All Forum Posts by: Mark Munson

@Aidan Richard Connly

Do yourself a favor and connect with Scott above, I can vouch for his background and experience. I've seen him speak personally, and my clients are students of his or know him personally.  

Hi @Jake Warren

I own a mortgage brokerage that solely focuses on real estate investors. I'd echo the above, buy along the I4 corridor between Orlando and Tampa. I also would look at places like Ocala, lot's of new builds and future appreciation. I recently bought a 2019 SFR in Ocala, my business partners and I just had to change the carpet and paint, and we were able to get it $60k under value (off-market marketing). It cash flows roughly $600 with a DSCR loan. Feel free to reach out if you need any advice.

Hi @Aidan Richard Connly

     I have helped finance a number of self-storage deals for a client of mine, I'm happy to connect to see what I can answer or connect you with a few people that are savvy self-storage investors. Feel free to message me. 

That's fair, I guess we just disagree, which is the point of forums I suppose, to hear opposing views or ideas. Many DSCR loans are IO, so there isn't really a "universal" term structure of them, in my opinion. In his post, he said: "Hard money lenders do not make long term loans." That is not true, so I just disagree with that statement. He also said: "Hard money lenders make their money on the, up front points, as much as the interest rate." That's true, but they also make money while selling the note, albeit less so than they did a year ago. He also said: "Even if you did find one that would do it, the difference in price would not even be close or worth considering." That's also far from true. If the spirit of his post was something different, than my reply was off. I guess I was more so responding to what he was writing literally. 

Hi @Shaqiul Chowdhury

I don't want to be discouraging, but I've never heard anyone willing to do a cash-out refinance up to 90% LTV. If you can find it, it certainly won't be in the hard money space/DSCR space. I would check with more local banks, as that is probably your best option. Also, the higher the LTV, the less favorable the terms. More than likely, a 90% LTV loan, if it existed, would be at 9%+, if not higher.

Hi @Tarcizio Goncalves

      Yes, cap rates matter. For example, let's say your gross $60k a year in rents on a $1M dollar property. And let's say the operating expenses are $10k a year, thus making the Net Operating Income $50k, or a 5% cap rate. With interest rates above 5%, that means you are losing money every year. You should be tracking every KPI you can, and taking the full context into consideration when accessing a deal. If you can find a property with a cap rate 4% above the interest rate, it is difficult to not make money. Obviously there are a lot of metrics beyond cap rates, but it should be considered. 

I don't know if equate is the right word, but all of your major HMLs offer DSCR loans. HML was flooded with institutional capital over the last few years, allowing most HMLs to offer a DSCR product through their secondary market investor or allowing them access to the capital markets to sell those notes. So yes, in a sense, because DSCR loans are available through HMLs. Institutional money (Wall-Street) has even changed their outlooks on lending due to HM over the last few years. The very definition of HM is as follows:

A hard money loan is a specific type of asset-based loan financing through which a borrower receives funds secured by real property. Hard money loans are typically issued by private investors or companies. Interest rates are typically higher than conventional commercial or residential property loans because of the higher risk and shorter duration of the loan.

Outside of the loan duration mentioned above, a DSCR loan fits that mold. The extent of the qualifications stemming from the borrower is their credit score; otherwise, it is entirely asset-based. If the asset is cash-flowing or the rents are at par with the monthly payment, the vast majority of people will qualify with some DSCR lender, because we are lending money based upon the asset. 

Hi @Phil Shelton

Anyone that says a HML doesn't do long-term financing is incorrect, numerous do. The standard is 30-years and usually 1% above a conventional loan or so. They aren't holding the note for 30-years, it gets sold on the secondary market, but you have 30-years to pay it off. There is a significant lack of knowledge in our space on what options are out there, I suggest connecting with as many lenders and brokers as you can to see what they might have. I can give you 20 examples of lenders that are on the HM side that do this and I have done them personally for years. A HML loan won't report to the credit bureaus, so there are advantages, many beyond that. It is a far easier underwriting process, feel free to reach out to get some actual feedback on what the markets offer.

Hi @Robert Rutledge

Do you know the rate lock policy? If they are locking the rate immediately upon the credit pull, you should feel a bit safer, but get it in writing. If they float the rate until the appraisal is in, shop around. You can get low to mid 7's at 75% LTV with good credit. The terms aren't bad, but I'd be cautious of random and unexplained LTV changes. Feel free to message me if you need further advice.

Hi @Ricardo Cortes

Unless you acquire a property through creative financing, it may be best to tap into your equity. Assuming the equity is in your primary residence, it might be best to do a HELOC and use those funds to start investing.