All Forum Posts by: David A Lisowski

@Jim Piety

If going for traditional financing, it's best to ask the lender for different Loan Estimates.

It's weird but if you are going to have MI (less than 20% down), you typically get the best rate at 15% down (85% LTV). Ask for LEs at 15% and 20% down.

MI on investments does not drop off at 78% LTV like a primary or second home. You can request at 70% and 65% LTV. Automatically drops at midpoint of loan.

You never get MI back.

You can do a cost analysis of paying the MI to that point on the amortization schedule versus having to increase the down payment.

I think investors want to avoid MI because it feels like wasted money. But if you are refinancing or tapping equity or selling before the break-even, it might be worth less down and having MI. On the other hand, if you plan to buy and hold, the MI cost overall might be so small compared to other factors...

I don't know. It feels like it's cheap to borrow now so it's worth putting less down to invest in more property, but you also don't want to be spread too thin and be over-leveraged.

@Nick Scullin

It might be. In general, a good deal is a good deal. It depends on how you analyze the deal and what your goals are.

It's funny because my wife and I talked about that over the weekend. We visited a $12.5M Gulf-front property at an open house.

Do vacation rentals justify that price? Not even close. Vacation rent might cover taxes and interest on a loan (if you are lucky)...

But our conversation was this: if money was no object, I still wouldn't pay $12.5M for that property.

We could buy our own Gulf-front home, and two additional investments for a cool $4M each, and the cash-flow from two investments will make more than the 1 $12.5M...

Not a deep dive or analysis. Just brainstorming... but something to consider.

Better yet, we get to see what $12.5M property has to offer and those are the things we can copy to add value to our properties. For free.

@Abdullah Rubiyath

Just use cash if you make a cash offer.

If you need the money back, you would do a delayed financing (basically, a cash-out refinance).

You will pay cash and close. Once you own the property you can pull your cash back out using delayed financing.

Be sure to have detailed paper trail of where the funds were sourced, moved, and ultimately paid to to seller.

Ideally, you are paying 80% value of the property in cash. That way you can pull out what you put in (essentially).

@William Lindsey

Cash-out refinance.

HELOC to access equity.

Make payments to them like you would any other lender.

Not sure of others. Folks here have some good suggestions. I've never done BRRRR, just FYI.

Scaling.

Cash-flow.

Conventional loan limits (restricted to 10 financed properties on FNMA and FHLMC).

There's probably a bunch more reasons. There are also negatives to consider.

I don't have any commercial investments nor commercial investment experience. I am familiar with commercial lending, but definitely not an expert.

Not everyone is interested in commercial. But I definitely am, and that's a goal after our next investment property. It will be a multi-family, and the current plan is to use traditional financing.

@Bryan Crawford

Oh Awesome. I'm glad I mentioned it. I'll have to check it out. What's the usual time?

That's much closer for me

@Mark Nugent

Reply back and ask if they have any property to sell to you.

Not to flood the board, but if you own a current primary and can get a lease on that property, that should help in qualifying for a new primary purchase. That would also be a benefit towards purchasing another investment later.

@Jim Piety

Get specifics from a lender.

The order in the purchases could be vital.

Most lenders will want to see 2 years of landlord experience on your tax returns before they consider rental income on investment properties. Even then, there might be other requirements like having a lease and first month rent and security deposit.

If you have enough income to qualify on both purchases without rent income, then it shouldn't be an issue other than finding down payment and reserves (yes, you will probably need cash reserves to cover 3, 6 or even 12 months of PITI). One of the reasons the order can be vital.

You might be able to close on one and then open a HELOC to finance the next deal. That might complicate things financially so definitely speak with a lender about the details and requirements and have a plan.

I don't think HELOCs on investment properties are really a thing right now... so if that's the route, you'd want a primary first.

Otherwise, you get an investment property, and prove + cash flow for a year (again speak to a lender on these requirements) or two. Then a primary purchase. You could cash-out refi the investment to get the down payment for your primary. But that also delays a year or two.

@Kate Barry

Keep in touch with the second offer. Eventually you'll get a good deal.

Let numbers drive the business. Don't be emotionally attached. I know that's easier to say than to do.

Think of it this way: if you made 2 offers, and they didn't close, then you aren't making enough offers.

Don't take the rejections personally. Stick to your numbers, make offers, follow up on the "hot" leads. Remind yourself of your ultimate goal, and look at the short-term goal. You got this!