All Forum Posts by: Guifre Mora

Should I use this money to pay off current mortgage that generate $1500 rental income a month or should I use 60k as down-payment on a rural home, fix and flip?

Thanks

Julie, it will take you 3.33 years to generate 60K from 1500 monthly. 60K can probably give you good returns if applied correctly. I can't give you an opinion on investing in rural property.

0 Votes

Originally posted by @Kevin O'Brien:

I am in the final stages of a rehab in Indiana that I was planning on refinancing through a hard money lender once it is rented. Before the virus I saw some hard money lenders up to 80% LTV @ 6% for 30 year fixed loans.

Are there any lenders offering similar terms now? Property was 70k and with the rehab I’m in it for just under 90k. It should appraise for 130k. I expect to be able to rent it for $1375.

Expenses are $200 a month for taxes and insurance. So with a mortgage at 6% it's somewhere around a 1.9 DCR.

Kevin, realistically you are looking to 70/75% LTV. I'm starting to see lenders are coming back slowly but LTV's are not pre CV-19.

2 Votes

Originally posted by @Kisha Peterson:

I’m a newbee so I need some good advice. I cash closed ($75K) on a property 4 weeks ago. It wasn’t my intent to pay cash but Covid happened and many lenders were at a standstill so I ran out of time (it was purchased on auction and I only had 45 days).

I have credit but just recently resigned from my 9-5, so I have no income on paper. I just found a lender that’s willing to give me $42K with no paperwork. Here are the deets: 12 months, no prepay penalty, 12.2% interest only, 1 million in liability insurance (not sure why since I’m not rehabbing).

It’s currently rented and I’m not doing a rehab, I just didn’t want so much of my cash in the house! I plan to keep buying! Taking on the note will add $10,600 in additional closing costs and interest for $42K of my money back. However, I was thinking I could refinance later with better terms. But that’s no guarantee.

Is it worth it to take on this note? Help!!

Let me help you .....DUDE! ... unless you had a family member in a Mexican jail and you needed cash to pay off the federales to get them out maybe it is worth it.

I don't get it, you made a rushed desition to go all in and pay cash, you quit your job and now you are willing to go all-in again with 42K. Even in las vegas, they would have stopped you from making this kind of bet. "sir/mam we think its time for you to collect your chips and call it a night".

As you said, "But that’s no guarantee", so if you cant refinance in 10 months you will lose the house, for sure that is a guarantee.

1 Vote

Originally posted by @Yishi Pan:

@Guifre Mora

Thanks for the tip. Would you say that it's still a deal to pursue if the purchase price + rehab cost is > 75%ARV but somewhat close.

Under a quick rule of thumb yes, heavy rehabs like this one and ARV need to be scrutinized in detail also I'm doubtful that a 240K home would rent at $3740 at this price you can buy it why rent ...

1 Vote

Originally posted by @Nick Mast:

My partner and I are looking for viable solutions to our current obstacle. We formed an LLC for the protection that it offers us as individuals and also to have a binding agreement between us via our Operating Agreement. We are now running stuck on the eventual step that involves refinancing after we complete the cash purchase and rehab of our potential properties.

The bank lenders that we have spoken with are telling us that the commercial loans we would eligible for would be in the neighborhood of 5% interest or greater and be 15 year fixed or 20 year ARM loans(depending on property type). We are also being told that we can only refinance up to 70% of ARV. It goes without saying but this obviously throws all of our numbers out of whack when analyzing properties and preparing for the next deal.

My question is, would you suggest that after the initial purchase and rehab we refinance using a loan made to an individual (either my partner or I) and deeding it over to the LLC if the bank allows? Would you suggest that whoever is not the primary borrower on the loan have the other member of the LLC co-sign for the loan? We know that the bank will have both of us as personal guarantors on the commercial loans and this is not an issue for either one of us. Just looking at ways we can lower our interest rate and increase the term of the loan as well as acquire 75-80% LTV as are offered with individual loans.

We will speak with the attorney who drafted our OA for the legal implications but just wanted to get some feedback from members of the BiggerPockets community who have dealt with similar situations. Thanks in advance for any insight or suggestions that you can share.

Nick,

Probably yes, you could get a lower rate & longer-term- if you refinance under your name and quitclaim into the LLC at closing but both or one of you will need to qualify. (I say probably because I have not seen your entire financial packet & property numbers - so I'm speculating from what you are saying)

75-80% LTV at under 5% - under the current mortgage lending condition is too optimistic. Shoot for 70% that's realistic.

