All Forum Posts by: Erik Estrada
Erik Estrada has started 182 posts and replied 4620 times.
Post: DSCR Loan application
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
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Quote from @Carl Stieler:
I am in the process of applying for a DSCR loan for a long term rental property through my Checkbook LLC.
The loan company I am working with wants me to fill out an application form where all of the questions are targeted on my credit, my info for collateral and my personal real estate situation. There is no mention and nowhere I can put in my LLC information. Granted, this is just an app to get pre approved, but I'm concerned that without all the correct DSCR needed information, the process will get stalled.
DSCR lenders will require a full application, despite not considering your personal income or debt for qualifying purposes.
Here are just a few reasons why most lenders will require your personal information:
1. Primary Residence History. Most lenders want to see that you live somewhere else and will not intent to live in the subject property. If you rent your primary residence, most lenders will want to see how long you've been renting and may require a utility bill as proof.
2. Schedule of Real Estate. This will help show you are an experienced investor. Filling out the full schedule may help you qualify for better terms
3. Bankruptcies, Foreclosures, Residency ETC.. I think this one is self-explanatory
The work history section is stated, meaning it will not be verified by most lenders. The LLC documents will still be conditioned for if you plan to close the property in an LLC. This does not mean your LLC will be the guarantor of the loan. Most residential 1-4 unit DSCR lenders will require a personal guarantee to be signed at closing.
Post: Why do some investors care if DSCR loans are reported on credit?
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
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Quote from @William Thompson:
Quote from @Erik Estrada:
I have always been curious about why some investors care if a DSCR loan is reported on your personal credit?
Good question — that one comes up a lot.
The main reason some investors prefer DSCR loans not to report to personal credit is flexibility. When it's off your report, it doesn't impact your DTI ratio, which keeps your borrowing power open for future deals or personal financing.
That said, having it report can sometimes help build your credit history if you’re still early in your investing journey — so it really depends on your long-term strategy.
Are you currently using DSCR loans in your portfolio, or still exploring if they fit your goals?
I am curious to know how this does not affect your personal credit? The borrower signs a personal guarantee at closing. Additionally if the investor is reporting rental income and depreciating the asset on his income tax returns, wouldn't it be fairly easy to check via a title search to see that there is a mortgage recorded?
Post: Unable to Refi Property Due to Land Contract?
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
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Quote from @Beth D.:
Hey there --
Here's the general situation. We are preparing to buy a property that is mid-reno. We are taking over after the demo stage and because the house is gutted and not "habitable" and no bank will finance it -- the seller has offered a short term land contract with a balloon at 60 days.
The issue is, now all the typical banks we would use are telling us we cannot refi a land contract that is under 12 months. We are purchasing for 475k with 100k down. We are paying cash for the reno work (approx 100k) and the ARV is 625-650k.
We ideally want to refi for 475k and get our 100k back and hold the property for renting.
Any ideas?
Can we buy initially as an individual and then re-buy as an LLC in 30 days if refinancing isn't an option (though not sure how we'll get our 100k this route)? Are their private lenders that will help us refi?
Some lenders will allow you to refinance with no seasoning, however they will need the rehab to be fully completed. They will also need to see the terms of the note and if title will be in your name upon the note being fully repaid.
Post: Buy fix and flip
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
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Quote from @Taran Sergiu:
How did you guys started your first flipping job?
My wife and i started this path in real estate, we want to start flipping. No investors want to start working withme because i have 0 experience. Do you guys know anyone who would help me start my first project. Thank you
Do you have the funding available or the deal flow? Maybe that can be your value proposition?
Post: Why do some investors care if DSCR loans are reported on credit?
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
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I have always been curious about why some investors care if a DSCR loan is reported on your personal credit?
Post: Evolve Funding feedback
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
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Quote from @Jonathan Noggle:
We are considering Evolve Funding for a DSCR loan. Does anyone have experience with this company or using them for a DSCR loan? There is limited online information about them, except that they have a C+ rating on BBB, and they do not provide an address on their website. I suspect this company is different from Evolve Property Management.
Do they have an NMLS license?
Post: Préstamos Para Inversión En Bienes Raíces
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
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Compra o refinancia propiedades de alquiler no ocupadas por el propietario con 1 a 4 unidades
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- Sin requisito mínimo de DSCR
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Post: DSCR Lending Up to 80% LTV on Cash Out Refis --- No Seasoning
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
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Post: Hard Money Lenders vs Private Lenders
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
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Quote from @Havan Surat:
I am wondering what are the differences, if any, between private lenders and hard money lenders in funding flip/ BRRRR projects?
Hard Money Lenders generally follow cookie cutter guidelines to ensure repayment of the loan. They may or may not require an appraisal and can generally lend at a higher leverage since they have larger credit lines.
Private money lending is your typical mom and pop, family, or pool of investors that create their own notes and will have a common sense approach to lending. You will not really see private lenders do 100% financing, but they can do a 2-3 day close since funding is readily available and you won't be going through the scrutiny of underwriting. You can probably anticipate a 65% LTV max with this kind of lenders, and a lot more creative financing options.
Some private lenders provide gap funding and could request repayment in the form of equity instead of your traditional points and rate.
What I see most commonly is newer investors trying to get 100% financing with no track record or any form of confidence that the loan will be fully repaid. Sometimes you just have to think, would I trust someone with $500k with no skin in the game or history to show that they will repay me?
You could also look into outside JV partners for funding. You will set up an agreement with an investor for funding and in return they will be repaid X amount without necessarily being directly involved in your company. But be expected to repay even if your exit does not go as planned..
Post: HELOCs on Investment Properties
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
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Quote from @Devvrat Kumar:
Quote from @Erik Estrada:
Quote from @Shakir Elvin:
Good day, I have a rental property in South Florida and I'm thinking about adding some square footage (additional bedroom and bathroom). My plan is to used some of the equity in that property to do this expansion, I got a rough estimate of the interest rate at 11.25%, is this normal and if not I would love to be connected to a bank/ broker that does HELOCs on investments at a lower rate.
Shak :)
Sounds about right. You have to factor in that this is a HELOC for an investment property.. The rate will be very high on this as standard. If the fees are not absurdly high, this is not bad.
It is very difficult to find lenders that will do a HELOC on an investment property.
Are these HELOC based on asset value or tied to salary income?
Depends on the bank, but usually it’s a full doc loan