All Forum Posts by: Greg Huegel

@Sriram Kumar Bikkina - To specifically address your question, there are several differences between dealing with a private money lender and going through a local bank/conventional lender.

Conventional Bank: 

Advantages - Ability to close the loan under an individual's name, lower rates and fees, typically no prepayment penalties on long-term debt

Disadvantages - Capped at a certain number of loans (7-10), longer closing timeline, underwrite borrowers using DTI, more documentation required, typically don't like closing under business entity/LLC

Private Money Lender:

Advantages - No caps on number of active loans, don't look at DTI - strictly consider the performance of the property (DSCR), faster closing timelines, less documentation required, close under a business entity/LLC, typically more loan options available

Disadvantages - higher rates and fees, prepayment penalties on long-term debt

@Kristin Vitalis, I would love to walk you through our different loan options that may be of interest to you. We have helped thousands of investors take their business to the next level! We offer financing for any type of real estate investment opportunity you are currently looking at from FNF, Rental, New Construction, and Multifamily. 

DM for more information to see how we can help!

@Colette Major,

As others have mentioned in their replies, the rate appears to have been floating throughout the underwriting process and not locked at the time of submission. Many lenders are not currently locking rates, due to the current market volatility, because if their cost of capital increases between the time of submission and closing, the lender may be losing money on the loan. Depending on the LTV, a 6% interest rate is actually pretty competitive in today's market, unless it is through a conventional lender, but even then it is not that far off. The reason the lender included the rate buy down is because interest rates increased during the underwriting process, so the rack rate for the loan at the same LTV is higher than originally quoted. My assumption is that the lender bought the rate down to their new minimum/floor interest rate. If that is the case, your only options are to try to go through another lender and extend the closing date, pay the buy down points to secure a lower rate, or not pay the rate buy down and move forward with a higher interest rate.

So you are aware, many lenders can use the appraisal from your current lender. You would just need an appraisal release letter from your current lender and confirmation from the new lender that the appraisal is acceptable, per their requirements. 

@Jesus Ramos,

I love that you are expanding your business portfolio and breaking into real estate, especially at the age of 22! You are already ahead of others your age.

In my opinion, the best way to deploy your $20k, would be using the BRRRR method/Fix-to-Rent option. It will be easier to find a distressed property that requires rehab for a lower purchase price. Plus going the short-term FNF loan route requires less of a down payment (10-15% depending on the lender), and 100% of the rehab would be financed. Upon completion of the rehab, you could refinance into a long-term rental, start collecting passive income, and potentially receive more cash out proceeds than you initially put as a down payment (depending on how good of a deal it is). Using the cash out proceeds, you could repeat, acquire another property, and start to scale your real estate business! The most important factor going this route is building out a solid team (contractor, real estate agent, lender, etc). You will thank yourself down the road (and potentially save yourself a lot of $$) for building out a solid team from the very beginning.

Considering the current market, it would be difficult to acquire a turn-key ready rental property for $20k, unless you go the conventional lending route, as @Marshall Leipprandt mentioned, and obtain an FHA loan to limit your down payment. Going the FHA route, you would need to live in one of the units and still keep some cash on hand for any repairs or maintenance. If you can find a rent ready duplex in this price range to live in one side and rent out the other, and find a conventional lender to not have an issue with your clothing business income, then that is still a great plan!

Hope this helps.

Hi @James Clark, I second everything that Mitch stated about DSCR loans being your best option for this scenario. The only thing I would add is there are ways to only use your wife's credit for the loan to get the best rates and terms for the deal. Shoot me a DM for more information on how to make this work!

Hi @Ashley Undercuffler,

We specialize in offering both short-term and permanent financing for multifamily properties (5+ units). I would love to see how we can help! Shoot me a DM, if you're interested in learning more. 

@Colby Fryar,

I have had many conversations recently with investors who have had the same questions and concerns. Some lenders are increasing their fees to try and counteract the current interest rate environment and stay more competitive on their rates without substantially affecting their bottom line. As a lender, on multifamily bridge loans, we are able to lock the interest rate for 30 days upon a signed LOI. This is directly impacting the underwriting of deals from a due diligence timeline standpoint. We are seeing shortened due diligence time periods and inspections taking place prior to even signing an LOI.

Today's volatile market has more of an impact on MF Perm options because the SWAP rates are being applied and are increasing daily, as you mentioned. As always with multifamily, this truly comes down to the size, numbers, and the market specific data for the deal as well. 

Hi BP community,

I have seen a great deal of confusion on the forums about financing options for real estate investors. I have originated over $250 million of loans and have learned a lot during my short time on BP. I would love to give back and answer any questions you have about financing your real estate investment opportunities in these interesting times. If I don't know the answer, I'm sure the community can step in and assist, as we all will always have more to learn. 

So, what questions do you have?!

@Jason Revere,

Investors who BRRRR properties are our specialty. I would love to see how we can help. Shoot me a DM for more details!

@Ray Galyean,

I am more than happy to walk you through how we can help scale your business. We offer financing to all types of real estate investors, from first time flippers to experienced vets completing dozens of projects each month. DM for details!