All Forum Posts by: Sasha Mohammed

i think a couple of friends of mine are doing this. they borrowed against their primary, i think as a 2nd TD on top of their low-interest 1st, and are now loaning those funds out as private money funds. personally its beyond my risk appetite, but to each their own. They have been profitable so far. i just dont like risking the roof over my head, but that's a personal decision you'd have to make. i suppose so long as your profits exceed your costs, and you are solid about your vetting process on who you'd lend the funds to, then.... why not?

oh man i disagree with the nay sayers. i put solar on my home, i'm almost 1 year in... and i am STOKED!

I'll add - i'm in SoCal, doing a house hack on an SFR. Utilities are all included in a flat-rate monthly rent for these guys. Pre-Solar, I was averaging about $200/mo for 4 adults during the year anyway, BUT the summer months with A/C i was getting bills upwards of $600 - $800/ mo with conservative A/C useage... usually siting between 74 and 76 degrees on auto and switching to windows when it was cooler outside at night.

Solar cost was about $23k, financed for 15 years at a 6.5% rate. no monies down.

SoCal Edison charges me about $12/ mo for connectivity charges, my monthly bill on the panels is about $200 (same as i was paying before, but minus the giant summer a/c bills)

As of now (10 months into my true-up period), i have about an $830 credit with Edison. Since July we have had the a/c running on auto between 74 and 72 degrees ALL DAY AND ALL NIGHT. 

July was a credit of about $30, August will be a bill of about $50... which will eat into the credit i'm owed (oohhh noooo lol). I suspect Sept will likely be about the same. 

i will say from a mortgage broker perspective - purchase is better than lease on your financing ability and ability to sell your property. it is a UCC, which is not a lien, but does require a temporary termination in order to refinance, which does come with an added cost, likely about $300 or so. and if i sell i will have to pay off the remaining balance of these guys for the prospective buyer.... but im totally fine with that. 

All in all, solar was a great move. So far seems to be saving me approximately $2k a year.

@Kris Kempe, may I ask - why private lenders? 

Now a days, there are plenty of institutional investors who have stepped in to fill the creative-financing gaps left by fannie/ freddie. 

Curious if there was a specific reason you were looking for private lending?

Anyway, an experienced mortgage broker (one that specializes in investor-specific lending) could be a good fit too help you find institutional investors and private money options alike. 

Best of luck!

we deal with this from time to time, its a non-issue for most lenders who are familiar and comfortable with closing in an LLC (you wont catch fannie or freddie doing this, though).

The borrower is the LLC which the holds title to the property.

Guarantor is a little more tricky, this depends on the guidelines of the lender. Some will want to see ALL owners of the LLC (in this case the LLC is owed by another LLC, so who owns the "LLC Y" in your analogy?) as guarantors, other lenders will want to see anyone with 20% or more, some give you an option....etc.

the problem arrises if you your LLC Y is now split ownership between other LLC's... i think the term is "equity groups". Say, LLC A and LLC B formed a partnership to create LLC Y.... LLC Y owns LLC X, and LLC X owns the property... then who do you make the guarantor? :) I have had something similar to this once, years ago, but we essentially just had to get a corporate resolution signed by all members of all LLCs to confirm they were okay with our borrower encumbering this property/ moving forward with the transaction. a few signatures, and no biggie!

this is really good advice! You'll feel a lot more confident talking to clients if you have a good understanding of the process from start to finish. 

also, be a master at your craft. sounds like you're already finding ways to emerse yourself in the industry. there are a lot of "professionals" who know nothing and talk as if they do. dont be one of those guys :) check your ego at the door, and understand this industry is always evolving. you will continue to learn 10 years in, 20 years in, 50 years in. 

DRE route opens more options. you could find you hate lending, and prefer to go into the real estate side. as a broker you also have more lending options than you would if you went retail/ direct lending. Our pricing is almost always better as well. 

Best of luck to you! This industry is both extremely challenging and very rewarding.

this is a toughie. truth be told, there are lenders out there that will do an individual DSCR loan w/ a $55k minimum. Problem is, the fees are going to be SO EXCESSIVE... it may not even be worth it for you to press forward.

i would recommend the conventional route if that's an option. 

i dont think acreage is your issue here, but every lender will have different guidelines, so it's possible. Could it be that your appraiser marked the property as "rural"? This often does create an issue for DSCR lenders, and often means they chop leverages. the 12% rate tho -- that seems excessive to me, even in this market.

Since you already have an appraisal, take a little time to maybe call around. see if you can find yourself a better deal with a lender that will transfer the appraisal. 

Not a sales pitch, just for comparison sake: i just priced this out with ONE of our lenders who does offer STR DSCR and a breeze with appraisal transfers - 30 year fixed at 70% LTV with 680 fico is giving mid-8's (with 1 point plus lender fees). It was not giving me 75% LTV and i suspect it's because i need 700 fico to go above 70 for cash-out.

Point is - you should have options on this one. I suggest you reach out to an investor-focused brokerage for a 2nd opinion. 

I believe this will have to go through probate if there was no will :( I suspect, however, the process of probate may at least prolong the reverse mortgage company from being able to press forward with foreclosing (i could be wrong here, check with an attorney). 

Once it's clear and title moves over, then @George Randall is correct, there should not be cash-out seasoning for an inherited on conventional financing. IF you are intending to go with DSCR financing, you'd have to check with individual DSCR lenders for their seasoning requirements/ guidelines on such, but I suspect it is probate which will open up refinance doors for you.

keep us posted on what you find, this is an interesting one.

if for sure you intend to sell in a year or two, i would look into bridge financing. it will be more expensive on rate more than likely, but you avoid the prepayment penalty, and the payments are uuuuusually interest-only. 

if you think you might change your mind and keep it for a while, DSCR is not a bad option, but i would look into Freddie Mac SBL. those rates are still in the 6's and 7's, albeit a bit tougher to qualify for... but even on sale, it could open you op to a seller-financing option if that behooves you.

or for easier qualification, there are lenders that will do a 30 year fixed DSCR and you can still buy-down the PPP to 1 year. then you have best of both worlds - short PPP but the option to keep if you change your mind on sale.

i think your issue is a title seasoning issue. you mention buying your wife's family home... could you elaborate on what that means? who is currently on title on it? who is the reverse mortgage currently under? what is the circumstance here? sorry to be frank but, did that individual pass and your wife inherited the property? We'll need more info here to determine. 

The reason im asking, because if you're trying to move a property from one person's name to your LLC, it will likely be seen as a sale transaction. not just for property tax reasons (this should be a consideration as well), but also in what type of loan the lender would need to facilitate for you, and in turn, if you'll need to bring in a down payment as well.

if you can somehow be added to title, (you'll need some seasoning while on title, this wont be immediate), then you could likely facilitate a cash-out DSCR transaction and only borrow what you need to pay off the existing lien. every lender's guidelienes on cash out seasoning and title seasoning will be different, so i suggest you make a game plan before you go messing with the title.