All Forum Posts by: Ed Burk

as a PML, I speak with many New Investors looking for their 1st FNF property. Here are some Important questions that are not normally asked: What would be my 'cash' outlay for the purchase/closing and to begin the Rehab | Are Interest Reserve funds required | Is the payment based on the total loan or just the advanced portion | Are the REHAB funds advanced at closing OR disbursed on a as completed basis (draw) | What are the Pre Scope/Rehab Inspection and Draw fees. With no prior experience, make sure you are clear and they understand you are new at this. Experienced Investors traditionally will receive what you see advertised, this is not normally the case for New investors. The best of fortune to you in your new endeavor!

@Lane Stubblefield Great question. As a Private Lender I can shed some light on how the "fix and flip' type loans work. Not knowing your qualifications, and stated this is the 1st project, I would assume an Intro tier, Leverage would be 75% of Acquisition/Purchase | 100% Rehab holdback | 70% ARV. Our top tier allows (90%/100%/75%)

Purchase @ $80k @ 75% = $20k down payment

ARV @ $150k @ 70% = $105,000 MAX total loan amount- your Total loan = $80k

Rehab @ 100% @ $20k = $20k Holdback for repairs. Since we issue on a Draw basis, you would complete x% of the work, and then be reimbursed for that amount.

Interest Only payment for 12 months-  based on the  Advanced portion. So you would not be charged interest on the holdback amount until it was reimbursed. 

Hope this helps Lane...

@Dhiren Ahir- As @charles carillo stated, the Refi. normally is a breeze, assuming the Deed/Mortgage gets recorded timely and your not waiting on the County to record the new ownership. Also, with a Private Lender, owning the home < 6 mo. typically does NOT require the property to be Tenant occupied, a 1007 addendum could be used to calculate the DSCR, as well as the property as-is value being used from the Purchase price. > 6 mo., would require Tenant occupied, but would also use the higher/ current as-is value if cash out was important.

I have used this method of investing before. One of the benefits with this strategy is getting a cash discount when purchasing quicker without a lender but that does not seem to be the case here.

Working with lenders when refinancing is much easier because you already own the property so there is no time crunch if/when fees arise that are higher than estimated or never previously disclosed; you are able to simply say "no thank you" and move on. You also have a lot more room to negotiate.

I would purchase the property, perform renovations and value-add, refinance and repeat.

Charles Carillo, Real Estate Agent

To add, as a Lender @Simon Stahl was spot on. We do allow payoffs < 6 mo./ delayed financing, utilizing the Purchase price as the current as-is value to determine LTV. > 6 mo.s would allow lenders to us a new higher/appraised as-is value. However, if your not looking for additional Cash out, it can be done as you mentioned...

@Katie Panzica- Piggybacking off what @Michael Glist and @Ben Stoodley have already covered re: the DSCR income qualifying, the home may or may not need to be tenant occupied at the time of closing (which will vary by lender). In this case, a 1007 Rental addendum done by the appraiser will be used to gather comparable average rents for similar properties, this would be used to determine the 'Income' amount. For non tenant properties, 90% (varies by lender) of that amount would then be used to calculate the DSCR... Hope everything works out well for you!!!

Jumping into this Post a bit late. Had many a discussion with them concerning today's Premium on the raw materials- We are seeing some 25-40+% cost increase over the last year or two- a significant dig into profits. This alone has put many of my smaller investors working into Long term buy and holds to their portfolios. Post 'covid' the Carry costs are playing more of a factor as well if you do not have an crew available. ROI can be very misleading without all the pertinent factors. Hope this adds a little value to your research-

Freddie Mac Investment Capital research Full Story

Constructive Loans- Funding when Bank can't...For investors who are seeking alternative financing solutions with flexibility or looking at value-add opportunities that have upside return potential, it’s worth exploring non-traditional deal partners......Lending for commercial and multifamily properties dropped 48 percent in the second quarter compared to a year ago... but Freddie Mac research indicates that banks and others are expected to make 20 to 40 percent fewer loans in 2020 compared to 2019.

https://lnkd.in/gRDkX6Y

Professionals prefer our (1) time approval for their 1 yr. Capital Credit Line option without Income or Employment verification. Allows funding(s) on one or multiple on-going projects, re-usable for 12 mo.from approval. From Cosmetic improvements to Major rehab redesign, we provide the needed leverage for your project(s). Long Term Rental programs also available for short term buyouts, Fix and Hold or Cash Out.