All Forum Posts by: Michael Anderson

I am in a similar situation with the STR I am purchasing. The rates for vacation home and investment property are similar because of the fannie/freddie pricing adjustments for these loan types.

The problem you will have is you can't count the income from the STR unless you have a lease, which for an STR you probably don't. The other option is to use your Schedule E to show the income and adjust it based on the "fair rental days" to show income. But if you just bought it in November, I'm sure your tax returns are showing little, if any rental income. You were able to qualify under investment property loan because the lender was allowed to use 75% of the fair market rent, which was determined by the appraisal.

Your best best is to wait until this time next year and use the income from the property in 2023 to help qualify. Rates are not much better now than they were in November, so why are you looking to refinance anyway? 

Nope. Don't jump higher till you figure out the formula at those entry level price points. I alway tell people... If you find the right deal, the money will find you. 

I personally think it's pretty reckless advice when people say to switch your conventional loan to an LLC and violate the note terms. If you need the LLC protection that badly, get a commercial loan. But if you don't want to violate your loan terms… insurance policies are your friend. Get a nice big umbrella policy.

I rehab a lot of properties in Gloucester City which is right on the other side of the Walt Whitman bridge, so I am very familiar with these types of rehabs. You are on the right track, but the reason hard money lenders don't want this deal is because there's not a lot of equity in it. Which is why they are telling you you need more money to bring to the table. 120k PP with 30K rehab and 150K ARV is not going to get you the maximum funding from hard money. If you have a stronger deal... example 75k PP, 30k Rehab 150k ARV, you will see the hard money lender will fund it with you bringing much less to the table. You can of course do this deal as is, but the HML will require you to bring more money to the table to make up for the lack of equity build opportunity there.

You are on the right track, but keep looking. The deals are out there.

Go to local REIA's. You will quickly find out who the serious flippers and buy and hold guys are especially once it slips out that you have some money to lend out. You can also build relationships this way and get a feel for who is a trustworthy candidate to be trusted with your money.

I think it’s really important to consider a very established, tried and true market. While the returns may not look as sexy as some of the emerging markets, the established vacation markets will provide less risk IMO. I think we will see the emerging markets bubble and burst (if we aren’t already seeing that), as more and more investors create an oversupply of STRs.

I just went under contract on my first STR in Seaside Heights New Jersey. A tried and true, but very seasonal beach town that is currently undergoing a big revitalization.

We don't really have enough information to accurately answer the question. You didn't really specify the circumstances of the "private loan in general" this could be a private mortgage note, unsecured loan... etc. A lender would have to dive deeper into your specific scenario. I am running into the same concerns as I am approaching my 10 loan limit. It's not about deceiving or hiding things. It's about following the guidelines as to what needs to be included, and what can be omitted from a URLA loan application. For example, loans in an LLC which you are not "personally obligated" on do not count towards your 10 financed property limit.

If you have a specific situation you are working through I am happy to give you a hand. I work a lot with these types of scenarios.

I just locked a cash out refi at 6.87% for an investment property I own on a 30 year fixed. I'm only taking 65% LTV but still, it's a pretty competitive rates. The rate is dependent on credit and the investor's level of experience though. If you shop around, you can find favorable terms.

As others have said, a credit pull isn't much of a concern as far as negatively impacting your credit. If you plan on using a conventional loan for both properties theres a few things to keep in mind.

1. Do you currently have a primary housing expense? If you do not have a primary housing expense and try to purchase an investment property conventionally, there will be more restrictions when qualifying for the mortgage. It's just a nuance of the guidelines you should be aware of.

2. If you or your fiancé can qualify for financing on your own (not jointly) for either the primary or investment, it would be more beneficial to do so. It gives more flexibility down the road with DTI when needing to qualify for future loans.

The Fannie/Freddie limit when obtaining a conventional loan on an investment property is 10 "financed properties" (not loans). Some banks have their own overlays that make lending more restrictive to the basic Fannie/Freddie guidelines. The lender that advised you of this probably has an internal overlay within company that doesn't allow more than 5. That being said, once you max out conventional loans, DSCR loans are a great option. Conventional loans are great though when starting out as you can usually get more competitive lending terms vs. using a DSCR loan.