All Forum Posts by: Robert Sepulveda

Just the cost of an appraisal. Maybe credit check for $30. That's all you should pay. Anything else should tell you to walk away.

@Stephen Nava

Basically, they use the rental income from schedule E for the past 2 tax years to avg your usable net rental income. This income will be added to your regualar w2 or business income to determine your total debt to income ratio (DTI) against your debts and monthly mortgage costs.

To calculate your net rental income, your total rents collected for the year are added to deductible expenses (taxes,insurance, interest, depreciation). Then that total is subtracted from your total expenses for the year. What's left is your net rental income for that year. Your last two years are averaged to give you the 24 month avg net rental income that you can use as additional income on your application.

Hopefully that makes sense. Let me know if you have any questions.

Yes, I've seen that myself as an investor, that's a big reason why I keep up on alternative financing.

Happy to help.

@Logan Turner

Got yes, I understand what you're trying to do. I've done it in the past, however, that was before regulations were put into place after the mortgage crisis to prevent that. You can move the asset from one ownership to another ( i.e. move in and out of an LLC, trust, or partnership) but you cannot sell it to your self from your LLC.

But, as I mentioned, you can find a lender who will will not require 6 months seasoning if you are the sole member of the LLC. You'll just pay extra for the title work and they can record you out 1 day prior to funding, then record the note in your name. Then you can do a "delayed financing" cash out refinance if you paid all cash for the property at anytime. 

If, however, you financed the property at the time of purchase, you will have to wait the 6 months anyways from the date of purchase.

@Craig Teeter the short answer is yes, if you will have no more than 10 financed properties. However, after 4 financed properties, qualifying, rates and terms get a little more difficult. You must have a 700 plus fico score and the LTVs will "generally" be about 60 to 70%. 

Not every lender will let you go above 4 financed properties, so that's the first question you need to ask before you submit an application and credit to see what you qualify for. You'll get more details after that.

@Logan Turner

Sorry, forgot your other question. No you can't sell to yourself anymore. But you can find a lender who will will not require 6 months seasoning if you are the sole member of the LLC. You'll just pay extra for the title work and they can record you out 1 day prior to funding, then record the note in your name.

Let me know if you need more details.

@Logan Turner, From my experience, you can get your homes purchased through the LLC, however, you're usually not going to get a 30 year fixed.

Private money will get you 1 to 5 year terms (typically) with simple qualifying and usually interest only between 7% and 12% rates.

Portfolio loans will allow you to do a longer term and get better qualifying terms for better borrowers. But you'll typically get 2, 5, 7 or 10 year terms with around 6% to 8 % rates. First key used to be the only one who provided long term fixed loans, but they switched to being a note buyer instead of a lender.

Your conventional loans will all require you buy in your name. Maybe someone else may have a niche lender that can chime in, but that's my 2 cents.

Most lenders will allow you to receive an owner carry second of about 10-15% depending on how strong your deal is, and as long as you retain the DSCR within their program guidelines.

You can also naturally negotiate who pays for certain closings costs and even receive credit at closing for negotiated amount of repairs required on the property. These can help reduce your cash out of pocket. But few if any will allow you to have a 0% downpayment deal. Talk to your lender and ask the question. You should get a quick answer, or just move on to the next.

Your "portfolio" loans are your best option after 10 financed properties. The term means that it is a specific lending program or fund not sold off to or under fannie/freddie or government loan guidelines. So you're not restricted to the rules governing most loans. 

That means it's more expensive and requires more downpayment, but you get the flexibility to buy as much as you can justify in your balance sheet and application. You are typically going to get 6% to 8% rates and require a 25% downpayment.

As soon as the zoning hits commercial, you're out of the residential loan market.  You can get a 30 year term, but at most a 10 year fixed hybrid. If however, the title report says it's a multi unit residential within the commercial zoning, you could get a 30 year fixed mutli unit loan. Either way, you're going to be stuck with 20% down at best for either type of loan.

There's a loan out there for you, just have come to terms with the downpayment and commercial terms.

If possible, you can check with the city to see if the zoning can be changed. If that's possible, make an offer subject to the owner getting the zoning changed back to residential.

Hope that helps.