All Forum Posts by: Erik Estrada

Requirements: 

1. 4 Fix and Flips completed in the last 36 months (you must show proof that you closed on it with your personal name or entity name) 

2. Min Loan Amount $250k 

3. Min FICO 700

4. Up to 70% ARV

5. Fees can be financed into the loan 

6. Only available in certain markets. 

1. Nice looking terms that are not realistic with the current market. 

I am not sure why some investors still fall for this one. Everyone is after the lowest rate/ no cost/low cost loan. You will probably get this at a local bank or credit union if you have other assets invested with them, but not in the hard money/non-qm lending space. Lenders, brokers, and loan officers are in the business to help you get financing and make money. They are not going to cut you any favors and do your loan basically for free. What I see most commonly is Investors calling up a bunch of lenders or emailing them, plugging all the terms on a spreadsheet and going for the lowest one. I wish it was that simple, but you are not accounting for the fact that this industry is not regulated like a consumer purpose loan. You will very easily fall into the trap of a bait and switch if you don't actually take the time to research the companies and ask the right questions. 

2.  Getting the runaround (requesting more docs, taking longer than usual, or just simply not being straight forward)

This usually happens if you are working with a broker that doesn't know what they are doing. If you keep pushing back your closing date, and the broker is constantly going around your questions, this is clearly a sign that you may not close on the loan. Always ask for conditional approval letters and review them with your broker. 

3.  They have a do it yourself business model. 

There are a lot of lending companies and broker shops that have a do it yourself model. This is not good as you basically risk screwing up your own financing. An experienced loan officer is going to look at your file and ask for the docs he/she deems necessary in advance. This avoids you sending in items that will kill your deal or make it difficult for you to close on the loan. 

 Don't think you will find one. Less Down = More risk.

Hi Garrett 

Have you looked into doing a HELOC or cash out on your existing properties? This will be the most cost effective way to purchase the new SFR in Gilbert. Doing a cross collateral loan will be expensive and you will need to find a lender that is OK with doing both states. AZ is very tough on business purpose loans as many Private Money lender are required to have a license.

740 FICO minimum and 1 Year PPP minimum 

85% LTV is possible on a DSCR loan. The rate will be pretty high

 What is the square footage of each unit? Are there any shared spaces? Are all units leased?

 Hey Harish, 

What kind of terms are you seeing so far?

 Hey Eric, 

Let me cover a few things. 

1. If the property is currently delisted, there are lenders that do not require a seasoning period to finance you. They will however go based on the lower of the listed price or appraised value (unless you are able to get an exception approved) 

2. DSCR lenders are only going to underwrite this asset as an STR or LTR. Do you have any other short term rentals owned for 12 months? Lenders are going to want to see experience to use Short Term Rents.

3. Are you able to get an extension on your hard money loan? Is that $1,600,000 value a conservative estimate? What was it listed for and how long was it on the market? 

4. Is there an HOA for the two condos? Is the property conforming to the current zoning? Do you have a certificate of occupancy and a rebuild letter from the city to verify that the property can be rebuilt as is?

 Hey Matthew, 

There are several lenders that can do this. But they are usually not a strict wholesale lender where they do not have a retail shop. 

From the top of my head, you can do this with Lima One, Easy Street, Kiavi, and other big box lenders. They are just more strict on the DSCR if you are trying to finance them on a portfolio. The properties below $100k will be difficult to finance on a portfolio since most lenders are valuing each asset individually (not the entire portfolio)

You may want to try a local commercial bank first to see if they are able to value the entire portfolio, not individually.