation loans in various states including Jersey. We had a great, very informative conversation with them.  

    1Reply
  • Chris Townley
    Urban Planner/Designer · Highland Park, NJ · Member since 2015 · 31 posts · 5 votes
    10y

    @Jasmine Cotes

    A great mortgage broker i've used before is Bishoi Nageh at Petra Cephas

    1Reply
  • Jerry Padilla
    Lender · Rochester, NY · Member since 2014 · 3k+ posts · 1k+ votes
    10y

    @Jasmine Cotes

    @Jay Hinrichs  

    You can technically have two FHA mortgages........

    There are certain guidelines and indications to it as well. The best route is refinancing your current FHA to conventional than obtaining another FHA mortgage. You most likely won't be able to go from a duplex to another duplex for the indication of increased dependents - which is one of the indications. It would be a lot easier with underwriting to see you get a larger SFR from a duplex to use this indication and have 2 FHA mortgages. FHA limits you to a total 4 mortgaged properties total.....So this can only be done so many times. You must live in the property for a year, not with the intention of moving shortly after. 

    Hopefully, this is what you intended as Jay said, it sounds like mortgage fraud from your original post.

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  • Jasmine Cotes
    OP
    Rental Property Investor · Wayne, NJ · Member since 2015 · 26 posts · 3 votes
    10y

    @Ro Maga 

    Yes Jersey is a tough place to invest in but I love it here so i need to figure out a way to make it work! The 203k sounds like an excellent option , thanks so much for the advise and i will be sure to watch my wording around the brokers , this post has definitely got me to be scared to death of mortgage fraud! lol

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  • Steven Gesis
    Investor · Miami, FL · Member since 2015 · 1k+ posts · 390 votes
    10y
    Originally posted by @Jasmine Cotes:

    Hey looking for a mortgage broker who knows the deal when it comes to REI, creative financing, the work arounds on how to avoid the traditional 20-25% down and any other loop holes there may be out there.

    I'm trying to get my second home I currently live in a small 2 fam, I plan on upgrading to a larger two family now that the kids have outgrown sharing a room. I know i should be able to get a 2nd FHA loan under this condition but what happens to the 1st home (any penalties?) and how will i get myself into the 3rd property which i plan on obtaining shortly after, can i keep upgrading and keep the older properties at the same time, when does that plan run out? I'm just clueless when it comes to getting creative i need a guy or gal who knows the ropes and is willing to help my situation. Please Refer!

     Ok, so everyone had some very good advice and @JayHinrichs says it straight up and he is the real deal, he knows his stuff, I really appreciate every single forum he is in, he is just good and has the right way of putting it together. 

    • We have determined that you cannot do a 203K
    • We have determined that an FHA loan can only be one at a time for any owner-occ. house
    • We have determined that you cannot say creative and FHA/Government

    Do you have any existing equity in your home? How long have you been in your current property? 

    You may just want to refinance your existing asset into a conventional loan, drop PMI and rent it out entirely. If you have existing equity you may walk-out with a little cash or no money out of pocket -- (this is a maybe, we do not have enough facts yet)

    Instead of financing your next purchase with money out of pocket, use the equity in your existing property to open a HELOC (Home Equity Line of Credit), use this inexpensive capital to fund your purchase and then later refinance to a permeant loan after construction and new enhanced value. Then you can use 20% down-payment investor renovation loan.

    Finally, if you do refinance the initial property, purchase a 2-4 unit occupy one unit, house hack this think to oblivion, rent the other units out, use a 203k to remodel the interior all with simply using 3.5% down, realistically, be prepared to e all in at like 6-9% once you consider all the cash reserves and required impounds. 

    Anyhow these are some simple options, I do not think you weill find 90% LTV lenders, I did recently have someone on BP offer this product ot me, however, as everything else in life, if it seems to good to be true, it is not true :)

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