All Forum Posts by: Ceril S.

We are right in the middle of a BRRRR that we used hard money for. That is what the BRRRR calculator right here on bigger pockets is for! Make sure your numbers work and that you have enough buffer. The appeal is that you will need less directly out of pocket to do a deal that would otherwise only have been available to you if you had 100% of the cash on hand for both the purchase and the rehab - the cost of financing is just another number in your calculations. That being said, this was our first deal using HM - but our 6th deal overall, that qualified us for relatively cheaper HM terms and we also pretty much knew what we were getting ourselves in to - we know the market and what we could rent the final product for, and we knew the rehab timeline and what our refi options are and what we would qualify for. (although we did run our numbers based on worst case scenarios) @James Johnson - doing a deal with HM when you don't have to has been on my mind as a future strategy to limit my actual out of pocket expenses since limaone will finance up to 90% purchase/rehab requiring only 10% down Plus fees at closing.

Hi @Mathew Weissman - I've been curious to see if anyone here has used that program also.  I don't qualify, but it seems like a dream if you can get it.  Do you have a property/area that you are looking in?  Keep us posted on what you find out.

I would be interested in how long you would need to live in the property and also if you could use it to finance 1-4 fam props.

We have used the BRRR strategy on MFHs.

I used to live in parsippany and think you would have different pocket neighborhoods that would have good opportunities out that way.

@Christian Sifuentes We closed in early december with a deal with LimaOne - just put in for my final draw today as our property closed out the permits and inspections yesterday. Not sure why other people had issues. This was our 6th property but our first one with a HML so I was a bit nervous. (and proving that we had experience already landed us better rates - yay!) Everyone I dealt with either answered my question right away or sent me to the right person for my question. The draws worked out fine - once requested, inspected within 2 days, $ wired the day after. Being able to just put in 10% of both purchase and rehab changes the game for us. (They do require that you have some reserves to start rehab) I was totally against using a HML before this, but a deal fell into our laps when our capital was being used in another property. We are currently looking for a bank to refi the loan out, but we would totally work with LimaOne again.

PS. This is for a BRRR deal buy and hold rental.

@Jorge Pesok Thanks for the update! Hope it all goes smoothly. 

@Nick Adams - depending on what you're looking for - I think you'd be able to find something in Boonton Town,parsippany, lake Hiawathac Lincoln park....

@Cynthia Ng You can finance them in your LLC but it will likely be more expensive. You mentioned a rate of 3.25% - that would be excellent and really unlikely that you'd be able to get that as an LLC owned property (If anyone knows of one that will give rates like that - message me now!)

In an LLC some of your options would be: Commercial loan, Portfolio Loan, or Private money (limaone,etc) those seem to run rates from 6.5% (lowest I've seen unless you take less than 70% LTV) and up pretty high from there

For the best rate and terms going conventional lending (in your own name) will be the cheapest and best terms - as you quoted 3.25% (our lowest conventional loan is around 3.75%)  Do you currently have other mortgages in your personal name?  The banks we used have limited us to 4 mortgages being able to cash-out refinance, so I am looking for a bank that will do properties 5&6 right now.  But if these will be your only mortgages, then you are in a good place.  Our 4th property that was a cash-out refinance was with Wells Fargo and it was fairly straight forward.

Hope this helps!

@Jorge Pesok Keep us posted how you make out. Finding that we are in the same position and it's Killer thinking about all that capital being tied up in one property! While the bank is looking at your accounts like you have nothing - uh yeah - it's in that house!  We are also coming to the conclusion that using a fix to rent loan strategy moving forward will be the best at this point in the game. It will allow us to scale while keeping most of our own money in our own pocket.

Right now it's looking like we will have to adjust our numbers with less favorable than expected loan terms (higher rate, lower LTV) but we will see.

@Todd Magin We only use RUBS for water at this point - partly because I believe when we set it up (a couple years ago) only water and sewer were allowed per NJ laws so you will have to check your state ordinances (and the other reason being that the gas and electric were already split) I believe that we could sub-meter the gas and electric as long as we didn't make a profit on doing so. We only have 11 doors and doing RUBS in-house for 1 property isn't a big deal but if we had to do it for all of them, I would probably have a company do it for us. 

You can try to submeter it (There are some companies that will do this for you) but sometimes that isn't possible - the pipes just are not that divided at the source.  

You can also use RUBS (Ratio Utility Billing)  we use that for water on one of our duplexes and it works just fine.  I don't recall the ratio off the top of my head, but it's a combination of each apartments square footage and the number of residents in that apartment.  This is spelled out in the lease and explained at signing.  So far it has been awesome and the tenants are actually very consistent in their water use.  But, best of all, it's not an added expense that we have to carry.

@Nick G. we are working with Lima One now. So far they have been great, even with the holiday week, etc. We closed on a fix-n-flip loan with them and it was much easier than conventional lenders.  We plan on transferring it over to a Rental-30 and do a cash out refi when the rehab is complete. 

A few things - do you hold the properties in your personal name or in an LLC? They require that you take out the loan in the name of an LLC.

- Qualification for refi is not based on your personal debt to income but on the income of the property itself -  debt service coverage ratios. 

- Lima One will cash out refi and close within 30 days. 

- Yes, rates are higher than conventional but seem on par with commercial loans.  (I looked into a commercial loan but they did not want to do a cash out refi so it was a no go.)

Let us know how you make out!