All Forum Posts by: Marty Johnston

Quote from @Andrew Kilgore:

Hello all! I have found a cheap property in the Anniston/Oxford (Alabama) area for around 20k. I haven't estimated rehab costs, but hypothetically it would cost around 30k for a full rehab. I am also estimating the ARV to be around 85-90k. The problem I'm running into is I can't find any hard money lenders that are willing to lend under 100k. Do you guys have any recommendations, or do you think I should just try to find another deal?

 Andrew,

I'll echo some of the others here. Especially the past 6-12 months, the capital markets have moved to 'defensive' mode and guidelines around minimum loan amounts continue to be even more restrained then usual (increase in minimum loan amounts). There are many who will go as low as $75,000, and some lower, but in my experience once you get under $75,000 the best solution is to look an unsecured financing if possible. These loans look at personal credit and DTI (term loans) as well as credit utilization (for revolvers). Rates are still between 6-16% depending on your credentials which honestly, isn't bad when you consider how real estate lenders will often have underwriting fees/processing fees, etc beyond their origination fees, which from a %-standpoint gets really expensive in these smaller price points! People are surprised how well unsecured financing pencils out, especially given no appraisal, and the ability to write a 'all cash offer' since these fund in as little as a few days in some cases.

Hope this helps! Feel free to DM me if you'd like to chat more on this

Quote from @Ben Capone:

Hey all, exploring some options for a personal loan to get a down payment on a place I am looking at. Has anyone had luck taking personal loans out for down payments? Or any other good options I can explore? Looking at making a move as soon as possible.  

 Ben, personal loans can be a great option depending on how much you need, your time line (how quickly you need to close), etc. They're very fast, unsecured, and when you consider cost vs a refi (appraisal, title fees, lender fees etc) person loans can even be more cost effective in the right situation. 

That said, it's case by case In some cases they only pencil out when you know you have a short term exit such as with a rehab or new construction. But you know your numbers!

Quote from @Michael Shepherd:

Thanks for all the great informative responses. I am currently in the process of getting a loan that lets me pull out the entire purchase price, but not the rehab cost. However, the loan is based on the ARV so I shouldn't have a problem getting my full purchase price back. Thanks for all the feedback and guiding me in the right direction.

@Marty Johnston Does the loan you're referring to allow me to burrow against the rehab I put in? For example, I bought a home at 70k, put in 30k of rehab, and arv is 140k ARV . . . Could I potentially pull out the entire 100k I put in immediately? With no seasoning as long as I paid cash?

Yes, you are correct. Seasoning is technically 30-days to use the new appraised value with a limit up to 100% of initial investment, so just as you outlined if you invested $70,000 PP + $30k Rehab, your total investment would be $100k. So long as it appraises at /.75 (75% LTV), meets DSCR (can use market rents if not yet leased), and assumes good credit (minimum 680 on this particular program), you should be able to get 100% of your initial investment back out of the deal.

If you wanted beyond the $100k in your example, you'd need to wait for the 6-mo seasoning period.

Feel free to DM me if you'd like to discuss further. 👍

Quote from @Nathan Spangler:

I have an opportunity for a flip that would require significant financing. All the hard money lenders I've talked to are saying they require purchase plus rehab to be 70% of ARV. This opportunity doesn't quite fit that, but the numbers still leave between $150k to $200k in profit.

Is there anybody with other options that deviate from the 70% guideline?

Hey Nathan! There are 75% of ARV options out there, what are your total numbers? Ie purchase, rehab, and ARV? And what is your total liquidity you can dedicate to the deal?

If the numbers don't fully pencil out and your seriously dedicated to the deal, you could also consider gap funding.

DM if you'd like to chat more on this!

Quote from @Michael Shepherd:

Is it possible to get delayed financing on a home I bought and renovated and rented with my own cash in order to get some money back quickly? And then get the rest by refinancing the delayed finance after a seasoning period? Is this possible? Or legal?

Same as others have stated here Michael but the only thing I'd add is there are lenders with NO seasoning as well "if you have documented rehab. Meaning you can refinance day after you finish the rehab at full ARV and get up to 100% of your capital back. Even better yet is some lenders will still call it "delayed purchase" which is great because you can still obtain purchase money terms which is usually better than cash out terms.

After the seasoning period it converts to cashout terms as usual.

DM me if you'd like to chat more on this. 

@Quincy Baker I'll echo that many lenders will utilize 100% of market rents on a DSCR product. Some limit to 90% of market rents for their DSCR analysis but if it's strong, should be okay. Same for STR's, many lenders will still simply utilize Market Rents to determine DSCR. This can be a hidnerance if you're in a market where STR income is high but LTR income is low and doesn't debt service well - you may be limited on LTV to ensure a 1.0 DSCR minimum. There are other programs who have "No DSCR" calculation, which works well in these scenarios as well, but expect much (much) higher rates. Between 9.5 - 12.5% on a 30-yr fixed in some cases. True asset-based lending with no DSCR analysis.

On Question #1, I'm not exactly sure I understand what you mean by "towards down payment". You'd have to still bring the minimum 25-20% down (depending on market, credit, DSCR, etc).

Hope this helps!

Quote from @Jewel B.:

Guys, I already have lenders in mind. I was simply asking the best method of contact...

To this point, lol. I always love calls from clients. Most efficient, you eliminate the back and forth questions and get to an answer and terms asap. In my experience speed, efficiency, and accuracy make everyones world go round. Phone calls hit all three of these. Even emails that include EVERYTHING can make eyes glaze over. So if debating between the two - start with a call. Followup with emails with any requested details thereafter IMO 👍

@Jewel B. others stated similar things, but any good lender or broker should be able to provide you with plenty of information over the phone, and those brokers with established relationships should be able to even price out your deal with multiple lenders over the phone in about 10-15 minutes for your projects as they have access to their lender's pricing / calculators. Find a good broker. If you do, they'll save you your invaluable time, and even though you pay a broker fee, they can pay you back 3-10x in savings by finding the beat loan program for you by understanding whats most important to you (highest leverage most important to you? Lowest costs/fees? Balanced option/somewhere in between?) I promise you wont be disappointed! 

@Ryan JonesI have to give a shout out to 1st Service Title in Greenfield as well - they have gone above and beyond for so many of our clients over the past few years. Nothing against Stewart, Attorneys, or Focus Title in WFB either!

@Tanu Soni I'd echo Robin here, there are a great number of lenders who offer both rehab financing for the acquisition and rehab, and then who can also refinance you into a long-term rental loan once the rehab is completed. This simplifies the process and makes it easy for you! You'll find a great number of resources for this here on BP. Feel free to otherwise DM me if you'd like to chat more about this 👍