All Forum Posts by: AJ Exner
AJ Exner has started 1 posts and replied 549 times.
Post: Cash-out refinance income requirements?
- Lender
- Springfield, MO
- Posts 574
- Votes 285
Hello Faiz,
If the property is paid off and it is rented out, I might recommend a DSCR loan as it is based off of the asset itself and most DSCR lenders do not need W2/Tax Returns. Some DSCR lenders would even utilize the After Repair Value and can still be vacant if you are completing the rehab.
Good luck, happy to explain further if needed.
Post: The Best Financing Options For Zero Income Borrowers With High Savings
- Lender
- Springfield, MO
- Posts 574
- Votes 285
Quote from @Rachel Waldorf:
I have around 100k in savings that I would like to put towards the purchase of an investment property in Rochester, NY. I’m looking for income generating rental properties that cost under $90,000. What are the best financing options for this? Proof of income will only be the property’s current rental cash flow. Should I take out a secured loan using my savings account as collateral? Or is there a better option? (I also would like a loan that doesn’t require a high down payment).
Hey Rachel,
So a DSCR is a great option, but it won't really help you on the down payment side of things. Even on most DSCR loans, you'll be looking at 20% down, so your best bet for low(er) down payment would be to utilize a BRRRR strategy with a rehab-focused bridge loan into a DSCR to get it stabilized and cash flowing.
Be sure when you talk with potential lenders to make sure that they are licensed to operate in NY as well. Licensure is a little different up there and you don't want to get caught going through the process only to find out that they can't actually lend there.
Good luck!
Post: Cash out for rehab on multifamily condo
- Lender
- Springfield, MO
- Posts 574
- Votes 285
Hey Christine,
Sounds like a refi/rehab bridge loan and they can generally close those a bit quicker.
Just sent you a DM, would be happy to help if you are interested but would need a little more information.
Thanks!
Post: Dipping toes into commercial multi-family - how does lending work?
- Lender
- Springfield, MO
- Posts 574
- Votes 285
Quote from @Selina Giarla:
I have two 3-family homes and 1 duplex, none of which trigger the commercial loan requirement. I am interested in going bigger - anywhere from 5-12 units, and anywhere from one building or multiple homes. I understand anything above 4 units will require a commercial loan. As I navigate the numbers, I would like to understand current rates with 25% down. I also understand there are DSCR options but not certain I want to go that route. I prefer 30 yr fixed so I can have some level of certainty while I get accustomed to the larger properties and the caveats that comes with, but not sure I could get a 30 yr fixed. I also have managed warehouses and considering purchasing a warehouse or storage facility so if lending also differs for that, could you please let me know?
Aside from that... I would like to reiterate my main question which is: what should I factor in my underwriting for interest rates? I have high 800's credit score and prefer 0 points. I have a preference to investing in texas but looking all over the red states. Thanks everyone!
Hey Selina,
Rates will be pretty deal specific as residential focused DSCR with your history would be better then even a true commercial property. I think @Tyler Warrick is pretty close, but obviously you won't really know until you get your hands on something and they can calculate it out.
I would anticipate a primarily residential to be there, but primarily commercial might be around mid-9s to sniffing 10, based on where the 10-year is and how it would cash-flow
Post: Financing Land Purchase and Construction
- Lender
- Springfield, MO
- Posts 574
- Votes 285
Ketra,
There is some flexibility with a few lenders that I know of on purchasing the land (up to 75% from what I've seen) as long as the land is shovel ready. You'll find some heavy hesitation on most lenders if it hasn't been planned/permitted because of the delays that those things are prone to have.
Post: Does this lending product exist?
- Lender
- Springfield, MO
- Posts 574
- Votes 285
With that type of experience, I might target a fix/flip or HML that has experience triggers keeping your costs low and maybe even something like deferred interest payments or bundled fees. I've got a group that I use with my clients that might be able to help out.
I think your bigger issue is the margins on something like that. I'm seeing a cost basis at ~$470k and an ARV at $499k doesn't leave you much margin on a refinance. Are you underestimating your ARV or potentially overpaying for it?
Post: HELOC or hard money?
- Lender
- Springfield, MO
- Posts 574
- Votes 285
Hey @Josh Mac
Pros and cons to each. Using a HELOC puts more liability on you while the hard money puts onus on the lender while you leverage their money and maintain as much of yours as possible.
Post: DSCR Loan Prepayment Penalties
- Lender
- Springfield, MO
- Posts 574
- Votes 285
Quote from @Gustavo Alvarez:
Hi there! I applied for a DSCR loan and the terms include vague language indicating they may be a penalty if paying the loan early. Is this common for these types of loans? Is there a typical minimum period where the penalty applies, like 3-5 years? Can this be negotiated?
Yes, they are typical, but each lender is going to vary considerably as to their PPP flexibility. For some groups, if they are aggressive in getting deals, they might offer discounts on their PPP plans to get more business.
It is worth having the conversation with them on the front end once you start talking with lenders.
Post: DSCR - Portfolio vs Individual loans
- Lender
- Springfield, MO
- Posts 574
- Votes 285
Quote from @Cody Coll:
I have several properties I am in the process to cash out refinance after I completed the rehabs and got renters in. We have a good amount of refinances to put in place 8 ( 6 in one entity & 2 in another). I always toggle between the two options of refi'ing them in a portfolio loan rather than doing them individually. Any good pointers or tips for one way or another. I know it comes down to investing strategy, I would like to say these are long term holds, but you know how real estate is the next best deal can be knocking on your door. Thanks for the help in advance!
Cody,
There was a time when portfolio loans were definitely the way to go, specifically when rates were at rock bottom and you could bundle as many of them at that rate as possible. However, many lenders have backed off of portfolios and often times you will sacrificing leverage for 'simplicity'.
The other issue, as it has been stated, is that it becomes financially tricky to take a property out of the portfolio, so you also sacrifice flexibility at a time when you begin to scale and flexibility can be really important.
If you work with a single lender for the refis, many will offer you discounts for multiples, so even though its not a portfolio per se, you can still save money on some closing costs by doing them all at once.
Good luck on it though, would be happy to recommend if it would be helpful.
Post: Refinancing with no seasoning period
- Lender
- Springfield, MO
- Posts 574
- Votes 285
Quote from @Richard Moreno:
My friend has a property he is rehabbing in Detroit and we are at seeing if there is other options to refinance other than private lender. Is there a bank or CU that will refi without seasoning period? Or is that even an issue seeing that renovation started a year ago?
Richard,
Most of your conventional sources would ask for a 12 month seasoning, I think you would need to look for a DSCR lender that can do little to no-seasoning, which might still be tricky. Make sure to confirm with anyone you work with that you are on the same page to ensure that there are no surprises going into the end.