All Forum Posts by: Jerry Padilla

@Eric Charles

I would use the BRRR method or Rehab funding to minimize the amount out of pocket and maximize your equity.

I personally would purchase houses that need some work, and fix them up to increase rents and equity in the property. You can get conventional financing on up to 10 properties. If you build up enough equity in the property you can cash out on up to 75% of the value on SFR and 70% of the value for a MFR. There are a couple different products for investors to use to rehab properties. HomeStyle can be used on SFR investment purchases and EZ-C Renovation Loan can be used on 1-4 unit investment properties.

@Daniel Johnson Here on B.P. is a great way to build relationships with lenders and clients. I suggest becoming a pro member and being the expert in your area. You can advertise or educate in the marketplace with a pro membership. You should also set up keywords for your area and then educate investors that reply locally. You will get referrals from other B.P. members as well as lenders. 

@Logan Zanki

I am glad to answer any questions on investor financing questions that you have.

@Nicole Heasley Beitenman

FHA is a great product for people that want to owner occupy and have little money to put down - going up to 4 units. You are required to live in the property for a year. Why take the risk of what could happen? You are only required to put 3.5% down on up to 4 units, so find a property that you would be willing to live in one of the units for at least a year. FHA has some strict guidelines, and you are limited to a maximum of owning 7 units total, including the subject property. So it is a good way to start out, because once you start investing, this product may not be available again, once your units start adding up. It is always best to refinance out of FHA once you have equity built up to avoid the mortgage insurance as with FHA it is typically for the life of the loan.

@James Wise

Damn...... 1998 ways of generating income. You are crushing it!

@Eric Stanley

For a cash out refinance on a SFR primary residence is a 80% LTV. If the property is worth $380k and you refinance the loan amount would be $304k. So you would be able to get a little bit of money out on the property if it appraises at that amount as well as eliminate the mortgage insurance that you are probably paying. It is up to you if you would want to go this route or maybe you could do a HELOC as well. The only problem with a HELOC is the rate is adjustable and will probably go up in the long term.

@Sean C. 

@Kevin Fox

is a great connection to make. He is an agent in San Diego that I work with. He can advise you on house hacking and answer any questions that you have on the market.

@Andrew Bergman - Yes, I am able to lend nationally.

Product Overview

LTV Requirements: Maximum of 110%

1-2 units allowed (3-4 units by exception only)

The Limited 203(k) may only be used for minor remodeling and non-structural repairs.

The Limited 203(k) does not require the use of a 203(k) Consultant, but a Consultant may be used.

There is no minimum rehabilitation cost.

Maximum number of contractors: 3

Repair Limits

• Renovation Total can be up to $35,000 in cosmetic repairs.
• This amount includes: 10% contingency reserve and all fees and costs listed in the fee section.
• Exceptions are not allowed to exceed the repair amount.
• Borrower is not allowed to fund overage.

Allowable Repairs

oRepairs and final inspection completed lesser of 180 days or as approved by the Renovation department

oMaximum repairs $35,000 (inclusive of all financed renovation fees). NO Exceptions.

oRoof: repair or replacement (covering, underlayment)

oGutters/downspouts: install/repair/replace

oInsulation: ceilings/walls/asbestos removal

oSiding/windows/doors

oPaint: interior/exterior/lead paint abatement

oKitchen: all appliances/cabinets/ total

oElectrical: repair/replace/recondition all

oPlumbing: repair/replace/recondition all

oRepair/Replace HVAC or other systems

oRepairing or removing an in-ground swimming pool

oInstalling or repairing fences, walkways and driveways

oFlooring/subflooring/tile/carpet/wood

oTermite treatment/damage repair

oRepairing or replacement of well and septic- *See appraisal section of the guidelines for specific requirements

oWeatherization items/repairs/ improvements

Non-Allowable Repairs

oStructural or requiring engineers report or requiring blueprints

oRepairs performed by the borrower

oNo Detached Garages

oNo Swimming Pool Installations. Pool Repairs are allowed.

oImprovements that do not conform to the surrounding neighborhood

oRepair cost that exceeds $35,000. NO Exceptions.

oAny new construction including room additions.

oLandscaping or similar site amenity improvements.

oAny repair or improvement requiring a work schedule longer than six months.

oRehabilitation activities that require more than two payments per specialized contractor.

oMajor rehabilitation or major remodeling.

oRequired repairs arising from the appraisal that Necessitate a “consultant” to develop a Specification of Repairs/Work Write-Up.”

oRequire plans or architectural exhibits.

oResults in work not starting within 30 days after loan closing.

oBorrower is unable to occupy at closing or within 30 days.

oTelevision antenna and satellite dishes.

oAdditions or alterations for commercial use.

oSFR conversion to a 2 unit

Contingency Reserve

o10% of the cost of rehabilitation

oProperties where the utilities are turned off will require a 20% contingency.

Permits

oIf permits are required to complete the improvements, you must have permits prior to any subsequent draws after settlement. No Exceptions

Borrower Acknowledgment

oParties listed below are not eligible to perform the work:

oBorrower

oFamily Member

oBorrowers Employer

oSeller

oRealtor

oAny Interested party to the transaction

A family member is not allowed to originate or be involved in the loan process

oFamily member as defined below:

oChild (son, stepson, daughter, stepdaughter)

oSpouse

oParent (includes step-parent or foster parent)

oGrandparent (includes step-grandparent or foster grandparent)

oLegally adopted son or daughter, including a child who is placed with the borrower by an authorized agency for legal adoption

oFoster child

oBrother/stepbrother

oSister/stepsister

oUncle

oAunt

oIn-laws

Fees

oSingle Fee: $550

Conforming Loan Amounts

oMaximum loan amount as determined by FHA (Conforming Loan Limits depending on location and number of units - below)

oEach county has its own individual area limit https://entp.hud.gov/idapp/html/hicostlook.cfm

High Balance Loan Amounts

oMaximum loan amount as determined by FHA (High Balance Loan Limits depending on location and number of units - below)

oEach county has its own individual area limit (refer to the following HUD website) https://entp.hud.gov/idapp/html/hicostlook.cfm

Upfront MIP

o1.75% of the Base Loan Amount

Monthly MIP

@Joe LaGreca

I have to agree with @Amit Kumar if anyone can make it happen it will be @Kevin Fox I have personally seen him make the numbers work in your market.