All Forum Posts by: Joshua Fulenwider

@Daniel B. I appreciate you exploring this.  Most people don't give it a second thought and simply move out.  Chances are if the credit union finds out this is your plan they can take several different approaches.  First, they could freeze the line (no additional advances) and keep all other terms the same.  Secondly, they could utilize an acceleration clause (demand the entire amount be repaid right now) as the loan was intended to be use against a primary residence only.  Third, they may put you on an amortized repayment immediately.  Or lastly, they may do nothing because they don't care.

I can not advise you one way or another.

@Matt Leonard if I understand you correctly, this is an investment property that you are renting out to others?

If so, talk to a commercial/portfolio lender, not a mortgage lender.  The rules are different once you step over to underwriting real estate using commercial guidelines.

Community banks are going to be your best bet for this type of lender.

@Aaron Rowzee It depends on how you are raising the funds.  Are they a loan? Or are they equity investors (i.e. partners).  Partners are going to be governed by the operating agreement you put in place with the partnership, llc, or corporation that you form.  My recommendation would be to set up a separate entity, operating agreement, and bank accounts for each pool of investors so that there is no co-mingling of funds.

If you are doing these as private financing and creating a 2nd position loan on the property you can do something similar to what I mentioned above.  However, it may benefit you and provide some comfort to your borrowers to contract with a payment solutions company.  You pay the company (or they draft your account) and then they disburse funds to who you owe.  If it is a single person per property that is pretty simple, but I believe they can also manage the payments to an investor pool as well.

I only have limited experience with the payment company as the one I got involved with was set up for me already.  It was very convenient.

Hope this helps.

@Johnathan Alesso I live north of Denver.  The market out here is really hot right now.  Not ideal for landlords just entering the market.  There are some deals but they are scarce right now.  Good luck in your search.

@Keyla Dietrich check your county assessor.  Depending on how advanced their website is you may be able to do some searching there.

Other than that, there are certain list providers you can access online.  You can set your search parameters and they will sell you a list that meets your criteria.  I did it a few years ago for non-owner occupied properties and I think a thousand names cost me about $300. 

@Yoni R. if you are going to be living in this property you can pursue a conventional mortgage and get better rates/terms. This could be a 30 year amortization possibly with a point or two paid for closing costs. This could be done on a fixed rate or an ARM (adjustable rate mortgage).

If you were to come to me, my rates and terms are going to depend on the property and your experience as a borrower. The information I give are examples of what is currently available in my area. Your area could be different. I would be writing it up as a commercial real estate loan. This means a maximum 20 year amortization. We only do variable rates on real estate which is similar to an ARM (typically a 3/1 or 5/1). Rates are currently ranging from about 5.75%-7.75% (prime + 2.00% to prime + 3.00% with prime currently at 3.75%). Don't quote me on this as these are always changing.

I have found that these are fairly common terms in my market.

@Yoni R. it's going to depend on your lender and the type of loan you are pursuing.  A bank may look at it as a single family home with a second kitchen (not uncommon).  Do you have a lender you are working with already?  If you have an open-minded lender you may be able to float the situation by them phrasing it as a hypothetical.

If you came to me to finance it I wouldn't care about it being set up as a duplex, but I am a commercial lender not a mortgage broker.  Since I work for a portfolio lender we have more discretion and I would base my decision more on the loan analysis.

I would discourage trying to hide issues with the property.  You want to be honest with your lender.  Character is a crucial part of banking but it is very subjective so it is imperative to have a good relationship with your lender.  Talk to whomever you are working with and see what their requirements are.

The good thing is, if you run it by your banker and they say they can't help you, there are thousands of other banks you go to.

@Ed Diaz make sure your are provided an appraisal.  My partner roped my into a turnkey deal that we never received a copy of the appraisal and they set up the financing.  Come to find out there were multiple layers of fraud and we paid about twice what the property was worth.

Do your research on the turnkey company and make sure they have a reputation for honesty and integrity.  

I would also recommend pursuing your own financing for the property rather than using their in-house financing because it will help to have a neutral party evaluate the deal as well.

Hope this helps.

@Yoni R. It depends on the type of loan you are going for at refinance.  Are you working with a traditional mortgage lender or a portfolio/commercial lender?  Portfolio lenders tend to have easier underwriting standards, especially since this is an investment.  The length of the time will be similar with both.  Once you get them all the documents they need it will take them 1-2 weeks to analyze the deal and make a decisions.  From there they will order an appraisal.  Appraisals can take 20-45 days depending on the current demand in your market.  Once the appraisal comes back and is approved by the bank it is typically fairly quick (about a week or less) for loan documents to be prepared.

Depending on where you live, a city inspector will likely do an inspection on any permits pulled to make sure the work is done according to code.  Check with your local authority on this.  Your loan officer will likely do a drive-by inspection to get an understanding of what they are lending on.  But the appraiser they hire typically needs access to the inside of the property to take pictures and measurements for their appraisal report.  If there are any issues any of these three parties may require additional inspections (additional inspections that may be required are pest inspections or possibly a survey).  When your inpsector comes out it is helpful to provide them with information on what was done during rehab and how much was spent as they do reference your purchase price in their report.

Depending on your lender they will have different rules as to how much you can refinance out.  After a year they typically will refinance based on the appraised amount only and it is based on percentage of that. The exact percentage is going to vary from lender to lender (unless you go with a traditional mortgage and that is dictated by FNMA and other government agencies).

Your plan sounds doable.  Keep asking questions and keep pushing.  The most successful people I know hear a lot of "no's" before they get a "yes."  But they keep going until they get to the "yes."

@Todd Ashley As far as I know, I believe you should be able to obtain conventional financing as long as one of the borrowers plans to occupy it as their primary residence.

Sounds like you're on the right track.