All Forum Posts by: Sasha Mohammed

@Jacob Allweil, if you have the ability to qualify with income through traditional financing methods, this will be your best option as far as cost is concerned. typically traditional mortgages have the fees paid with lender credits, meaning you often don't have to pay much out of pocket (usually just the appraisal). Of course, it all depends on how the deal is structured with your Loan Officer, but it gives you better rates and typically less fees. Time, on the other hand, is a different story. Lots of paperwork for traditional financing, and a ton of scrutiny by underwriters as they pick through your financials. 

if you're looking for loan options which are quicker and less cumbersome to obtain, commercial lending is the way to go. although it's a trade-off between cost and time. typically commercial will offer higher rates, higher fees, and odd-ball terms like prepayment penalties and sometimes balloon payments (so be aware as you shop). But commercial is an excellent option for investors who write off all their income or simply don't want to waste the time duking it out with an underwriter. 

I suggest you reach out to a broker who is comfortable not only with traditional mortgages but also commercial. They could look at your paperwork and determine the best route for you and your situation specifically. 

I, too, would suggest a portfolio. I know of one off the top of my head that only requires about $50k value per door. They're out there, definitively. So long as the property is cash-flowing up to the lender's standards. 

I'm with @Kenneth Garrett on this one. Stop wasting your time with DTI. It's moreso for consumers than investors anyway.

Real quick disclaimer -- IF you CAN qualify with DTI, you should. almost always. the terms will be better, the rates will be lower, but you'll work for all of that with the amount of paperwork you'll provide in order to obtain it, and exactly what you're doing now -- time spent figuring out how to make it work.

Don't force your square-self into a round-lender hole. There are lenders that will accommodate your needs as an investor, and won't care about DTI. Some won't even ask for your tax returns at all!

Do some research on Debt Service Coverage Ratio (aka DSCR). this should open up a whole bunch of lending options that should make your life a whole lot easier. Or better yet, find a broker who is experienced in these types of loans, they'll guide you.

Best of luck!

@Jordan Russum this may work for a portfolio lender. Maybe a typo, but want to confirm, value is about $365k, correct? Not $36,500. Value per door should suffice (typically $50k per door), so long as they're cash-flowing over 1.25% DSCR you could do a portfolio 10 year term roughly in the 7's (rate).

IF you can provide your tax returns and jump through all of the hoops, i'm sure you could find a local bank or credit union to give you a 10-year fixed option, but still amortized over 25 or 30 years. And you would probably get way better terms... but this is much more cumbersome as it would require a ton of paperwork, and it would be up to the bank/credit union to make sure you "qualify". 

Being in lending myself, I've found that it's often not easy to qualify with these types of loans (banks and credit unions) as most of the income isn't on-paper (or written-off), and their decisions are made on whether or not you have the ability to repay the note. 

Without looking at your actual paperwork, I couldn't tell you for sure if a bank/ credit union would be worth your time or not. 

But if you need something fairly headache-free, I would look into portfolio. 

hi @Levi Fox,

I would say it's definitely possible, however it's all going to be based off of the numbers you're analyzing right now. 

What state is the property in? 

There are plenty of financing options for such property types, it's really going to come down to finding the right fit as far as lending goes. For something along these lines, if the property cash-flows nicely and has tenants in-place, you could probably achieve rates in the 5-6% range (assuming good credit and a solid down). 

Portfolio lenders may be a good option for this one, and then there is always private money or hard money options as well.

There's not enough info in your post to give you definitive answers, but generally speaking, yes, there are plenty of lenders who would lend on a $1.5M apartment complex. 

For now, work through the figures and determine if it's cash-flowing and how much. typically lenders want to see 1.25% DSCR, higher is obviously better.

Hope this helps, best of luck!

@Niti Jamdar i vote Portfolio lenders as well, but i would suggest staying away from big-banks and credit unions. 

You mentioned they were trying to talk you out of holding the properties in an entity/ LLC claiming unfavorable terms. Seems to me it would be unfavorable to them as they may not be ABLE to close a loan in an entity.

There are loan-types out there, and portfolio lenders, who have no problem with an entity owning the properties, and will finance the properties mainly based on the cash-flow; not your ability to repay. There are specific parameters you'll need to hit, such as minimum loan amount, minimum number of properties in the portfolio, and the location will have to have a certain population density in order to be considered. But it would avoid tax returns/ income verification, and would allow you to release the properties from your fannie/ freddie 10-cap. 

Yes, the rates may be a bit higher than the conforming loans you're accustomed to, but if the intention is to continue acquiring through traditional financing methods, a portfolio is a great option to free up your cap and keep investing. 

You can reach out to @Alex Bekeza, he can run some numbers and possibly find you a lender to meet your needs. 

@Darrell Braxton you can try reaching out to @Alex Bekeza. 

Since you didn't give too much info as to the scenario, I couldn't say for sure that it's possible. But it sounds like something he should be able to help you with. 

Best of luck!

@Account Closed i wouldn't say 2 points is high, it's actually fairly average. It totally depends on quite a few factors; mainly, loan size and the amount of time the broker would need to spend on your file. 

if it's a small loan amount, that would contribute to higher points, because 1% of $100k is only $1,000 vs 1% of $1m is $10k. 

It may seem high because borrowers are conditioned to look for the lowest rate and the lowest cost. And since most fannie/freddie consumer loans are typically priced-in with the broker being paid on the back-end through the lender, the borrower is often not aware of what the broker is making on the file. 2 points is totally normal, but may seem high when you're paying it out of pocket vs. the lender paying it on your behalf.  

you will find discount brokers all over the place, but you often get what you pay for. I wouldn't shy away from this because of the fee. Don't be afraid to ask the broker to reduce, but also don't be surprised if they aren't willing to. Some files can take an enormous amount of time, and they don't always close. in the event the deal falls out, the broker walks away empty-handed despite the work/ time/ energy and effort put-in up until that point. 

Personally, I would walk away from this deal. From the little info i have, it sounds like the sellers are well aware of these issues, as they may have experienced them themselves at some point, and are now trying to rush you to close. 

Granted I'm just basing this decision off of what's in this post. C4 is not-lendable with most traditional mortgage lenders (i'm pretty sure they need C3 or better), and unless I had a clear exit strategy, I wouldn't feel too comfortable to step into a seller-financing situation. Especially if you're new to investing/ rehabbing, and especially if the sellers are already showing you that they're not flexible with things. 

Just my opinion, take it with a grain of salt. 

If you plan to keep all of these long-term, you could do a portfolio loan and combine all 6 into one portfolio. it sounds like they're cash-flowing, which would be the majority of the "qualification" on portfolios, and you could take cash-out based on a combined LTV on all 6 of them. Since it sounds like most of the debt on the properties are not even on-title (business lines of credit), you'll have access to the most funds as a lump-sum this way through one transaction as opposed to individually refinancing them.

Just a thought :)