All Forum Posts by: Brandon Beardt

Quote from @Eddie Pietschmann:

Hi everyone!

I am looking for recommendations on who to use for a few DSCR loans. I have two projects going on that I would like to refinance into DSCR loans, but not sure who to use yet. Any recommendations would be greatly appreciated!

Hi Eddie,
Thankfully for you, the entire "Loans, Mortgages, Credit Lines" forum is filled with lenders/brokers that are familiar with and have access to DSCR financing. It's pretty much mainstream for every lender/broker I see responding to posts. I'd say do your research and reach out to a bunch of them, because while the general concept is the same for most lenders (Rental income > PITI(A) payment) some have different qualification metrics and pricing adjustments such as FICO thresholds, LTV, prepays, lender points, etc. Best of luck!

Quote from @John Geer:

Dear all,

Wanted your input on cash back refinance. My primary house is paid off, value ~300K in current market, maybe more. I have a 2nd property that I am leasing out, which is making positive cash flow ~$500/month. 

I am interested in getting a third property in the same area given its location to a large post-grad institution with good tenants. I strictly look for 3 bed/2 bath SFHs. I do not have the cash upfront to place a 20% downpayment on a property at this time. However, I was told that a cash back refinance on my primary home would be a good option to get equity out of my paid-off home. 

Is this a good idea? Or would it be better to just save up money for the next downpayment? The other option would be to get a cash-back refinance on my 2nd property that has about 48% equity (house valued at about 375K). I earned equity on this 2nd property quickly with the recent rapid appreciation in real estate market. My goal is to build a portfolio in the next 10 years or so, and pay off the properties as quickly as possible. 

Thank you all,

John

Hi John, sounds like you have quite a few different avenues you can pursue in your situation. I would only pursue a cash-out refi on your paid off primary if you're looking for a larger sum of money to take out to use for the down payment of the new property. You'd get a whole new mortgage and would have to pay interest on the entire amount. If you're looking to potentially take out a smaller amount, a HELOC on your primary may work out better. You may not be able to tap into as much equity as a full cash out refi, but that way you have access to a good deal of funds and only pay interest on the amount you actually use. It really just depends on how much cash you'd need for the down payment of the new property. Taking cash out of your current investment property is also a good strategy - I would just make sure that your property continues to cash flow afterwards given the new loan amount and rate. The good news is, you have a few different options to consider! It's just breaking each option down and figuring out which one you are most comfortable with and makes most sense for you. Don't feel pressured to take out more equity/cash than you really need. Best of luck!

Quote from @Michelle Figueroa:

I'm planning to BRRRR my next property but looking for a bank who could refinance a property after I renovate & rent it. Does anyone have any experience with a financial institution in North Carolina who might refinance a property within 6 months of purchase? Thank you!

 Hi Michelle,

Congrats on planning your next BRRRR! That's always exciting news. I'm not familiar with any local financial institutions in NC that would be able to help you out (not my local market), but there are a TON of national lenders that have programs geared towards people in your exact scenario. In my experience, some lenders are able to help you utilize a full cash out refinance within 3-6 months of being on title. Talk to as many lenders/brokers as you can to gauge what options are available for you and best suite your interests/needs (As you can see, there are MANY across the forums). If you plan on continuing this strategy, establishing a trusted relationship is key! Best of luck!

Quote from @Kim Jones:

Can anyone refer me to a reputable hard money lender. Thanks so much, Kim

 Hi Kim,

What are you trying to accomplish with a hard money lender? Details are important! It may help respondents point you in the right direction to what you're looking for. Best of luck!

Quote from @Jay Smith:

Hello, I’m finishing up on a property and will be ready to refinance the property to pull my investment out. Originally I was going to do a cash out refi with the loan officer at a local bank, but I found out about lenders that will loan money base off the operational income of the property. Do anyone know or are lenders in Michigan the do “debt service loans” 

 Hi Jay,

Being aware of your different financing options is a great tool to utilize in today's market. I would talk to a variety of different lenders & brokers regarding DSCR financing to find one that best suites your needs. There are lenders/brokers all across this forum that are familiar with the concept, but the product/program they actually offer could have some minor differences between each other that make a big impact on you and your scenario (loan level pricing adjustments like experience, LTV, & FICO requirements, etc). Typically you're able to close in either your personal name or LLC, but it sounds like you already have an LLC that you want to close in. Best of luck!

