All Forum Posts by: Marty Johnston

@Lou Gonzales, Just sent you a PM!

MJ

You read it right - this is available for all investors in the below states. BK's, low FICO, Foreign Nationals all okay! See below for program details and email me if you have a deal needing 100% financing!

At the bottom of this email is a term sheet put out this morning for the program in Philadelphia.

Email scenarios to [email protected]

100% JV Rehab Financing! No lender Points! No Monthly Interest Only Payments!

Fico:No min fico score! Lender does not care about tax liens, bk’s, shortsales, foreclosures, lawsuits from the past or current. They do run a background check for fraud and are concerned about that but not credit issues.
Loan Terms: 9 months or less.
Loan Size: $75,000- 1M Max LTV/ARV: Lender provides 100% financing of the purchase price and rehab costs as long as the total loan does not exceed 70% of the ARV. Rehab can be more than the purchase price in certain circumstances. Lender does not like rehab budgets over $125,000 or projects that are adding square footage.
Interest Rate: 9.00%, but no interest only payments need to be made through term projection

LOC Fee: 0.75% points and the lender covers this as well.Property Types: 1-4 unit investment properties! This includes Single Family Homes, 2-units, 3-units, 4-units, condos and town homes.
Pre-Payment Penalty: None!
Use of Funds: This program is really set up for Purchase & Rehab deals. The lender can do Refinance and Rehab deals on a case-by-case basis. Refinance + Rehab deals are harder to do b/c it strains on the ARV and profit more. Exit strategy on the deal has to be to sell.

Lender Points:Lender has no points and closing costs are only $805! Lender also pays for insurance for loan term.
Lending Territory:NJ, PA, Delaware, DC, MD, Virginia, SC, NC, IL, TX, NY (case by case), FL. Would consider deals in Missouri.
Closing Time Frame:3-4 weeks for first closing, 2nd closing will be 2-3 weeks.
Experience Requirement: Borrower’s are not required to have previous experience! All levels of experience can be taken into consideration (Ex. Borrower is a licensed contractor). Lender wants to know how many deals borrower has done in past, average size of the rehab and do they live close to the deal so they can manage the rehab. Borrower will be in charge of managing the rehab. Lender does not require GC to be licensed unless the state does.

Liquidity Requirement:Borrower must prove they can start the renovations with their own funds. They will be reimbursed for rehab in draws.

Construction draws:Released to borrower upon successful work completion, requires on-site inspection, $125 draw fee. Borrower can do as many draws as they want. After relationship is successful the lender may consider upfront draws.

Appraisals: Are done though an AMC. Lender asks for an As-is Value and ARV, but the ARV value is much more important than the as-is to them.

JV Agreement: The lender is able to fund the majority of the deal 100% b/c they will actually be the entity taking title to the property via a name change addendum to the purchase and sales contract. Lender has a Certificate of Authority with borrower, which allows them to enter into purchase and sales contracts in a specific state and gives duel signing authority so either can sign at closing. Borrower is still linked to the property and the deal by a local operating agreement and a profit share on the deal is negotiated from day one.

Extra:Can work with Foreign Nationals

@Hip Rodriguez There are many private mortgage lenders out there who don't season or source your down payment. Many reqest to see bank statements for the proof of funds/ability to close. Otherwise don't and you can pay however you want - just make sure you have it by the time you hit the closing table or your out appraisal and potential other third party costs if you can settle!

Other options to use that may be those who want to see bank statements to proof liquidity, but don't source or seasoning large deposits. These lenders allow 'gifted funds' or allow you to come up with the required funds whichever way you can. As I always say - It's finding the right lender for your situation!

Or as mentioned above - 100% JV funding options can be of major value to you, especially on your first deal or two to get some cash in your pocket - cheaper money follows the more experience you have. Experience is KING! FICO will affect rate more than leverage, if you're in and out in 60-90 days, 1-3% in rate means pennies (although some investors are pinchers!

My $0.02

MJ

@Angeline Walker

There are a plentiful # of secondary market private mortgage lenders, and all of them have different seasoning requirements. Some have 2 years, some 12 months, some 6 months, 3 mo, and even one month. Some lenders offer programs for 'delayed financing' which is really utilized for investors who purchase a property with cash outright (typically need to for sheriffs sale or REO when no interior access is available or time frame to short to get a loan), and then they will actually refinance you up to 90% of original purchase cost + rehab (Experience & Credit will vary your rate and LRTV's). Works great for flippers who have ability to purchase a property outright but want to re-leverage the property.

