All Forum Posts by: Sasha Mohammed

@Kelly Pierce i was actually the tenant in a similar situation not too long ago. It is difficult being in those shoes and having the home sell out from under you. it's invasive, it's stressful, and it's expensive. The good news is California properties tend to sell quickly if priced right, although you know the real estate market better than I do in your specific property's area. 

Cash for keys is not a bad option if you think you can come to an agreement with the tenants. Waiting out the lease isn't always in your best interest, especially if you think the market is softening. It may be worth it to offer them something like their deposit back in-full immediately, along with moving costs (idk $300 for a moving truck?) and an extra $1000 toward their new rents/ deposits (just throwing something out there, i'm sure you can find what works for you to offer them). Get creative if you need to. But showing that you're willing to work with them will go long and far when it comes to them working with you on the sale (them accommodating showings and open houses). 

I read a horror story on BP not too long ago about a tenant that knew his rights, and followed them, but would do things just to make it uncomfortable. example, he would be in solely his bath robe for showings. It seems ridiculous but its not uncommon... or illegal, so tread lightly. Cali is very tenant-friendly, so if you go this route, make sure to consider the tenants and their needs. Even if just for the purpose of protecting yourself. 

@Marco Gonzales @Daniel Federico CoreVest is fantastic! We love them. They qualify you based off the cash-flow of the property. There are very specific value per-door requirements you need to hit on multi-family, and since it's based on cash-flow, you'll have to hit specific DSCR requirements as well.

Have you reached out to any local banks for this as of yet? It will be a bit more cumbersome to qualify for a loan through a local bank or credit union, but you might get better rates and terms...  

Feel free to send some info over to @Alex Bekeza, he may be able to help.

@Paolo Ruggieri What is the biggest issue you're having with what you've been offered? is it the up-front fees before closing? the balloon? the interest rates?

I don't know what you mean by "better" since that's subjective and could mean anything. What you've quoted above is actually a pretty good deal IMO! The rate is low for a portfolio deal, and if you're only paying a total of 2 points INCLUDING all of the appraisals and misc. title escrow u/w etc.... that's better than 2 points just to originate PLUS all of those extra fees...

If you're already experiencing this headache trying to find something yourself, I would suggest utilizing a Broker. You'll have to be ok with paying them for their services, although, I don't think all of them will charge you up-front. I know our brokerage only charges a fee if we actually CLOSE the deal for you. Brokers typically have good relationships set up with lenders they send business to often, and can sometimes help negotiate things you may not be able to negotiate if you call in directly. 

The thing with lending is that there is no one-size-fits-all. You may be very rate sensitive, whereas someone else may be very point/ fee sensitive. Obviously everyone wants the "best deal" -- but that means something different to everyone. And typically it's a trade-off. If there was ever a lender that had the lowest fees and the lowest rates and the easiest process, everyone else would be out of business. It's moreso about finding the best deal for YOU, and your scenario specifically. 

hope this has helped!

@Jon Graves personally, i wouldn't start out with friends and family in an investment deal, especially if you're new to it. sounds like a recipe for potentially ruined relationships to me, but that's your call entirely. If you choose to proceed this way, i would encourage you to set up an entity with these individuals to make sure it's all documented and ownership percentages are clearly stated. you dont want anyone to feel screwed in the end. Also consider who gets to call the shots. if you want to sell and the rest of your "team" doesnt... who wins that battle? Keep it simple while you're starting out and learning -- Just my 2-cents on this. 

As for lending -- it's totally going to be dependent on not only the people looking to borrow money (typically lenders will base their decisions off of ALL borrowers, and typically the rates and terms will be based on the weakest link), AND the property in-question. where is it physically located? what's the market like in that area? is it stabilized (tenants)? what expenses are you responsible for if-any on that property? how much is it cash-flowing? for more conventional financing, there's the added hurdle of income and documentation required from ALL borrowers, and usually conventional loans don't like entities. 

