All Forum Posts by: Brittany Minocchi

Hi Cody - 

DSCR loans are a great tool in these types of scenarios. No W2s, 1099s, tax returns or paystubs needed, and no DTI calculation. Just need to make sure the property generates enough income to cover the monthly principal, interest, taxes, insurance and HOA (if applicable). Required down payment is typically 20-25% depending on FICO, property type and level of experience.

Feel free to send me some details, I'm happy to discuss or answer any questions you have. 

As others have mentioned, if you can commit to using the property solely as an investment and won't occupy it yourself at any point in time, DSCR will allow you get around the DTI/employment/income issues. DTI isn't a factor and you don't need to provide tax returns, 1099s, W2s or paystubs. The property just needs to generate enough income to cover the monthly principal, interest, taxes, insurance and HOA (if applicable). They typically require 20-25% down so it sounds like you're good there.

Happy to chat further if you have any questions, feel free to connect! 

If you can find someone willing to do a HELOC, rate will be much higher compared to a cash out refi.

As far as the early pay off, loans can be structured with different prepayment penalties depending on the lender and state the property is located. You mention wanting to have the loan paid off within 3 years, so if it were me, I'd price your loan with a 3 year prepay. If you plan to pay it off after that 3 year mark, you won't be penalized. You could do a 30-year fixed loan here as well. 

Do you have a US based bank account? If you'd like to send me more information about the property, I'm happy to look into it for you. Feel free to connect. 

Typically anything that needs to be done to the property will be noted on the appraisal, so it's odd if nothing was mentioned until the last minute....it will show that the value is "subject to _______________________" and this is where they will add things that need to be done before closing. However, my first thought reading your post was that a purchase price of $59,500 is extremely low for a DSCR loan - most DSCR lenders require a minimum loan amount of $75-$100k. I have one that will go down to $50k, but the value on this is too low even for them.

You can use conventional financing to buy a primary, second or investment home, it's not just limited to owner-occupied. On a single family investment home, conventional financing requires 15% down. That's likely the lowest down payment you'll find for any investment property loan these days. If you're looking for a property to occupy, you can get away with 3-3.5%+ down depending on what you qualify for. If you look at a 2-4 unit property, you can live in one unit and rent out the others with the same down payment, although FHA financing on 3-4 units is a little messier than on 2 units or with conventional financing.

I think maybe wires got crossed with your loan officer, it doesn't sound like you are both on the same page. 

You can pull a portion of what you originally invested (purchase price + closing costs) within the first 6 months, but conventional cash outs require a 12-month seasoning period to use ARV.

No seasoning will require that you did rehab. You have to be able to justify the jump in value. Lenders won't allow someone who got a deal for under market value and did little to no work to cash out based on appraised value. In that case, you're stuck waiting the 3-6 month seasoning period. The process can be started about a month prior planning for a 30 day close. 

Hey Brett - 

Speaking specifically about closing costs, those can be a little hard to pin down. It's going to depend on what type of loan you're planning on getting, and fees vary from lender to lender...same with title fees. I always hear people say to add 10-15% to whatever you think your rehab budget will be. As for value, have you talked to in agent in the area that knows the market? They should be able to give you an idea of current value/ARV.

 All over the place. Depends on loan type and will vary lender to lender too (especially when comparing retail and broker), not all have the same margins. I've had people get lower rates at no cost than they were offered by another lender WITH points. 

In my market, there are some low-priced properties that would be difficult to get financing on. In that case, cash makes sense. We purchased two of our properties outright with cash and 2 with financing. We didn't want to over-leverage but we also didn't want to tie up all of our funds when they could be used to acquire multiple properties. Even with the mortgages, we have FANTASTIC cash flow, so it made sense.