For your purposes here, a cashout refinance within 6 months often means the lender will only lend based off of the original purchase price rather than the new value (to mitigate risk). Other's might go off new appraised value as long as you are able to document the improvements that were made to the property. Just need to find the right lender.

To answer your questions more specifically:

#1) If you own the property for 2.5 years, there won't be any issues with seasoning requirements. You would be able to get a new loan off of the current appraised value no problem.

#2) Commercial lenders absolutely lend against one property! Most commercials lend down to minimums of $75,000. Some go lower, but most hover around $75k or $100k loan amounts

#3) That's up to you to decide! If you can get a residential mortgage and you qualify, rates are typically lower for residential mortgages. Commercial rates are slightly higher, but UW guidelines are usually more focused on the asset more than your Income and DTI ratio.

Hope this helps!
MJ

@Kerry Boyle - As you are well aware as a lender - every investor has their own situations that call for the individuals needs. A quote at 6.85% & 2.5 pts (Lender and Broker combined) at 75% LTV 5/1 ARM 30 Yr Amortization on a purchase with a 765 FICO and just 1 other owned properties felt like a pretty good offer (Borrowers DTI was too high for bank) When we presented an 85% LTV and 8.150% and 3.5 pts on a 10/1 ARM 30 Yr Amortization - the borrower jumped at it for the extra LTV even though he had the liquidity to move forward on either.

Sometimes situations shock you, I almost completely disregarded the second quote but turned out to be the winner for hte borrower. I think most around here would agree with you - leverage is king to 85% of investors.

My $0.02!

Adam,

We work with a handful of rehab lenders who would look at this loan with you if you'd like a couple quotes, would be happy to take a look.

Depending on your experience (0, 3, 5, or 10+ rehabs in last 24 months) you'll see anywhere from 80% of PP and 85% of the rehab to 95% of purchase and 100% of the rehab done in draws.

Let me know if I can help! Best wishes on this deal

[email protected]

Marty J

Hey Tom,

We may have a lender who would consider a second position bridge behind the seller carry up to 75% of the as is value (or as completed value for construction). Im not sure if the values are there or the price points, but might be an option. Can you provide a little more color on the deal?

Thanks Tom!

[email protected]

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@Nicholas Morgan - If you are able to go to a residential lender and qualify for an investment loan there, you may be able to get a preapproval letter. However, if you are going after a commercial loan, these same "pre-approvals" really do not exist prior to having the property. Many of the lenders we know won't even consider a loan file until the borrower already has the property under contract, while a few will still assist with issuing a "Conditional Loan Approval" or Letter of Intent Subject To full UW, Appraisal, clean title etc.

In this scenario, you can still get everything together for a lender, but if it's a commercial loan (including 1-4 units, 5+ MF, Mixed Use, Retail or other pure CRE etc), you'll have a much harder time get a strong PreApproval that your used to seeing as a residential home buyer.

Here's why: A Residential Lender is looking to the home owner to pay back the loan. So, they're looking at the home owner's credit, income, DTI, and the viability of that person's financial status to pay back their loan.

A Commercial Lender is primarily looking to the income of the property to pay back the loan. They're going to look at the market's avg market income, but first and foremost their are providing a "Letter of Intent/Interest" to the property itself with the Borrower as the guarantor. If there is no property to UW, how can you expect a lender to issue a pre-approval without first doing their preliminary UW on the property? If the properties not under contract, how is it a viable deal to the lender? This is why many of the lenders we work with refuse to consider a deal until the borrower has it under contract - it's not a real deal until then, as anyone could easily still come and lock up the property and the time spent UW the deal was a waste of resources.

Some investors think it's a catch-22 when a seller won't go under contract with a borrower until they have their financing lined up, where some CRE Lenders won't issue an LOI until it's under contract.. You can find the lenders who are willing to do it, and most of these are residential lenders who are more accustomed to doing so. If you can, do your numbers on the property, make sure it's a viable investment, then go to the seller with an offer. You are likely to hear both sides of this argument I believe, but I do see the above to be truly on a weekly basis.

Just mt $0.02!

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