All Forum Posts by: Dave DeMarinis

I know many real Lenders who absolutely reach out directly and solicit business as well as doing significantly marketing. Unfortunately, the scammers are probably also reaching out directly. The biggest red flag I've seen by far is requesting/requiring an upfront application fee. NEVER, EVER pay that. I don't know any reputable lender collecting fees at application. The second biggest red flag I've seen is offering terms that are too good to be true. 

All that said, you are right to be careful and do your due diligence.

A lot of dependencies but you should start with the appraisal company and see if they will adjust it (as well as explaining your reasoning to the bank). It depends on a lot of factors but it is not uncommon for investors to get the appraisers to modify their appraisal in situations like this.

Agree on cash out Refi for BRRRR/Buy and Hold over HELOC if the DSCR of the property supports it. As @Kerry Baird said, HELOC's CAN BE CALLED. This is not to be taken lightly. If there is an economic crisis or debt crunch - it can definitely happen and it will be at the WORST possible time. The one HELOC advantage is you don't pay interest until you take the money. That can be a big deal if you are flipping but you are planning buy and hold.

@Dustin Thoms There are some great commercial lenders who will loan on a SFH rental based on the economic viability of the individual property.

GOOD NEWS: No seasoning requirement for BRRRR, Doesn't effect your personal DTI, Will loan to your LLC, can get 30 yr fixed term (or shorter ARM), 70% to 75% LTV (not LTC) and no loan count limits

BAD NEWS: Fees will be higher, rates may have a small premium, you will still personally guarantee the loan

PM me or let me know if you need more information.

Short term acquisition and renovation financing for BRRRR and flips. Non-owner occupied. Residential, MF and commercial properties.

@Aimee Tarte To clarify, is there no other mortgage on either of the rentals? Only the SBA loan is secured by them? You might be able to get an equity line of credit (kind of like a HELOC) from most commercial lenders.

I'm significantly ramping up my lending activities for 2020 and looking for a good software package to manage and automate as much as possible. I'm curious for the good and bad of what you are using? Here are my priorities and criteria. Did I miss something important?

1. Quick and Full loan application online (Ease of use for borrowers)
2. Track and move borrowers/applicants through the pipeline 
3. Checklist and document management throughout processing (configurable and ease of use for lender)
4. Portal/Dashboard for investor view of loan performance
5. Loan Servicing management
6. Competitive upfront costs and ongoing subscription costs
Plus 2 Nice To Haves: Good analytics reporting and Compliance Updates regularly communicated

@Artur A. I’m not sure of your question. Vacancy should be a % of rent. Maintenance is often a % of rent but you have to sanity check it without much things cost. 

EXAMPLE: A simple plumber clearing a clogged drain is going to cost the same for $600, $1500 and even $5000 per month probably. Maybe a small variation for regional (plumbers in San Francisco probably make (and charge) more than plumbers in Cleveland)

Regarding CAPX and Maintenance - you can adjust lower because of the HOA responsibilities.
EXAMPLE: HOA maintains the roof so you will never have to replace the roof out of your CAPX ... They mow the grass/plow the parking lot, so you will not need landscaping/snow removal in your maintenance.
Also note, the % of purchase price as depreciation cost basis is generally higher with condos. This means if you can take advantage of depreciation, it will have extra benefit to you.

@Ryan Grant Great post and feedback. I think you are on the right track, however - make sure you don’t forget about the closets. Most areas require a bedroom to have a closet to be considered a bedroom ...

@Musammath Khan A deal generally needs 3 components to work. Equity, Debt and Execution.
Owners and Partners Get/Provide Equity
Lenders provide Debt
Investor does, leads or manages the Execution (renovation, property management, repositioning)

Where does equity come from? 

1. Purchase below market
2. Forced appreciation from renovation and/or NOI increase
3. Down payment

PROBLEMS: 
1. Many banks won’t finance in the structure you propose. They prefer the downpayment comes from you. Talk to the lender early about your plan.
2. It doesn't make sense for a HML (or Private) to do this deal. There is no equity protection AND they are in 2nd position.

SOLUTIONS/SUGGESTIONS
*Huge plus that you have reserves.
1. Are you buying under market, if so you can use HML for the 1st position, stabilize the asset and the refinance with long term financing and payoff HML
2. Bring in an equity partner to fund the down payment. This will be much more expensive than HML or Private but it is more attractive and fair for your partner and better sets you up for success. Ideally, it would be a partner with money AND experience.