All Forum Posts by: Brandon Beardt

Hi Stephanie, I've seen DSCR programs that allow cash-out refinancing on the property's new appraised value with only 3 months of Title seasoning and minimum property values of $75K required. Seems like this scenario could fit if that's the type of financing you are looking for. To answer your question, you should always shop around and research different lenders to see what they can offer. Many RE investors are in your same shoes and can sometimes have difficulty finding financing for their properties lower in value or when they haven't owned the property for that long.

 Hi Zachary,

The cash-out refinance should be based off the NEW appraised value of the property ($200K) after the lender's specific title seasoning period ends. Typically 3-6 months after the purchase. Curious, why are you capped at 65% LTV for the C/O refinance? Seems a bit low unless there are other factors playing into that. 75% C/O is standard right now. Shop around and see what other lenders can offer. It helps to have options with this type of strategy.

 Hi Matt,

Congrats on your new duplex purchase! Most if not all DSCR lenders can lend nationwide, giving you a wide array of different products to choose from. Each will have their own set of guidelines and requirements but the general qualification metrics are the same - good FICO score and the property projecting to cashflow each month. DSCR lenders generally lend on 1-4 units, with some actually being able to go up to 8 or 9 units. Once you're past that point, you'd have to look elsewhere, with a commercial lender perhaps. I'd recommend doing some research on some different lenders in the Build Your Team tab above or even other people who respond to your post and reading the reviews left from other Bigger Pockets users themselves.

Hi Nick, the loan officer should be able to get you some type of term sheet or quote that shows the different costs associated with that specific loan and scenario. Every private lender will have different costs associated with getting the loan, which can depend on factors such as LTV, FICO, property type, etc.Private money lenders are almost always more costly compared to a traditional bank because there's much less paperwork/due diligence involved. Private lenders offset this risk by charging more. There will always be costs when completing any type of RE financing. This includes the C/O refinance once you complete the rehab. For example, there'll be costs for Title/Escrow, lender processing/closing fees, and even origination fees.

 Hi Patrick, only you'll be able to answer that question. You're going to have to run the numbers to see what your new cashflow will be if you were to refinance the property, if there is any at all at that point. Then, take that into consideration when using the equity to purchase another property. What sort of return or new cashflow are you expecting/hoping to get from this new property? If the numbers make sense and are in line with your risk tolerance/RE investing goals, then go for it! 

 Hi Rick,

Many investors utilizing the BRRRR strategy are opting for alternative financing solutions, instead of conventional financing, in order to recapture their capital quickly to keep the process ongoing. You can easily buy a property, do the rehab, and cash out refinance after only 90 days of being on Title with DSCR financing. These lenders wont look at your entire portfolio nor base the qualification off of whether or not these other properties you own are producing any income (unless it's the subject property). With conventional financing, you'll now have to wait 12 months before being able to get the cash out of the property which can drastically increase holding costs (assuming you purchased with hard/private money). In addition, you may have a much tougher time qualifying if your DTI is out of line with your other properties in consideration. It also sounds as if you're trying to refinance the property every year or so to pull out the newly acquired equity through the appreciation, did I understand that correctly? With that in consideration, not sure if you'll have a liking to the prepayment penalties associated with this type of financing, but nonetheless, it's another tool in your arsenal.

If your worry is that lenders will look at your portfolio and review all of the debt you owe, DSCR lenders don't take that into consideration. DTI is not a factor and they only look at the subject property and whether or not it cash flows.

If your worry is that the rent will only cover the mortgage payment, that is exactly what DSCR lenders want. In fact, most just want the projected PITI payment to be equal to the projected market rent for qualification, though, some allow negative cashflow at lower leverage (not ideal IMO). 

The good news is, you have options when it comes to the BRRRR strategy, but you'll have to choose one that best suites your needs and goals. Best of luck!

 Hi Kevin, are you able to provide some deal specific details? I'm sure most if not every lender on here can help you out in some way shape or form. In regards to a credit pull, that's almost guaranteed as lenders need your score since it will affect overall qualification and pricing for your specific scenario, but won't happen until you're in process. You should be able to at least get a quote without needing your credit pulled.

That's great to hear you already have 4 properties acquired since starting last year! Have you considered tapping into any of the equity of the properties you've paid cash for to utilize for expansion? Also, since you mention the BRRRR strategy, keep Title Seasoning requirements in mind when on the Refinance part of the process. When BRRRRing, most lenders will want you to be on title for at least 6 months before being able to cash-out on the new appraised value post-renovation, however, I'm seeing programs that'll allow you to get cash out using the new appraised value as soon as 90 days of being on title. Just something to put on your radar as you're learning and growing your portfolio.

Understood, any reluctance in getting an LLC set up? Most are relatively easy to set up and maintain.

 Hi John,

No, not all private/commercial lenders require you to close in an entity, though I'm sure most prefer it for business purpose transactions. I know of a few lenders that will allow you to close in your individual name depending on what you're looking for. What type of loan are you trying to get?