All Forum Posts by: Sasha Mohammed

i agree with @Alex Hunt. the margin between the two interest rates is negligible in today's market. 

A few additional things to consider between the two loan types: prepayment penalties, probability of closing, points/ fees.... and vesting (LLC or personal).

Most investors are doing LLCs from my experience... but that doesnt mean you have to. there are some liability protections with LLC, along with a little anonymity if set up right. but also some added costs.

one suggestion here is just whatever you decide, stick to it. some counties will see a transfer between personal/ LLC or vice a versa as a 'sale' and trigger property tax reassessment.

Hi @Kayla!

One question i have for you - do you intend to reside in the subject property? or would it be fully a rental?

if you intend to live in it, there are strict ATR rules for consumer loans. this means the lender will have to qualify you with income one way or another. if self-employed, you have a few options that will eliminate the need for tax returns. You could try a bank statement loan, or even a potential P&L program if the lender allows. 

If you don't intend to live in it, and it is fully an investment property, than you could go with some type of commercial loan. DSCR is an example of this. Given that you intend to furnish the property, you could submit your purchase as a DSCR loan using short term rental income to qualify. there are a few lenders out there which will accept STR income even if there is no history of such. This would depend on the appraiser giving value (as you're accustomed to), and additionally, a comparative rent schedule using short term rental comps in the area.

The big elephant in the room is whether this is intended to be another house hack, where you are occupying one of the rooms yourself; or if it is fully an investment property and you will reside elsewhere. 

theoretically you could go 70% cash out on DSCR with STR income to qualify (currently considered "vacant" property), even if rural. Not every lender would allow for rural, nor STR income to qualify... but they are out there. However, the caveat to this is that there need to be acceptable comps in the area. Your property sounds to be more unique, therefor likely making it challenging to find acceptable comps. if the property is common for the area, it's likely this could be a non-issue with the right lender.

there are quite a few options for lending institutions which would look at doing a portfolio/ blanket loan. They are not all created equal. guidelines will differ, minimums will differ, rates will differ. 

i can't speak to credit unions, because they can make their own guidelines and rates. But i suggest you reach out to a few before selecting one. Or better. yet, speak with a broker who can do this shopping for you. 

i agree with @givo in that you also should ask about a "partial release" in case life happens and you'd like to sell one out of the portfolio. This is a huge sticking point that you want to be aware of before you dive into a product like this. 

i dont think you should have any issues. just because someone is on title, that doesnt necessarily mean they have to be a party to the loan. you can be on title and not be on the debt. 

if you completely transferred the title to your kids, THIS would be an issue. but if you and your spouse are staying on, and have simply ADDED the kids, I'm not seeing an issue. 

As @Gina Tse-Louie mentioned above, i would make sure your PCOR was filed correctly with the county, and checking the "parent to child" box in order to hopefully avoid a property tax re-assessment. i have a client currently going through this now and it is quite the pain to unwind (we're still hopeful they will). better to prevent the headache before it becomes one, but i dont see it being an issue for your loan. 

That said, i have no way of knowing the HELOC lender's guidelines. so before you cancel altogether (if you do in fact want to get the heloc still), ask them about it. your LO should be on the same team with you of trying to find solutions, not looking for reasons to deny/ cause problems.

Edit: i just realized you posted this 3 years ago -_____- let us know what happened for others who read these forum posts years later lol

hey @Shaydon Childers

most responses are right, this will be challenging for traditional DSCR as they dont like gift of equity; and seller credits would be capped (usually at 2% of your purch price) and only allowable to be applied to closing costs.

i have one lender (specifically for 1-4 unit investment properties) which will allow for up-to 90% CLTV... and they are okay with seller financing so long as the seller is in 2nd lien position, allowing them in first lien position. they would max at 75% LTV on their 1st, with a 15% allowable seller-carryback (90% CLTV), and then up to 3% seller credits toward closing costs too.

they offer 30 year fixed rates, however, due to the added risk for the lender, the rates are going to be much higher than the traditional DSCR loan. BUT if it gets your deal done with less cash out of pocket, might be worth considering a higher rate until you can build some more equity/ pay down some of the balance, and the refi into something more reasonable in terms of rates. I believe they start in the high 9's currently.

you wont get to your $20k out of pocket target on this scenario specifically, but the point is, there are some lenders which will work with out of the box deal structure (for a premium).

round 6 and growing!! lets get one going in OC soon too :)

this is a toughie. hard money specifically is equity-driven, meaning they'll likely want 40%+ down to even entertain the deal. additionally, land without improvements is often very inexpensive (relative to land with improvements), usually pushing below a threshold which makes sense for a hard money lender. 

if you're not intending to build right away, then i think you'll have the best luck with private money instead of hard money. usually higher leverages than hard money, and more negotiable terms.

if you are intending to build on it pretty right away, a ground-up construction loan could work, but those will typically require some ground-up construction experience (on title on other ground-up deals), or an extensive portfolio of heavy rehabs/ rentals/ strong liquidity. those will give you acquisition monies (to buy the land) and build monies (to build the improvements).

lol happy to help. knowledge is powerful. 

not 2 months, no. usually a letter will let you get in for underwriting/ qualifying, and a 2-week pay stub required before closing. 

every lender that does fannie/ freddie will use standard fannie/freddie guidelines, but a lot of them have "overlays", which are additional guidelines imposed by their investors. check with your preferred mortgage professional to find out how they will handle things for your speicific scenario. 

There's soooo much i want to spew out but this is not the forum post for that. just one last tidbit, since it sounds like you're looking for a live-in multi-family, FHA is going to be tough due to added guidelines on 3 and 4 units. stick to conventional.