All Forum Posts by: Daniel Molina

@Dana Vijum I agree with most of what was said above although their advice seems to have a bias. Those loan prices seem extremely high if they are giving you a long term debt option (5+ years). I currently see 8-10% for short term bridge/fix&flip loans. I did not see what state you are in but that may play a part in the rates you are getting because almost all lender will be cognizant of the market and price adjust accordingly. For example if you are in the rust belt; I would rarely see anything under double digits. 

@Chris Smith Not every lender has a credit requirement; however, they may not offer you as much leverage as they would someone with a higher FICO. 

@Abe Hersk Thanks for your questions and I think it is important to understand a bit more about your goals before thoroughly answering; however, this should hopefully help:

My question here is, what would be my best option for a blanket loan let's say for like 30 units/houses? You need to see what a per door value will be. Most lenders will have a min value that they target and will remove an asset if it does not meet that requirement

- 15 and/or 30 years fixed. - typically these loans are on a balloon so you may get a 5-10yr term on a 30 year amort schedule. You can also now get some on a 5/1, 7/1, 10/1 ARM but they may limit the number of assets (by parcel number; not door) in each loan. 

- Non recourse. - usually non-recourse with standard bad-boy carve-outs. you may get better pricing if you go recourse but that is not always the case

- Income approach appraisal. - it will be on a comp sales approach since all the assets are residential. In the event of a default the cannot always sell as a pool so it has be taken with an approach that makes sense for all types of buyers. Your cash flow/DSCR will absolutely determine how much money you will get so property income is still very, very important 

Also are blanket loans in general more expensive? - they can be, it really depends on your goals and some of your pain points. They make sense for some investors and others steer clear - again knowing your goals and growth plan will certainly help any lender give you the best guidance and partner with you 

What else would I need to know beforehand?  - understand all your expenses like capex, opex, PM, TIA, utilities, landscape and maintenance. There are tons of blogs and write-ups about this topic. Some here and some on lender's websites.  

I disagree with this. The feedback should be don't shop brokers. Lenders are accustomed to seeing deals all the time and they are happy to work with end users. Brokers end up shopping deals for clients and while a client might continue to shop themselves you start getting multiple LOs involved. 

@Geoff Garber I think it depends on what you are looking to do with the property. I agree with @Cara Lonsdale if you qualify and have the time to wait for a conventional loan - go that route. If these need some TLC and you plan on flipping I would go private/hard money loan since time frame would be quicker; pay an I/O payment and some offer no pre-payment depending on term.

@Amy R. Sorry I am late to the party! Portfolio loans are a great option; however, you should really note a pre-payment clause and any acceleration clause should you decide to sell off 1 asset of the 7. They also tend to have a lot of document requests which was noted in the comments above. 

I would recommend considering just financing the one asset with a private lender if it is the only one giving you issues. I would continue to use conventional lending until you hit your fannie max of 10 loans. 

Feel free to reach out should you have any other questions. 

@Justin Munk I took a look at your report and it seems that you have this listed as a refinance at a 4.25%. There is a lot of option available here but may be a lot to complete review via forum post; however, the cost goes under 'Purchasing Closing Cost.'

There are plenty of lenders out there who can give you a more thorough breakdown of cost. Typically, those who withhold data tend to not be the best to work with. I have seen an uptick in people claiming to be lenders but are not. If you would like you can PM me to connect and I will gladly share more details with you. Lastly, you should be able to get significantly better terms than 70% LTP even if you are a first time flipper. 

@Felix Torres You need to be prepared with 10-20% down to start. Or find someone who does not want to get their hands dirty actually doing the work but may want to invest in you. Then you can create a JV agreement in which they grab an equity stake in the asset for putting up the fiscal requirements.

@Felix Torres I rarely see anyone doing 100% financing for flips. I think there might be some confusion to what the contact said. 

You can usually get anywhere from 90% of cost and 100% of rehab depending on credit and experience but most lenders will request you have some skin/equity in the game. When you use those figures its not uncommon to have a 120+% LTV when calculated off the as-is value at time of purchase. That will make it sound as if you can get in on the deal with no money.

With all that said, if this contact is using a personal acquaintance that funds him directly ...completely different story. Essentially he has built trust to have that investor lend him money whenever he needs it. Treat it like you lending a sibling money, sure you may ask for interest but you may not vet the deal as thoroughly because there is a trust factor already involved and its someone's personal money. Very uncommon for a fund/lender/company to offer that type of leveraging for someone with no money, little experience and no previous relationship.  

@Nicholas Walsh like almost any other lender you would pay interest and origination fees + the principal loan amount. 

Most private lenders offer an I/O option where you only make interest payments and then pay the principal balance once the note comes due.

If the loan follows any amortization schedule you will pay both principal and interest with your monthly payments. 

The origination fees are collected at time of closing. It is represented as points (percentages) so when you hear a quote of 9% and 2 points; you have 9% interest on the loan (annual rate broker up into monthly payments assuming a 360-day year) and 2% of the loan amount is collected and paid to the lender at closing.