Developer · Tacoma, WA · Member since 2018 · 160 posts · 37 votes
I haven't considered doing Buy & Holds because I'm more into Flipping. But I have a good deal that I'm looking to close on soon and i'm just considering making it a rental and i wanted to know, what kind of loan terms should i expect to see? As far as interest rates? points? I'm confused and I'm looking for some insight from someone who may know.
I would be looking to BRRRR this home. And I'm hoping someone may have a spreadsheet or explanation of how it all would work. Thanks for reading!
Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes
6y
From the HM perspective, it's really no different than fix&flip loans.
The exit strategy is obviously different, and the HM lender will want to give you at least a cursory look to see that are going to be able to get approved for the long-term financing on the back side.
That and your HM lender will probably expect to see a somewhat lighter renovation budget, since getting the property rent-ready isn't the same as getting it dressed up nice and prepped to sell quick as a flip.
If the house can pass inspection as is, you maybe able to skip the HM part completely. Just buy it using regular loan programs. However, keep in mind that there might be requirements for reasoning (with renter in place) and of course it takes longer to get these deals funded and closed.
Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
6y
@Leland James
From the hard money lenders I’ve spoken with, basically it’s the same thing. You get a hard money loan to fix up the property, then they refi you into a conventional loan for the long term, ie30year. If you are concerned with getting the conventional loan, don’t forget there are other criteria than the debt-to-income ratio. QM loans is one way... anyway, if you can’t qualify under dti, there are other loan products but you just many not get these great 3% rates.