All Forum Posts by: Bryan Maddex

Hey @Jude Chidi Ogene

Check out Sonrisers. It is a Charlotte based networking group for investors that is hosted online now. You can follow Wendy Sweet on facebook or search for Sonrisers on youtube. I do a market update every Friday morning!

I am speaking for the NC Reia and Greenville Upstate CREIA on the 25th from 12-1pm. You need to be a member of one of those Reias. NCReia has chapters in Charlotte, Raleigh, Wilmington and Fayetteville. 

I also speak a lot at different events. I am speaking at the REWB Club - Charlotte (Real Estate Wealth Builder Club) in December! It will be Dec 16th at Hilton University and I will do a market update and presentation on "Mortgage Hacks for Investors". I will be going over many ways to acquire properties with less than 20% down as an investor. You should be able to find details on Meetup or Facebook. 

Looking forward to seeing you around!

@Alberto Vargas

You should have all options on the table for you with your score!  Find a broker that has access to hundreds of lenders to help you find the best fit. You should be able to get something in the 6.75% range with 2 points or 7.49% with no points. 

Many lenders will let you add a credit partner to your LLC. They are not on the deed, only the LLC is on the deed. The credit partner needs 20% ownership of the LLC and then we close in their name.
Some lenders will let you both be on the loan and use the Higher of the credit scores between you and your credit partner. 
If you need to know a broker that can handle all of these situations, message me. I know a guy ;)

Welcome to BPs @Eric Hawkins!

Charlotte is tough for buy and hold using the traditional rent model, but we are now a PadSplit community!  PadSplit is a way to drastically change the cash flow of a property, even if you do not modify the home with additional bedrooms. A 4 bedroom house could work perfectly with PadSplit, or you could look to add 1 or 2 more bedrooms to the home. 

I am a mortgage broker with 220+ lenders that I work with and also a real estate investor! I have a mid term rental in Charlotte and a Short Term Rental on Lake Norman that does fantastic!

Happy to connect and talk strategy with you!

Hello @Harika Tumula!

I am a mortgage broker and work with over 220 lenders. I am also an investor. I am also a vendor member of the CREIA based in Greenville which is one of the best REIAs that I have been to!

Yes, you can rely on appreciation and rent increases if you do not need the cashflow now. Also, remember that around 11-13% of your payment goes towards principle each month. (This is Amortization). Think about that, that means part of your payment goes out of your left pocket and into your right pocket. You get that money back when you sell. So, your cash flow may be closer to even long term, even if you are losing short term.  This does not consider maintenance. Once you factor that in, your small loss is actually a bigger loss once you need to do any repairs or upkeep. 

I am a fan, don't get me wrong. the smaller your mortgage, the less likely you are to refi because rates got lower. The larger the mortgage, the more likely you are to refi. But, rates are likely to go down 1.5% to 2.5% from where they sit now based on current projections. You can make the payment lower later possibly. 

If you have a small mortgage (under $200k) i would suggest you pay for your next refi at the time of purchase!  Pay 2 points. These first two points usually break even faster than when you buy your rate down more than 2 points. Now you get better cash flow, probably got a tax deduction due to the points (check with your CPA), and you don't need to worry about refinancing later. Best yet, get the seller to pay a couple points towards closing costs when you make your offers, even if you have to go up on the purchase price (still has to appraise at the higher price). If appraisal is done on this one, and it came in over list price, ask the agents to update your contract to get up to 2% of the sales price towards closing costs without changing agent commissions. Same net to the seller, but keeps precious cash in your bank account!

Townhomes have extra holding costs in HOA and could limit your renting ability. I generally advise against townhomes and condos as the HOAs can become harsh and limit your options. But, if you think you are in a greatly appreciating area, and the cashflow works for you, not saying not to jump on this!

Last, if no one told you, taxes are about triple the cost of owner occupied properties in SC. Call your closing attorney and get them to run numbers for you on projected non owner occupied taxes. 

If you want to talk thru this, let me know! 

Hey @Lue Yang

One thing I did not see mentioned is AVOID FHA!

If you make a lot more than your brothers, FHA does not like this. Conventional financing is far superior to FHA when it comes to being a Non Occupying CoBorrower. 

With Conventional, your brothers do NOT need income, do NOT need credit scores, DO need to be on the loan and live in the property for 1 year. Also, FHA will have PMI that never goes away.

If your brothers want to move and buy another home, they cannot do 3.5% FHA on their next home since you helped them use it up on this one. (Unless they move 100+ miles for work or get married and have kids). But, if this is a future rental, you might not refinance this! You may keep the original loan so having a conventional loan would allow you to drop PMI in the future.

FYI, ADUs will NOT pay for themselves on appraisals. if you are in an area without many ADUs, you may get $5-$15k as a value, even if you spent $100k on it. If you have a TON of ADUs in your area, you might get 50% of the cost to reflect in an appraisal. 

