All Forum Posts by: Erik Estrada
Erik Estrada has started 182 posts and replied 4621 times.
Post: HELOCs on Investment Properties
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
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- Votes 1,458
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.
Post: DSCR 5 Year pre pay vs 1 year pre pay
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
- Posts 4,799
- Votes 1,458
Quote from @Erik Estrada:
Quote from @Rajesh Kasturi:
Team, Anyone did recent DSCR with rate and term.
Below are my lenders gave me with 700 credit score or 720 credit score.
5-4-year prepayment- 6.875%
5 year prepay @6.5%:
2yr Prepayment- 7.125%
1yr Prepayment- 7.25%
1 Year Prepay @7.5%
Should I go with low interest 5 years prepay and 1 year prepay and high interest.
My Goal:
Lock rate long term predictable.
Is 6.5 good rate for 5 years period.
Not sure I can predict rates for next 5 years.
Need your expert inputs
I would recommend a step-down penalty with the least amount of points. The rate is important, but I think going with a low point/no point option works in your favor with a shorter, flexible prepay than a hard penalty with higher points.
I have clients that I closed in 2023 at high 7% rate with a 5 year PPP, since at that time they thought rates would stay the same. Now rates are in the low to mid 6s at par. This is a time where you need to have flexibility in your financing.
The ARMs are pricing very well. Try to look for ARMs if your strategy is to keep the loan for no more than 3-5 years.
Post: DSCR 5 Year pre pay vs 1 year pre pay
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
- Posts 4,799
- Votes 1,458
Quote from @Rajesh Kasturi:
Team, Anyone did recent DSCR with rate and term.
Below are my lenders gave me with 700 credit score or 720 credit score.
5-4-year prepayment- 6.875%
5 year prepay @6.5%:
2yr Prepayment- 7.125%
1yr Prepayment- 7.25%
1 Year Prepay @7.5%
Should I go with low interest 5 years prepay and 1 year prepay and high interest.
My Goal:
Lock rate long term predictable.
Is 6.5 good rate for 5 years period.
Not sure I can predict rates for next 5 years.
Need your expert inputs
I would recommend a step-down penalty with the least amount of points. The rate is important, but I think going with a low point/no point option works in your favor with a shorter, flexible prepay than a hard penalty with higher points.
I have clients that I closed in 2023 at high 7% rate with a 5 year PPP, since at that time they thought rates would stay the same. Now rates are in the low to mid 6s at par. This is a time where you need to have flexibility in your financing.
Post: DSCR Lending Up to 80% LTV on Cash Out Refis --- No Seasoning
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
- Posts 4,799
- Votes 1,458
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✔️DSCR as low as 0
✔️ Hard Money Loans up to 100% LTC
We Can Finance the Following:
🚀Manufactured Homes
🚀 5-10 Unit Multifamily
🚀 Mixed-Use
🚀Non-Warrantable Condos
🚀Condotels
🚀Section 8 Rentals
🚀Pad Splits / Rent by the Room
🚀Short-Term Rentals
🚀Layered LLCs/Entities
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Call us today: 818-269-7983
🌐 Visit: https://luxeprivateinvestmentsllc.com
Post: Looking for Lender Guidance on $20K Seller Credit Deal Structure
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
- Posts 4,799
- Votes 1,458
Quote from @Chris McDaniel:
Hi BP Community,
I’m working on a deal in Houston/Pasadena, TX and could use some insight from those with experience.
- Purchase Price: $185K
- Seller Credit: $20K applied toward rehab at closing
- Effective Net Purchase: $165K
- ARV (conservative): $220K – $230K
- Rehab Budget: ~$20K–$25K (HVAC, bathrooms, floors, cosmetics)
- Exit: Refi into DSCR or conventional in 12–18 months
I’m trying to confirm with lenders how the $20K seller credit will be treated:
- Will hard money lenders allow this structure and apply the credit directly to rehab?
- If not, how do I best position this so it’s workable?
- Any recommendations for investor-friendly lenders (HML or DSCR) in Houston that have handled seller credit situations?
Goal is to make this a clean BRRRR deal with minimal cash in. Appreciate any advice or lender recommendations!
Thanks in advance!