Quote from @Jordan Lutz:

Hey so Im trying to  find a lender that will do a loan based on the Lease agreements and the appraisal.   I already have owner financed loans and mobile home parks that I own and single family.     How are people borrowing on their portfolios to buy more rentals ? 

Hi Jordan, when you say loans based on the lease agreements and appraisals, do you simply mean loans based on the income of the property? If so, as I'm sure you've seen throughout the forums, there are DSCR lenders that will do just that. They'll look at the lease agreement, compare it to the projected monthly debt, and if the income is greater than the debt service, the lender will proceed with the deal. Of course there's much more to it than that throughout the process, but the broad idea remains. Many investors are taking advantage of this opportunity where lenders will give them 75%-80% LTV on properties that simply cashflow, without having to provide income verification documentation.

Quote from @Sean Starkey:

Hi all! So my DTI is currently too high to qualify for a conventional loan. If I go DSCR route how much do they give you towards the house ? I know it's based on income the house makes so that could be tricky question. I need to be creative with financing now to continue to scale I feel stuck. I currently have 1 STR near Joshua tree CA

Hi Sean, DSCR lenders will typically give you 75% LTV for a purchase/refi. Some can even go up to 80% LTV on purchases but that'll increase pricing. If you're trying to put less money in the deal & go with 80% LTV, just make sure the DSCR still works as the ratio can get tight at that level since the loan amount AND rate increases. Best of luck!

Quote from @Kathy Lowery:

My lender states I need to show rental income on my taxes before I can refinance my investment property. Since I purchased it in December it won't  show until next year. 

How do I get around this? I hear investors say they refinanced in 3 to 6 months using the BRRR strategy all the time. Surely they can't be waiting until they file their taxes to do so.

What mortgage product will allow me to quickly refinance? There are no limitations (pre-payment penalty) on my existing mortgage. So I'm not sure why I have to wait so long. Does the quick refinance only apply if you purchased your investment property in cash? I've heard investors state they have refinanced hard-money loans in a short period of time. Does this not apply to a good old-fashioned investment property mortgage?

Thanks in advance!!!

Hi Kathy, many business purpose lenders will allow you to cash-out refinance within their required title seasoning period (typically between 3-6 months) without having to wait until they report on your tax returns. These business purpose loans have different qualification metrics than full-doc conventional programs. This type of financing (Non QM) includes programs such as bank statement loans & DSCR loans - programs I'm sure you've seen being mentioned throughout the forums as their popularity has increased drastically. If you choose to stay the conventional route, it seems like you may have to wait until it shows on your taxes (according to your lender) in order to do the cashout refi. If were to go the Non QM financing route, the rates will be higher, but it seems like you'd be able to utilize the cashout refinance much sooner. I'd say talk to a few different lenders to get a better sense of what you'd be able to accomplish based on your goals & current situation. Best of luck!

Quote from @Zachary Breverman:

Does anyone know of a bank/broker that offers interest only loans for investment properties?

Hi Zachary, there are a ton of lenders/brokers that have I/O options for investment properties. Lucky for you, they are scattered all across the forums haha. Any lender/broker that works with investment properties SHOULD have access to I/O options. Usually its a 10yr I/O period followed by 20yr amortized, but some lenders have different options. I'd say research different investment lenders here on BP, read their reviews, and talk to a few different ones to help gauge which one has options that meet your needs. Good luck!

Quote from @Danny Jimenez:

Hello all! 

Currently looking at my financing options as i currently do not have a W-2 job (self employed) so a conventional loan is out of the question.

Through an agent i know, i discovered the DSCR loan which does not take into account my income.

For those who have experience using this type of loan. What are some things to look for when searching for these types of loans and where did you find the lenders you ended up using?

Thank you for your time in advanced. Looking forward to chatting!

Hi Danny, the DSCR loan is a great tool to have in your REI arsenal, especially if you're unable to qualify conventionally. Different lenders will have different pricing adjustments based on LTV, FICO score, experience, & other factors, but the general broad idea is the same - if the rent >= PITI(A), the property will generally qualify. Some lenders may allow you to go negative, down to .9 DSCR while others won't even consider the DSCR during their calculation. Just kind of depends on the scenario and the lender, & it always helps to have contributing factors like reserves or experience. Rates are always higher in this space, but there's a lot more freedom in how you can structure the loan to make it work for you since guidelines are less stringent. You can even explore STRs with DSCR financing if you'd like. You just have to talk to different lenders/brokers and find one that best suits your needs. As I'm sure you can tell, there are a ton here on BP at your disposal haha. Best of luck!