All Forum Posts by: Guifre Mora

Ryan,
1) Some banks ask me what my plan is for the money and don't like the idea of me buying other properties... never heard of that who cares what the bank thinks. That might be a personal view of who you spoke with. 

2) Refinance in an LLC so I could faster on the commercial side, but from what I'm seeing it's not the case... It's the same process and timeline on either route. 

3) 75% ARV has to be seasoned for 12 to 18 months...Is this common? Yes, on certain loans, commercial loans can get you to 3-6 months depending on the lender but rates will be higher. 

4) Loan to cost I'll lose a lot of money and will not be getting all my money back like what I've been led to believe? I don't know what you mean "Loan to Cost" but who mislead you? ask them. Everyone jumps into RE without understanding the lending side of the business. You might be approaching the wrong lenders in your local area look for other lenders who do this for a living. Every scenario is different and bank/lenders also are different.  

 Carrie, 

Good for you - too little - at a min 1K - I would ask 3K.

 Cassandra,

Very smart and forward-looking to do this. Keep it simple you could just create an excel sheet P & L with all the information. But to tell you the truth unless you are flipping properties lenders or banks don't take this into account, this would come in handy if you are seeking an equity partner. 

Info to include: 

• Rehab cost
• Itemized repairs in rehab budget
• Pictures before and after
• Rent roll (including rent hikes)
• Expenses (Repairs, Capex, Management, Insurance, Taxes, utilities)
• DSCR
• Docs to keep digital: Title, Purchase HUD, Lease, LLC docs.

 Bahkti, 

Welcome to RE and BP. 

1. First, get your finances in order: 

Before getting into any type of real estate investment, get the rest of your financial house in order. Canadian (foreign nationals) have different requirements if looking for financing in the US, for example, higher downpayments, higher rates, Canadian credit matters, and owning your primary home matters for some lenders.

2. Get to know the local housing market:

Talk to real estate agents; who are moving to the area, and why; and analyze price history. In short: Do your research.

3. Build a local team: 

Successful real estate investing is as much about what you know as who you know. Build a team of real estate agents, contractors, attorneys, and accountants who can all help your business run smoothly.

4. Keep it simple:

A simple strategy can go a long way in real estate investing. If your goal is to generate passive income, don't be fooled into believing you need to go big to make it happen.

5. Know your taxes as a foreigner:

Rental properties have great tax advantages for U.S. citizens, but taxes are the tricky part for any foreigner buying a property in the United States. The U.S. will require the foreigner to pay taxes in the U.S. on real estate gains. The foreigner may also be required to pay taxes in their home country. The United States and Canada have an agreement that meets some of these concerns regarding income taxes for Canadian citizens. I would talk to tax professionals in both countries before buying any property

Mahan,

How long did you purchase and those the property has a current lien?

@Jaysen Medhurst mention 15% is a good solid rule of thumb. 

I encourage you to read this article it gives you a good insight into what exactly CapEx is and what items to consider. Some of these CapEx items might have to be addressed as rehab in your initial purchase.

https://www.biggerpockets.com/blog/2015-10-13-real-estate-capex-estimate-capital-expenditures

 Reggie,

To clarify some of your statements, a portfolio loan can also have a cash-out option. A portfolio loan is a mortgage loan originated by a bank/lender and held in the bank's portfolio over the life of the loan these loans can have a cash-out option. These loans are not on the cheap side but are have little more flexibility with underwriting. 
Other options are to cash out and purchase at the same time with the same lender or cross collateralize an asset to purchase. But if you are referring to a blanket loan where you secure a single loan with multiple properties at a minimum 5 properties are required and these loans can have balloon payments or strict prepayment penalties for 1 asset or the entire loan. 

So if cash is what you are looking for to purchase more RE, you need to know the equity of each property and multiply it by 65-70% minus current mortgages and that is what you can get out of each property minus closing costs. So if you are refinancing with little equity and the new loan is higher than the current rate this might not be the best case right now to pull cash as the cost for little cancels it out so it becomes an expensive loan without much benefit. 

When you say purchase cash and refinance to a 15-20 year loan you run the risk of not been able to finance the property and you just might be stuck with it with all your capital in it. You also might run into title seasoning issues. 

My suggestion is to pull cash for a solid downpayment and closing costs and get a purchase loan with 15-20 y term and also a quick question when you say commercial property are you referring to retail etc or 5+ units residential? 

 Jasson,

Tight analysis, few items to point out. 

Pre-Refinance Expenses: ...
Vacancy $294.00 (7%).  so you are doing a rehab you would not have a tenant so there is a 100% vacancy no income during rehab. The rest of the expenses should be absorbed into the rehab budget adding utilities needed fo the work. Operational expenses do not apply here (maintenance, CapEx, management & Mic).

Refinance:...
Loan Fees: is zero when adding a mortgage loan you will have closing costs from the lender. 3-6% of the value of the home in some cases. 

Total Cash Invested: $500.00 plus closing fees.

Loan Interest Rate: 4.00% This rate is achievable but this is today's rates, but do realize the current market trend and that this is an investment property so I would caution you, I would analyze at 5% as a mid-range. Because you are projecting this rate and loan in 6+ months so you should be conservative. 

 D'Juan yes you can refinance after purchasing with hard money or PVI loan. Any bank that does home loans can refinance a property into a new loan. Some of those banks you contacted might be very niche and may not be doing some refinance loans. During these times some lenders are not lending on non-recouse loans the borrower must qualify and must be the guarantor of the new loan and the title must be seasoned. 

Keep looking 

Ashley, congrats good deal. 80.7% LTV

Cheap - HML lender you got why wouldn't they lend 100% of the rehab like any other lender because you have plenty of room. It seems they are setting you up for failure in my opinion.

Well, you have plenty of room to make it fair and in your favor. If you can get a PV inventor to come in with the gap money it would be up to them to ask the terms, but I would set a fixed earning upon the sale.  I would offer them the same as the HML - 2 points plus 12% interest that's $3,800. You have a possible 100K in your pocket so even if you pay 5K to make it happen you are good.