Some private and hard money lenders only care about equity. some private money lenders only care about cash flow of the property. rehab lenders may only care about the after-repair-value. 

it sounds to me a little early to start talking about financing, but it definitely doesn't hurt to find out what options are available and how. If for sure you're looking into rehab, I would reach out to some rehab lenders and get a feel for their requirements. or to make your life a HELL of a lot easier, find a Broker who specializes in such loan-types. not all rehab lenders are created equal, and some will be better or worse depending on your specific needs. Broker will help you navigate. 

Best of luck!

yes! but this post is way to basic to have any real answers for you. Any details you'd like to share @Marco Gonzales?

you shouldn't have any problem from the sounds of things. i would double-check with a loan officer who is licensed in your state just to be safe, but from my understanding (of your question), you could either buy the property FHA so-long as you plan to occupy one of the units, OR refinance it into FHA after you buy it (again, so long as you occupy one of the units).

you can get an FHA loan only on the property you occupy. whether or not you have other conventional loans on other properties is irrelevant -- although they would all be taken into consideration on your debt to income ratio.

IF you qualify for conventional loans, however, it seems silly to go with FHA -- typically FHA is for borrowers with lower credit scores or higher debt-to-income. The payments are almost always higher FHA than with conventional, so if you do in-fact have the ability to go conventional on your investment properties, i'm not sure how it would benefit you to take out an FHA loan on one you plan to occupy.

Hope this helps!

@Ryan Deasy you can try reaching out to @Alex Bekeza if you need a starting point. He's great! :)

Best of luck!

This is a fantastic question, @Ryan Deasy! I'm sure you're not alone in this inquiry.

I'll start by saying the income approach on appraisals in and of itself are difficult to obtain. Appraisers are not typically told "go out and appraise this property based on income approach" -- they're given a property assignment, and when they get there (or after they've looked at the property and are sitting down to write their report), they determine "highest and best use" to decide which value determination best fits the property. 9/10 this is comparable sales. if there aren't good comps, next best option is most-often cost to rebuild. The caveat to this being if the appraisal was ordered WITH a rent-roll, and even still, the rent roll would be comparable rents from other neighboring and similar properties. 

Even IF you luck out and get the income approach, it will be based on comparable rents. Not your individual property's room-by-room income, even with lease agreements in-hand. 

With that said (because i'm currently in a similar situation and have looked into this for myself), there are lenders out there that will allow for a refinance based on the ACTUAL income of the property, even if the appraisal doesn't support it. Some lenders are opening up to things like Airbnb income, those might be where I would start my search if i were in your shoes. This is because lenders that are allowing you to qualify based off of short term rental income realize that your property may be cash-flowing better than the comps. So long as you have those lease agreements, and can document (maybe by bank statements) the deposits from tenants, they might be willing to take a look.

The other option is to look at lenders who might be willing to go negative cash-flow. The rates might be a bit higher, but if you're forced to use the appraiser's rent schedule as "income" for the property, may as well give it a try with a lender who is comfortable lending on the property, even if it doesn't meet a 1:1 DSCR. They exist, it's tough to find, but they are out there.

@Lincoln Kai this scenario doesn't sound impossible by any means, although you may need to work to improve your credit a little bit in order to get decent terms. 

I have a lender off the top of my head that would allow for sub-650 fico, but they max-out at 70% LTV under 650 credit. If you could improve credit to 650 and above, they would go 75% LTV with no tax returns and no income verification.

Typically a lender that doesn't look at your on-paper income will want the property to be cash-flowing to a certain extent. I believe these guys don't even look at this if the loan is under $500k (but i would need to double-check this for accuracy on this specific program).

In Idaho, their starting rate is 11.5%, and they charge points and fees... so you'd want to run the numbers and see if it makes sense to refi your 1st plus cash-out vs taking out a 2nd TD and leaving your 1st as-is. 

There isn't enough info in this post to accurately advise you one way or another as to the best options, but point being, there are lenders out there. 

I suggest reaching out to a mortgage broker who is familiar and comfortable with non-traditional financing methods, specifically tailored to investors to discuss. if you'd like a starting point -- try @Alex Bekeza.

Hope this helps!