All Forum Posts by: Marty Johnston

@Kristen Fennig congratulations on finding a great deal! Auction properties will probably require a local PML whose willing to go all cash with you since most auction properties have a hard time utilizing a traditional HML. Time frame and also many HMLs still require interior access for appraisals, which are not possible on many auction sites.

Can you tell us more about the deal?

@Stathis Karidakis, there are a number of secondary market lenders who will finance 30-yr fixed on 1-4 Unit investment properties or 5+ MF. They can be available in: 5/1 ARMs, 10/1 ARMs, or 30 Yr Fully Fixed (they do exist!) These lenders are slightly above bank rates, but with the longe amortization the 30-yr can still keep your monthly PITI competitive with the 25-yr am offerings from the cheaper bank-type lenders.

Also, when you say 21-units I wasn;t sure if you meant a portfolio of 21-units across a portfolio of 1-4 Unit properties, or a 21-Unit MF? In either case, what I stated above still  holds true!

@Virginia Aucoin Gap Funding like what you're seeking is available in the form of unsecured personal debt. As @Mary Joe mentioned, there is absolutely no recourse for these loans, so they're higher interest, but for profit-driven and leverage-driven investors, these can be extremely useful loans when used property to scale, or simply obtain 100% financing.

**BE SURE YOUR SENIOR LENDER ALLOWS FOR GAP FUNDING. This is the first question I ask all of my clients. If they've already locked in a senior lender for say 80% of purchase, and are looking for 20% gap funding, you must always check with your lender to see if they source and season your down payment. If the answer is yes? Then ask if they're okay with your down money being borrowed. Many lenders have a problem with this - you need to make sure you're matching a lender who allows the use of Gap Funding with your rehab/hard money loan.

Shot you a PM on this also.

@Andy Finneran, an application before a quote is pretty much necessary on most commercial loans, since their 80% the property and 20% the guarantor - I'd say that's fairly standard practice. Now you should be able to still get a phone call for a consult.

As it relates to Owner Occupancy - you'll have an incredibly difficult time finding a commercial lender allow you to live in a commercial property. I'd say 95% of Commercial Lenders require it to be solely non-ower-occupied investment. So probably a good idea to not live in the property (at least not right away to be sure) to make your life much easier. It's possible a note could be call-able as well if they find out you did ultimately decide to live in the property. Always consult with an attorney first if this is your end-intention.

If you do make it your business place of work, the biggest benefits would be after you utilize 51% or more of the SF of the property for your business. This would allow you to go SBA 7(a) or SBA 504. rates and terms can be preferable here.

The non-QM market would be a great place to look - banks are being pretty stingy in most markets around the country, and you're absolutely right - it's very largely a result of COVID... Lender's went on the extreme defensive in March-April when it first hit, most pipelines were wiped out 90-100%. Lender's are now slowly rolling back their recently tightened guidelines, but everone is still have some extra 'reserve' requirement, slightly lower LTVs (in many cases - some are back to pre-COVID) etc. Banks in general will have the highest requirements in most cases (although this was true even in the best of times). Non-QM (secondary market or private lenders) will be more easily obtainable.

Send me a DM if you'd like to chat more on this. Would be happy to!

@Jack Soluyy get it, Jack! Tons of knowledge to be had out there. Give me a call if you'd like to chat more on this or have any questions.

@Andy Finneran - Sorry you've had such terrible LOs to work with in not calling you back, that's a major bummer. This sounds like a solid Mixed Use property with the Residential SF making up more than the Commercial (this is a positive thing!) More lenders prefer a greater residential SF footprint vs the other way around - it opens opportunities for more lender options. Do you intend to live in any of the residential units by chance?

@Calvin Shih am I right to assume that this is for your primary residence? Or is this for an investment property? If the latter, there are a number of options that can be discussed. If the prior, I would likely echo what @Will Fraser stated regarding a HELOC or Unsecured personal debt (assuming you have 680+ credit and decent W-2 income).

Let me know!

@Jack Soluyy you are a fantastic candidate for the non-qm and asset-based commercial/portfolio lenders out there. There's a huge market for this and where many CRE Mortgage Brokers assist clients who are in your position. These lender's don't underwrite loans based on your income, but the properties income. They still look to you the borrower as the guarantor for the loan (Is Jack a safe investment!) You have great credit, so as long as the MF property you're interested in is also profitable, you'll be eligible for the loan. It's all about the property in their game.

Bottom line, you have lots of options! You can find all sorts of connections right here on BP as well. You're in the right place :)

Hey Mark,

Congrats on your 2021 goals! Would love to schedule a time to chat and see if we're a good fit here for what you're looking to accomplish. I'm with Fairway Mortgage (Conventional and O/O) and StackCap for commercial (My consulting co for N/O/O Rehab, Bridge, New Construction, Rental). 

I'll shoot you a DM to see if we can schedule a time for proper intro's later this week as your available.

Happy New Year to you!

Marty J

@Collin Emerson Miller this is very possible with a handful of Hard Money Lenders out there. We structure it with clients using unsecured personal debt - meaning no second position, or first position, and the Hard Money Lender can keep their first position. I call this "Gap Funding", and it typically only works well where you are creating value enough in the property to still exit both the HML and the Gap Loan (neither one is very cheap money generally).

Bear in mind, some HML's still don't allow for Gap Funds to be utilized as down money.. So be very cautious and make sure you're contacting them and asking the question. The trick is simply identifying the lender's who allow for this type of unsecured debt to be used as your down payment/cash to close - they're out there, trust me!

In short, what you're looking to do here can be accomplished, and many investors do so. It's not as cheap as seller financing, or rich uncle joe with the deep pockets who can give you 100% funding for 5-8%, but it's a very powerful tool to still obtain 100% financing through stacking your capital stack.

Hope this helps!