All Forum Posts by: Mike Klarman

Six months ago I didn't even have to sell the interest rate.  It was in the low 3s.  This is for 30 year loans.  Rates have doubled.  Look, a true private lender lending their own money can give it to you at whatever they want, but the truth is they really go by the marketplace.  Right now the on the buy down chart the floor is the low 6s.  I just did a 30 year cash out at 6.19% and they paid 4 points for that number.

Again, it matters what the money is for too.  For a purchase and rehab the rates are higher because the loan is only 12 months long and interest only payments.  The absolute best you can do is 7.99% and you'll need more qualifications than you have.  If you have 3 for experience then you can get low 8s.  8.25% or so.  If you are a complete newbie then you are going to get 12% and be happy with that because most banks won't even lend to you.

Me, I like to vet on the phone.  I call people and ask questions.  You can tell a lot about the experience of the person you are speaking with if you throw question after question at them.  

If you wanna know about lending guidelines or see an example of a doc list that you'll need to come up with for a loan feel free to reach out.  I'd be happy to help get you more seasoned in the lending process.

On the fix and flip sometimes no credit check is needed if the purchase + rehab has the ARV. I've seen places ignore credit there, but for a 30 year loan everyone checks credit.

do a refi cashout.  Pull the equity out and get your money but also keep the asset and have the tenant pay the note and build your equity back up for you.

Ask how many loans they close each month.  Ask about their lending process.  How long does it take to close?

Ask lots of questions and go with your gut.

Thanks all.

Anyone know a lender that will refinance a manufactured home used for investment.

For Fix and Flips:

1) Experience.  Some banks will not work with a newbie.  We do, but the terms will not be ideal on your first one.  High Interest Rate. Low Leverage on the purchase. Things get better on #2 and then better on #3 and then once you've completed 3 then the fix and flip product becomes very investor friendly: 90% toward purchase.  100% rehab.  Low interest rate.

2) Get your docs in a row.  You will need a bunch of docs: bank statements, entity docs, HOI policy, etc.  If you move quick you put pressure on the bank to move quick.  If you stall then they can just say well we never got the docs and let your file sit.

3) Stay engaged with your loan officer.  Email him/her daily with questions or an update.  If you need help getting things together then they should be eager to help you, if they don't have time for you then they are not a good loan officer.

Look at Hard Money Lenders. You have 2 flips, if you have a real estate license or contractor's license then that would often count as a point. Once you get to 3 points of exp then the product really opens up for you. You'll get 90% toward purchase and 100% of rehab. Loans most times can't exceed 75% of the ARV.

Get in good at a Hard Money Lender.  Really vet your loan officer.  Are they responsive?  Eager to help? I've seen loans hang around for 2 months because the loan officer is lazy.  A good loan officer will never have anyone waiting on them.  The Loan Officer is the go between for the Underwriting Team and the Borrower and it is key not to stop the flow.  Some Loan officers have documents sitting in their email for days holding things up.  

You two could've created an LLC together and negotiated equity in the deal for the money you are putting up and then you're not a debtor but an equity stake holder and don't have to worry about being paid back or being in a lien position. We do deals all the time where people are added to Operating Agreements because they bring something to the table like: Money, Credit Score, or Experience which allows for better terms on the loan.

So, there will always be fees associated with loans.  The great thing about Hard Money loans is that they are biz to biz loans.  They do not ask for proof of income or tax returns.  On a purchase, if your credit is good, 750 or better, then lots of hard lenders will give you 80% toward the purchase.  Then you will receive a chart with interest rates and you will choose where you want to be.  Some people buy down to the lowest rate they can get, some don't.

Six months ago when rates were in the 3s - everybody was buying down to the lowest rate and now those investors are locked into great rates.  Now, since rates have doubled - not everybody is buying down all the way.  But each interest rate has points associated with it.  1 point = 1% of the loan amount.  To buy all the way down may cost 4-5 points.  Or you can spend 2 points.  You'll choose when it comes time.

If you have any questions about what's expected of the borrower in the lending process feel free to reach out.  Because, honestly, more important than the Lender - most Hard Money Lenders have comparable products with comparable rates, is the loan office you deal with at the lender.  Some loan officers are good and attentive and some are lazy and neglectful.  You may have contacted a good lender but of the loan officer is lazy, slow, and neglectful then you will HATE that bank and it really won't be the bank's fault.