All Forum Posts by: Connor Hibbs

Hi Jonah,

7% is a solid marker for what to expect interest rate wise, but you likely will not see that rate at 80% LTV. The higher the LTV you go with on your refinance, the higher the rate will be. Also, it worth keeping in mind that most private loans will include the insurance and taxes as well in your monthly payments. If you are looking to refi with less than 6-months of seasoning, then you'll likely need to go with a private money DSCR loan.

Typically, just requesting the appraisal transfer letter should work with the lender. If they're pushing back on you try to give them reasons like "I can get a higher LTV there" or "the rates are x% lower with my other option". Typically saying things along the lines of needing to close faster or not liking your rep won't incentivize them to move quickly.

They should be able and willing to transfer this report though, especially considering that you paid for the report.

Hi Raul,

I'd be happy to go over some of the different types of options you may have if you'd like.

Hi @Yinon Estikangi,

If you're looking to go with a DSCR I would recommend getting a lease in place first. Often, they don't need to be moved in by the time of the appraisal, but if you have a signed lease, first month's rent receipt, and a receipt of the security deposit then the lender will often treat the property as occupied which can help increase your max loan amount in some cases. Providing a lease to the appraiser can also help in giving them an idea of the rents that you're expecting on the report while also confirming that there is demand in the market already for the value that you set the property at.

If you're looking to refinance a property using a DSCR I would be happy to help!

Hi @KeAnna Dakwa,

I'd recommend looking into the forums for the BRRRR strategy. This is a great way to build experience and get some quality rental properties under you while keeping your liquidity up to go find additional properties.

Hi @Ron Kim,

You may be better off going with a bridge or rehab loan to do some minor renovations, then refinance after the rehab has been completed and you've got new tenants in there. There aren't many options for property values below 100k, and most of the ones that are available will have much higher interest rates and fees. 

Another option would be along the line of what Erik said earlier with using a cash-out refinance on another property to pay for this one although I think leveraging your money through a rehab would be better for keeping your equity available for other opportunities.

Hi Jennifer,

You should be looking at 80% of purchase on this one and a rate somewhere in the higher 7's (assuming you go for the min downpayment). I'd be happy to get you some rough terms on this one to compare if you'd like.

Hi Matt,

You won't likely find a lender who can do 0% down payment options until you've built up a significant amount of experience with that particular lender. Most commonly you'll find 25% down on your first, 20% on your second, then you can get into the 10% or lower range once you've got more than 3 done in the last 3-years.

If you'd like some rough pricing ideas on what your scenario would look like, I'd be happy to help.

Hi @Jose Mejia,

Some things to keep in mind when moving forward with your cash-out refi are as follows:

1. How well does your property cash flow? Most lenders may limit your max loan size if you do not hit a certain cash flow thresh hold. Typically, they will refer to this as the DSCR (Debt Service Coverage Ratio) of the property. It's going to be your [Gross Income] divided by [Fixed Expenses]. The fixed expenses include Principal, Interest, Taxes, Insurance, and Association fees if in an HOA.

2. Your Credit Score and LTV (Loan To Value) matter for your interest rates and loan size. Higher Credit Scores allow you to get larger loan sizes or higher LTV options. By having a higher credit score or lowering your LTV you can reduce your interest rate and help to increase your DSCR.

3. If you are looking to refinance the rate and aren't concerned with taking additional equity out on your property, then you should use a rate/term refinance. These traditionally have lower rates than cash-out refinances and will only cover your existing loan amount + closing costs, so you'll need an existing mortgage for this type of loan.

4. If you're interested in pulling equity out of the property, then you'll want a cash-out refinance. Typically, you can get up to 80 or 75% of the as-is value as long as the property cash flows, and you have a decent FICO Score. For 5+ unit properties or commercial it is not as high.

5. Keep in mind the Prepayment Penalty Period (PPP) on your loan. This is a penalty window where selling or refinancing out of the loan would cost you 1,2,3,4, or 5% of the amount you owe on the property as a penalty fee. You can adjust them and shorter PPP's tend to have higher rates than long PPP's so keep these in line with you strategy with the property whether you want to hold long-term or refinance in a few years.

If you're still looking for financing I'd be happy to help.

 maybe the prices were reduced on unlivable properties due to back taxes being part of the deal for the purchase. Basically, lowering the sale price as long as the buyer pays all the owed taxes as well. This is at least my best guess.