Appraisals use GLA or Gross Living Area, that is your main house. Anything not actually apart of your main house (or a basement that is below grade) is considered Additional Square Footage and will have a fraction of the value per sqft as compared to GLA. 

ADUs can be a great investment for the ROI, but not for BRRRRing as you spend a lot and cannot recoup most in an appraisal.

Ok first, your numbering is making my mind spin lol!

#3. Are you doing 3.5% down on FHA or using HML? Institutional hard money lenders will not lend to you personally or on a home you are occupying. Plus, you can do a 203k Renovation loan to rehab the property. One close. 3.5% down of the purchase price plus renovation costs. Say you buy for $150k and put $50k renovations on, that is $200k total acquisition price so you would need $7000 as down payment (get your seller to pay your closing costs hopefully). No need to BRRRR. You have an owner occupied loan in the mid 6s today (hopefully lower later). And you wont have enough equity to refi out any extra (you need 20% equity before you can start pulling out funds).

Skip steps 4 5 and 6. No need for another loan. Then skip steps 8 and 9.

Step 10, rent your other unit. 

Step 11. Since you have an FHA loan you need to buy with conventional now, you can do 5% down on multifamily and you can renovate with a HomeStyle Renovation Loan. Just like the 203k above, you can finance in your renovations. 

Skip step 12, no need. Skip step 13, why put 20% down when you can use other peoples money and keep buying owner occupied properties with 5% down. I would rather buy 4 houses with 5% down than 1 house with 20% down. My 4 houses will by far out appriciate your one house, and I will win on net worth even tho i have slightly lower cashflow than your 1 house with 20% down. 

Skip Step 15.

Your steps have LOOOTS of closing costs for all your refis!  You likely can just keep your original loans unless they loan sizes are large and rates drop enough to justify a refi. But even then, you are better off to refi at slightly higher rates than "best rates" so that the closing costs are paid for or mostly paid for by the lender. (this is called premium pricing)

Keep in mind, if you refinance a house as owner occupied for the lower rates, you are signing a new 1 year occupancy agreement so you need to stay in that house 1 year post refi before you buy your next primary. 

IF you wanted to buy properties on the cheap AND do the work yourself (instead of hiring a contractor), then you want to buy with HML, do the renovations, then do a cash out refi and move into it. Dont tell your HML that you plan to occupy the property as HMLs cannot be done on occupied properties due to all the consumer protection laws in place. 

I like your plan overall, but your steps are off. Happy to have a call and walk thru this with you!

Hello @Nevin Wilkie

This post is aged a couple of weeks but I hate it when misinformation is given so thought I would clarify a few things based on some of the replies I saw. 

#1. Fannie/Freddie absolutely will allow you to transfer your property into an LLC after closing. Not all lenders will allow this, that is called an Overlay, but per guidelines, this is allowed since 2017. Any lender that does not know this does not work with enough investors and you should look for a broker that understands investors and can advise you property. I cannot do loans in NY in personal names, but I can do Business Purpose loans (DSCR for instance if closing in a business name). Depending on the lender, you can/should tell them upfront so they can document the LLC in the file so you are sure not to have a due upon sale clause triggered when/if you do transfer into your LLC.

#2. Yes, lenders DO check on this. The number of loans that are audited post closing is ridiculously higher than it was during 2020/2021. We as an industry are doing substantially less loans and way more are audited than have been in the past. Best to do this properly and ignore the people who say not to advertise this.  Now, if you have already closed, i would not advertise this, and i would wait maybe 3 months after closing to hope to be past the post close audit. 

#3. DSCR loans are fantastic in the right needs!  I would never do a commercial loan with shorter amortization and balloon payment. yes lower rates for now, but you have to do a refi at some point and if you do all of your loans on shorter terms, you will not be able to access as much traditional financing potentially. DSCR is 30 years fixed rate. No need to refi for 30 years. If the numbers work, why take a chance on a product that has a balloon payment?

#4. Do not just quit claim deed your property! Check with your local attorney/title company as many times you can void your owner's title policy with a quit claim deed. Let the professionals do this properly to not have to worry about breaking your title insurance, or at least ask your closing agent if a Quit Claim deed will void your owners title. this could be different in each state. 

#5. DSCR loans are not always more expensive than conventional financing! And they let you do higher LTV loans on refis and cash out refi! Yes, rates will be higher when you do above 75% LTV.

Best of luck to you!

Renters insurance only covers the renters contents inside the home. Home owners insurance covers the structure so you will always need to have homeowner's insurance on any property you have financing on. Some insurance carriers will have different policies that do not cover contents since the contents are mostly the renters, speak with your insurance agent about coverage options.

There are 15% down DSCR financing options. Rates are higher for these and that can make it hard to achieve a 1.0 or great DSCR Ratio (your income needs to be $1 higher than your PITI+HOA costs). You can do interest only payments if you are close (slightly higher rate yet if you do interest only). I would have to search my 220+ lenders to see if any do a ".75 Ratio" or "No Ratio" loan with only 15% down. I am guessing no, and also guessing if I found a Yes that it would be really high rates.