All Forum Posts by: Jerry Padilla

@Rolando Caceres

I would say it depends on your situation which way to go. If you have little cash, rather than waiting to save up the down payment, and continue paying rent, I would say go FHA. FHA has strict guidelines though so you would have to make sure the property is just cosmetic and is in livable condition. Otherwise you may want to do the FHA 203k - a renovation loan.

For conventional you want it to be in livable condition as well, unless you plan to use a renovation loan like HomeStyle. 

As far as refinancing, there is no seasoning period when you are not getting cash back. It is good to refinance out of FHA as FHA requires mortgage insurance for the life of the loan. With a refinance into conventional you can avoid PMI at 80% LTV.

@Bailey Masters

You could refinance hard money without any seasoning, but you would have to meet the required LTV of 75% for a multi-family investment property. If you don't meet the LTV, you would have to pay the additional amount.

@William Gantz 

If this property is a rental and not your primary as I had mentioned above the LTV is 70% for a cash out refinance.

@Chand King

VA is a great product. One thing to keep in mind with VA is that you won't be able to count potential rental income on the other units, without experience. So, you will have to qualify for the entire payment on your income.

@Jonathan May

FHA is a great way to start! In pricier areas like NYC, you may be limited to just a duplex because of the self sufficiency rule with FHA on 3-4 units.

There is another portfolio loan that I am aware of that works well in higher priced area’s because it is available once you hit maximum conforming limits plus $1. It allows for only 5% down and you can go up to 4 units as a primary residence with this product.

@Joo Park

Conventional is typically where you will see the lowest rates. 

If the property is considered a single family you can get an LTV of 75% and if it is considered a Multi-family you can get an LTV of 70%. It would take into consideration both your income and the rental income to qualify.

@Greyson Holden

You can count 75% of rental income that is not reflected on your tax returns yet. 

Many investors use the BRRR method and cash out refinance on the properties, to get most or all of their money invested back out of the property to purchase additional rentals.

Some investors start out initially by cashing out on their primary residence or getting a HELOC on their primary.

@Brandon Carlson

What is the current value?

What will the value be of the property afterwards? 

How much equity do you have? 

These all will help determine how to finance this project. 

HELOC's have an adjustable rate mortgage, but as mentioned you can pull out through your the project as needed.

Cash out Financing allows for an LTV of up to 80% on a SFR and up to 75% off for a primary residence.

There are also possibly renovation financing options. HomeStyle Renovation Loan is one of the options.

@Grayson Fleming

If you are planning on purchasing a multi-family, why not start out with FHA, since you don't have a lot of fund for down payment? You shouldn't have an issue purchasing a duplex with FHA.

3-4 units with FHA do require you to meet the self-sufficiency rule.

@William Gantz

I wouldn't pull money out specifically for the fear of a recession. 

I would pull money out now due to rates being low, and if you have a planned use for the money - like a down payment for more rental properties. 

If your property, is a primary residence multi-family property you could pull out up to 75% LTV.