All Forum Posts by: Andrew Postell

@Mike Gi yeah, so if it's 5+ then it's commercial/multi-family.  A 40 year is not a normal product in the commercial/multi-family space. 

@J. Mitchell Bernier yeah, 10 year I/O with P&I for 30 years. The rate is fixed in most products and the prepayment penalty is normally 3 years. Certainly can show choices for a 2 year and 1 year (and 5 year) prepayment but most people choose the 3 year.

@Joseph Lavoie this is more of a residential forum.  For this type of a question I would suggest posting it in the multi-family forum.  I mean, you can leave this here...but you'll get significantly more responses in the other forum.

@J. Mitchell Bernier 40 year mortgages are very common in the DSCR, residential space. But in the multi-family (5+ unit) space they are not. We'll wait to see how @Mike Gi responds to his unit count and that will determine if what he is looking for is possible.

@Alex V. you've got some good responses above but this specific forum is more for residential stuff.  I mean, you can leave this here but you would get significantly more responses in the multi-family forum.  Likewise, I would suggest to connect with some other investors locally.  Now you could try some local real estate meetup groups. Meetup.com is a good resource for those but some of the groups will also post here on Bigger Pockets Marketplace too. I might say that most of those are going to be residential in nature as well.  But Facebook might have some good local groups for you. Some of those facebook groups have thousands of members. And that's the kind of local exposure I would suggest to try.  Some of those Maryland/DC pages will have experienced investors that can point you in the right direction for local lenders.

Hope some of that helps.  Thanks!

@Anthony Vaganos thanks for posting.  You've got some different comments above so let me help clarify some things if you don't mind.

1. The benefits of the DSCR vs. Fannie/Freddie (Conventional) loans aren't just about rate and transfer taxes. For instance, Fannie/Freddie don't have a prepayment penalty. Most 30 year, fixed rate loans DO have a prepayment penalty.  That's pretty important if rates were to decrease in the next couple of years.

2. Fannie/Freddie do NOT care if you transfer your property to your LLC. As mentioned above, they specifically allow this. The "due on sale" clause is a non-issue here. I can into this at length so if you need more details let me know but for the sake of time - it's allowed.

3. Just transferring your property to your LLC doesn't really provide much shielding. And honestly, even a DSCR loan by itself, under an LLC, also doesn't provide much shielding. For most investors, to provide true separation would be cost prohibitive (between $10k-$15k). Again, this topic can be discussed AT LENGTH as well so let me know if you want to go further into it.

My suggestion to every new investor is to trust your instinct.  Learn of course, but many of us have purchased properties throughout our career without "iron clad" veils and have done just fine.  

Hope all of that makes sense but feel free to post with anything else.  Thanks!

@Nicholas Bourgeois thanks for the post.  You have some good comments above but I would also suggest to try some local real estate meetup groups. Meetup.com is a good resource for those but some of the groups will also post here on Bigger Pockets Marketplace too. Even facebook might have some good local groups for you. Some of those facebook groups have thousands of members. Eventbrite too. Thanks!

@Summer Shelton yes, FHA loans do allow this but make sure you speak with your lender about some of the trip ups from these loans. Mainly the "self sufficiency test". And as mentioned above, if the lender you are speaking with doesn't know what that is...then you need to go to a different lender. Seriously, it's important.

And as mentioned above, the amount of rent you receive on multi-family properties is based on 12 month rental comps. FHA will not use any short term rental data.

Something else to think about - any reason why you wouldn't use a Fannie Mae loan here?

Hope all of that makes sense but post more if you would like.  Thanks!

@Connor Williams yeah, what the above posts stated but it's formally called "Forward Commitment" when a builder does it (if you want to google more on it).  So, you, as an individual, may not get to the same rate that a MASSIVE national builder can...but you can certainly offer credits to the buyers to help buy down the rates.  The loan programs of your buyers will dictate how much of a credit you are allowed to apply to their closing but it certainly helps to move inventory when you offer an incentive. 

Hope all of that makes sense.

@Nate Jenks no problem, here to help and clarify.

When we speak to "cash out" loans in lending the maximum loan amount is usually 80% LTV on a primary home. Meaning, 80% of the total value.

So, if the value of your home is $775,000, then 80% = $620,000.

That's first.

That $620,000 represents the MAXIMUM mortgage amount.  So, if you owe $725,000...then you owe more than the MAXIMUM possible loan is that you could get on a "cash out" mortgage.

In order to do a cash out loan...you would need to owe LESS than 80% of the value of your primary home.  And that will be hard in short amount of time.

Hope that makes more sense...but certainly feel free to just call me if you want to talk anything through.  Thanks!