Maybe in 1-month things will be a little better or not ... But LTV's and rates for investing will not be pre-CV-19 for sure.

1 Vote

Originally posted by @Chase Whitney:

View report

*This link comes directly from our calculators, based on information input by the member who posted.

Let it go, my friend, it's not a good deal.

You have a mistake "Property Taxes $8.25 (1%)"

You have zero income during rehab until rented for 6 months - you must carry these costs and, in the end, you have no cash flow even when refinanced.

0 Votes

Originally posted by @Yishi Pan:

Hi BP Community and Investors,

I'm looking at a property to brrrr invest and wanted some advice on proposing an offer. Here are the details as follows:

1. Asking Price: 120k needs TLC

2. Comparable Market Analysis ARV average (most recent sold in past 6 month): 240k

3. Repair cost: 100k - 150k, haven't inspected and might have more surprises work included: interior gut job down to studs and exterior window/doors/siding/roof

4. Holding cost: Property tax 200/month; insurance 170/month; Utility (Property vacant) 80/month; Other cost 80/month

5. Renovation period 6 - 10 month

6. Refinance after stabilized with tenant in 12 month

7. Market rent after project complete is $3740/month

What is the max offer that I should offer to use hard money for this project or is it even possible?

I've also consider to finance through bank with construction loan; wondering how that typically works? I'm from Canada.

Appreciate any feed back, Thanks!

PASS with capital letters!

You are missing closing costs to the purchase and loan if financed. Also if financed you need the monthly payments in the holding costs.

Look at it very simplistically. 120,000 (purchase) + 3,600+ (closing Costs) + 5,300+ (holding costs) + 130,000 (rehab) = 258,900. ARV 240,000.

A good rule of thumb is Purchase+rehab= 65-75% of the ARV.

Good Luck

1 Vote

Originally posted by @Joel Paolo:

I am house hacking a property in the OKC area. From the research, I think you have to live in the property for 2 years but I have been unable to confirm it with anyone.

There is no max-min. Just like any other gov loan you are to occupy the property as your primary residence. If you move out of the property and renting it you are technically violating the agreement and the loan could be called, but I don't know if any lenders check if you are physically there.

1 Vote

Originally posted by @Anthony Simboli:

@Guifre Mora isn't drop box just a file management tool?

No different than Google. But if you use multiple emails as I do for my businesses each Gmail account will have its own google docs space, I found it hard to manage all under one roof. With dropbox, I can work on my iPhone or hp laptop or desktop and save all under one roof. Personally I never liked google docs I prefer Microsoft. Just my personal preference.

0 Votes

Originally posted by @Victor Nkhoma:

Spoke to a couple of lenders recently who mentioned FHA loan minimum credit requirement is now 640, not the 580 I initially heard. Possibly due to Covid-19 adjustments. Not sure. What have you guys heard or know anything?

Background story: A group of my friends (including me) are first-time home buyers looking to break into REI by means of House hacking.

Victor,

The official minimum of FHA loans—as set out by the Department of Housing and Urban Development—is actually 580. If you can make a 10% down payment, it’s just 500. But those are only minimums to qualify for FHA insurance.

Lenders set their own credit score requirements based on how much risk they’re willing to take on. This is called in a mortgage lender overlay -a qualification requirement applied by a lender that exceeds the standard qualification guidelines for a loan program. ... In short, applying overlays means that lenders use tougher borrower qualification requirements than they are required to according to general mortgage industry guidelines. In conclusion, you will find lenders from 620-740 in min fico scores.

You will need to shop around for the ideal lender that matches your criteria and if they are still lending under these criteria. Its a moving target.

2 Votes

All Forum Posts by: Guifre Mora

Guifre Mora has started 2 posts and replied 838 times.

Post: What can I do with $60k?

Post: Cash out refinance hard money lender recommendations

Post: No paperwork financing

Post: BRRRR Analysis Assistant

Post: Lending Suggestions for LLC

Post: [Calc Review] Help me analyze this deal

Post: BRRRR Analysis Assistant

Post: How long does a VA Loan require you live in the residence?

Post: Google Docs? MS Office? Others?

Post: FHA loan changes for first-time home buyers?