All Forum Posts by: Brandon Beardt

Quote from @James Burciaga:

Hello All, I'm in Texas and I'm looking to pull some equity out of a rental property.  What type of loan should I be looking at?

Home value $285k, rents for $3,000/mo.  No mortgage on the property.  Looking for $175k- 200k cash out on a long-term note 20-30 yr.

Hi James, the type of loan you should be looking at depends on what your goal is and how you want the scenario structured. The loan options available to you ultimately depend on what you can qualify for. If you're looking for best rate/terms and can qualify with full doc/income qualification, then conventional financing may be what you're after. Alternatively, if you're looking to qualify with alternative/no documentation, then a non QM/business purpose loan may be your best option. Closing in an LLC vs closing in your individual name is just one example of a loan factor to consider. You won't be able to close in an entity with conventional financing. Seasoning periods for cash out is yet another factor to consider. Different types of loans have different Title seasoning requirements when it comes to qualifying for a cash out refinance. You may not meet the Title seasoning requirement for conventional financing but may already be at that threshold for non QM/business purposes loans. There are many intricacies when figuring out which type of loan you should go for. I'd recommend speaking with different lenders/brokers to see what they can offer based on your specific scenario and goals for the refinance.

Quote from @Megha Mathur:

Hello all, 

We are looking to use the DSCR loans for buying our investment property. We were told about the prepayment penalty...now I do have a general understanding of what the prepayment penalty is...are there any lenders that offer these types of loans without the penalty? What kind of terms would I be looking at, let's say for a $350K property? We are looking in Texas.

Would appreciate any and all help in helping me get a clearer picture on this...thank you! 

 Hi Megha,

The short answer to your question - yes, there are DSCR loan programs that offer no prepayment penalty. The Rate/Terms are going to be worse considering it's not in the best interest to the lender to do a DSCR loan without a prepayment penalty, but some lenders do offer it. These lenders have to package these loans together and sell them on the secondary market to recoup their capital, and I would say that there's much more of an appetite with secondary market investors for loans with prepay penalties than without. Regardless of the lender, expect a higher rate and cost associated with a DSCR loan with no prepayment penalty compared to a DSCR loan with a prepayment penalty. Don't forget to take into account additional closing costs for the next transaction as well, as I'm assuming the purpose of the no prepayment penalty is to refinance if rates improve.

Hi Blake,

We've done DSCR loans for investors with properties in Detroit and under the $100K loan amount that many other lenders require and the pricing shown there isn't too far off. This pricing option doesn't seem too bad overall, however, I would recommend shopping for other options just in case. At 1.25x DSCR at 70%, I would imagine you'd get similar if not better pricing options from others, especially with the recent rate drops. Keep hunting!

Quote from @Adama Bah:

Hi all,

I am under contract for multi family (2unit) and having hard time getting good term loan because I’m first time rehabbing. It’s great deal in a good location near my other owner occupied property. 
Please share any lenders would fund this kind of newbie borrower. Looking for a 90% purchase and 100% rehab. 
Thank you

 Hi Adama,

I've worked with programs that allow up to 90% LTC (purchase+rehab) or 75% LTV ARV, whichever is lower, regardless of experience level. That being said, with most lenders it's FICO score and experience that play the biggest factors in the leverage option, so I'm not too surprised that you're not getting the greatest of terms from the research you've done. Location is a big factor as well. Keep doing your research because I'm sure there are some lenders out there that will give you the chance at max leverage even though your a first timer.

Quote from @Matt B.:

I'm looking at an off market 5 unit in the Chicagoland suburbs with a very low NOI, the landlord owns the property free and clear and has not raised rents in years, I've offered seller financing and they do not want to go down that road.

I could purchase for $475,000-$500,000, the property is easily worth this amount. The In place NOI is only $19,460 or a .53 DSCR, based off the .53 DSCR a couple banks will only allow a $180,000 loan. The min DSCR amount I could find is 1.10.

With out offering a massive down payment how in the world can I make this work?