— Christopher McDaniel
This will be a lender specific question as guidelines are different from HML to HML but generally most lenders would apply it towards the principal balance and the cash to close. You may want to ask your hard money lender if they allow the remainder to be applied towards the reimbursing you for the rehab
Post: DSCR vs conventional loan - 3 family
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
- Posts 4,799
- Votes 1,458
You should also confirm with your lender if they will allow you to QCD into an LLC after closing. .. This may cause your lender to require the full loan balance to be repaid, if you are not careful.
Post: DSCR vs conventional loan - 3 family
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
- Posts 4,799
- Votes 1,458
Quote from @Matthew Scheer:
Hi All,
I am under contract to purchase a 3 family with family members (one being my husband and the other brother in law). My husband and I will be 80% owners. We have been reaching out to lenders regarding loan terms and are getting the best offers for conventional loans to put in our personal names. We have good credit scores but are worried that down the line we'll have too much debt in our names if keep adding to our portfolio. Is it worth it to do go the DSCR route and putting loan in the LLC name with higher rates or should we just put loan in our personal names (and transfer title after the closing to the LLC)??
Morgan
It makes no difference, DTI wise. You still need to sign a personal guarantee on a DSCR loan which will then legally require you to disclose the debt when you try to apply for a conventional loan. If you try to "hide it" it will be fairly easy to see you own a rental through your schedule E returns.
The benefit of a DSCR loan is the fact that you can qualify with no personal DTI. If you are currently in a spot where you can qualify conventionally, this will usually be the best choice. Once you reach the point where you can't qualify for conventional loans, then that's where you would utilize a DSCR loan.
Post: DSCR Lending Up to 80% LTV on Cash Out Refis
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
- Posts 4,799
- Votes 1,458
Why Choose Our Loans?
We Are Highly Rated On
Google & BiggerPockets.com
⭐️⭐️⭐️⭐️⭐️
We Offer:
✔️ DSCR Loans up to 80% LTV Cash Out/ 85% LTV Purchase
✔️DSCR as low as 0
✔️ Hard Money Loans up to 100% LTC
✔️ Get Funded Quickly — Often Within Days!
✔️ Soft Credit Checks
✔️ Virtual Appraisals
✔️DSCR Only Second Mortgages
We Offer:
✔️ DSCR Loans up to 80% LTV Cash Out/ 85% LTV Purchase
✔️DSCR as low as 0
✔️ Hard Money Loans up to 100% LTC
We Can Finance the Following:
🚀Manufactured Homes
🚀 5-10 Unit Multifamily
🚀 Mixed-Use
🚀Non-Warrantable Condos
🚀Condotels
🚀Section 8 Rentals
🚀Pad Splits / Rent by the Room
🚀Short-Term Rentals
🚀Layered LLCs/Entities
🚀 Rural Properties
🚀 Legal Non-conforming Properties
🚀 600 sqft units/homes
📞 Have a scenario?
Call us today: 818-269-7983
🌐 Visit: https://luxeprivateinvestmentsllc.com
Post: Third lien position for flipping funding?
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
- Posts 4,799
- Votes 1,458
Quote from @Justin Bartram:
Quote from @Erik Estrada:
Quote from @Justin Bartram:
I am looking to utilize a new HELOC to finance flips off of my personal home. In the past we used the current HELOC I have on our house for flip and hold and furnishing several Airbnb's we had in the past.
I have been looking into refinancing the house to wipe out the HELOC and then turn around and open a new HELOC but our house was valued at 58,000 when we initially purchased. It was last appraised by a realtor (nothing officially documented) at 150,000. We owe around 90,000 total including the HELOC.
What I am conflicted on is the property tax. With the tax bill increasing and a higher interest than we currently have I am wondering if it would make sense or not to utilize a HELOC.
Another aspect I have looked at is using the house directly as a lien position for the lender for the downpayment with private or hard money.
If I were to not refinance the house I am unsure if I could convince a lender to take a third lien position. Our current roadmap is to flip houses, pay off the HELOC and eventually mortgage. After that start building massive cash reserves and start flipping with cash.
Has anyone dealt with anything like this and found resolve?
Hey Justin,
What is your blended rate with your 1st and second position loan?
Erik,
I am around 4.1 on the mortgage and 4.3..? on the Heloc currently. I know a refi will bring those up quite a bit.
That's a tough spot. Maybe you might want to see if your current lender for the existing HELOC is willing to extend your credit limit? Or refinance into another HELOC? The rate would probably double though.
Post: Fix & Flip Insurance
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
- Posts 4,799
- Votes 1,458
Have you tried Obie or Fortess Insurance? I usually use them if the borrower does not have any insurance