All Forum Posts by: Robert Sepulveda

Most will max at 70% for 2-4 units for the standard delayed financing option. That number is going to be based on the appraised value but will be limited to no more than what you paid for the property.

Banks and mortgage companies are going to require a standard appraisal inspection that will need to show everything works. So no missing kitchen cabinets, sinks work, toilets flush, etc. But it doesn't have to be pretty. So, if you have a 1950's property that is ugly but functional, bank financing is a viable option. 

However, if the roof is bare in spots, water damage shows, flooring is missing or is a hazard, etc. etc.,  then you're best off with private/hard money. You'd only want to use bank financing if you're going to hold the properties for long term investment. No flips.

Doing cash out with conventional financing is typically similar rates you get with a conventional purchase loan. So it shouldn't be more expensive unless the market moved up between the time you bought and the time you've refinanced for cash out. If a regular refinance is say 4.125, a purchase or cash-out refinance will be about 4.25 or 4.325. That's usually only a difference of $7/mo for your avg small home loan.

The expense is probably a broker trying to get a piece of your equity by charging too many points. Find a new broker or stick with a good bank. But don't be discouraged to try a conventional loan for up to 10 properties.

That's a great deal. i'd stick with it. 10 yr rates I've seen are much higher and don't make up for the extra 3 yr fixed term. For what most 10 yr rates are you can figure going adjustable 2 or three years after the fixed period and still be saving your overall interest paid over that time period.

Maybe others will chime in if they know of a better way.

Ahh nicely done. Great info.. thanks

@Trevon Peracca Thank you for your service!

When you're using your VA benefits, there's lots to consider but it's well worth it.

• VA appraisals are only acquired through the VA, so ask how long that has been taking for the area. My headquarters is in Lombard, and it's been about 2 weeks just to get someone out there lately.
• Ask if they perform their own "Notice of Value". If they wait for it to come from an authorized underwriter, that adds about 10 days after the appraisal report is done, before you can use it to be underwritten. So you loan is now 3 weeks in before you even know if you're approved. If they are able to do their own Notice of Value, then you'll get it 1 to 3 days after the report is in. Your real estate broker should be made aware also before you make offers, so they can ask for a longer escrow if necessary. If your agent doesn't know what this is, go elsewhere. They won't know VA loans well enough.
• Ask what their average days to close the loan is? You agent/broker can do that for you as well before you make offers.
• You will have to pay for a termite inspection if the sellers are not willing to. Consider if there is termite repairs, who will pay for them. It can't be you if you don't own the property, but you can invoice them if the contractor lets you and the seller won't pay.
• Stick with home with city water and sewer. Otherwise you'll have those to be inspected and cleared by the municipality who manages it, if it's well water and septic. Then remediation if necessary can get time consuming and expensive.
• Just remember you can only use your VA benefits if you're living in the home as your primary residence. You'll have to consider other financing if you're looking to invest. But you can turn your primary home you bought with your VA benefits, into an investment property 1 year or more after you've lived in it.

That cover's the basics. Good luck to you.

I've not heard this yet. i've only heard fannie saying they'll allow an easier conversion of your primary residence to an investment property.

If you've bought a rental home within the year, before you've claimed them on your tax returns, Fannie lets you use 75% of the market rents on the rental market survey with the appraisal. Don't know if that helps your situation at all or not.

With rates as low as they are these days, and the fed indicating it's inevitable that the rates will go up progressively, it makes sense to do a 7 or 10 year fixed rate term.

Most real estate cycles follow a 7 to 10 year cycle anyway, so  refinancing at those intervals tend to work out either with an equivalent increase in equity if the rates go up, or a reduction if rates if they've gone up throughout the cycle. Use a 5 yr if you have issues that you know you'll be able to correct with the property that will benefit you in the shorter term.

In either case, your normal amortization will allow enough principal reduction to add to equity that makes it the better scenario short of a full 20 or 30 yr fixed loan.

Focus on added value to the property, refining management and reducing vacancies in the interim and you can't really loose.

If the loans are $300k and above there's 5, 7 and 10 yr fixed for up to 10 more loans available with 30 yr amortization in around 6.5% range depending on the term. There may be others available that can do smaller loan amounts and 15 or 30 yr fixed out there. Your biggest issue is going to be meeting the reserve requirements for all your property (6 to 12 months PITI per property) and 25-45% down-payment depending on the portfolio loan you use.

Another option, since you're living in the property is to use the old 80/10/10 scenario. if your fico is 700 or above, you can get an 80% 1st, 10% 2nd, and 10% down from you. You pay no mortgage insurance.

May be the best option.