Thanks,

Matt

Hi Matt, I'm not familiar with a DSCR product that would allow lower than 25% down payment on a negative DSCR 5 unit property. So to answer your question, I don't think you have much of any options on this one without having to put down 25% or more. One option I could think of would be a no/negative DSCR product, 25% down payment, buy down the prepayment penalty to 1 year, increase rents, and then refinance after the 1 year period when DSCR is hopefully at least 1.00x. This goes against you wanting to put as little down as possible, though. At 0.53x DSCR as it stands, I'm thinking options are limited.

Quote from @Jason Sibley:

I have a rental property in my LLC that I am looking to refinance from a hard money lender, suggestions for lenders? Not looking to do a cash-out refinance at this time.

 Hi Jason,

A Rate/Term refinance out of your current HML into longer term financing with your LLC shouldn't be much of an issue. What's the full scenario details? This'll help other respondents provide their 2 cents and recommendations if they've dealt with a situation similar to yours.

Quote from @Amy Zuniga:

I have 2 properties, owned outright (no debt), by my LLC, valued at about $75k each. I am trying to find a way to get money out of either or both. So far no one lends to LLC's and/or no one lends under $75k per property. Does anyone know what I can do here? TIA.

  Hi Amy,

Any lender that offers business purpose type loans should be able to help you out with lending to your LLC. I'm not sure if that's the sort of financing you were looking at or not. Properties that are under that $100K threshold, that MOST lenders require, are not too uncommon for that area from my experience. From the deals that we've done through DSCR, the appraisal has to come in at that $75K value mark minimum, otherwise it could be dead in the water if it comes in under. With DSCR, you can do both refinances simultaneously/concurrent and accomplish your goal of closing in your LLC.

Quote from @Anne Nguyen:

Hey everyone,

I am quite new here but love all the content. I have been reading a lot about DSCR loans. I see how they would fund based on the numbers of a long term rental, short term rental, and midterm rental. What about sober living? Are there any DSCR lenders out there for sober living? Has anybody gone this route?



Thanks a bunch. Looking forward to all your responses. 

Anne N

Hi Anne,

I haven't seen any DSCR programs specific to Sober Living, however, we've closed Sober Living deals with a no-DSCR product. It's a different kind of program where we don't even consider the DSCR on the property, we mainly just look at the borrower's credit, their investment experience, and the property itself (where it's located, value, use, etc). Since there is even less documentation to look at/review with this, pricing is a bit higher than your typical DSCR LTR/STR product, however, there are numerous ways you can structure the deal to make certain the #'s work for you.

Quote from @Melissa Faraias:

Hello BP community,

I am close to finishing the rehab on my first rental property and looking to refinance soon. Does anyone have any good DSCR lender recommendations? The property is located in Houston.

A lender that I spoke with gave me two options for refinancing; the first involves refinancing immediately after the rehab is complete and renting it out to a tenant. In that case I could get upto 80% LTV of purchase price plus rehab costs. The second option involves waiting for the 6 month seasoning period and then getting upto 75% LTV of the ARV. Normally I would wait the 6 months, but the lender anticipates interest rates to go up significantly by then. Looking for some advice on what would be the best route to take. Thanks in advance for all the valuable advice.

Hi Melissa, congrats on almost completing your BRRRR project! All of the BRRRR investors that we work with usually cash out refinance once they've been on Title for 3 months with the DSCR program. This way, they're able to get max leverage (75% LTV) based on the new appraised value of the property and can repeat the process without having to wait the additional 3 months to start. My advice to you right now would be to talk to different lenders/brokers and see what sort of programs & terms they offer for this particular deal. It seems you're at the point now where you have some time since the rehab isn't fully finished. Use this time to connect with lenders and do your research/due diligence on them (read reviews, testimonials, etc). Once you're ready to start the process, reach back out to those you had a good connection/conversation with and get quotes.

Quote from @Dinisio Gilbert:

Can I do a refi-cashout on a property that's in my LLC or does the property has to be in my name? And where / who can do it for me?

 Hi Dinisio,

You can easily do a cashout refi on a property that's in your LLC with a commercial/business purpose loan. I'd say most if not all lender's on this platform would be able to help you out. Most of these types of loans still require a warm-body guarantor, however, so always keep that in mind if you're soley looking for non-recourse loan options.