All Forum Posts by: Axel Scaggs

Quote from @Ned Carey:

@Axel Scaggs You haven't mentioned your experience, your income and ability to build more cash reserves, other assets you may be able to tap etc. 

I take it that you are new and these  may be your first projects. Even if that is not so it seems that you are taking on too much. Profitable businesses can fail if they don't have enough cash flow or cash on hand. From the information you have given I would pick one and move forward. trying to do two at once will probably mean you make les on both. 

 You are correct, this is my 2nd deal and the duplex would be the third. I'll take it slow and focus on the duplex.

Quote from @Erik Estrada:

Quote from @Axel Scaggs:

I recently purchased a property in cash and planned to use the brrr strategy. It needs about 45k in repairs. So far I've invested 20k. I have a large amount of cash in the bank for the repairs. However, I found a duplex deal that was too good to pass up, as it was priced about 100k+ under its true market value. I received conditional approval for a DSCR loan and got the duplex under contract. We are in the very early stages of the underwriting.

Now for the issue. I have enough cash in my bank account to cover the downpayment and closing costs etc. However, now I may need to put the cash property’s renovation on hold since my funds are now taken atm. I considered using my credit card to pay for the renovations and then the pay them off via the refinance. However, this would affect my credit by suddenly having 25k+ in usage on my cards, possibly affecting my loan for the duplex.

Is it better for me to just wait until the duplex closes to continue renovations on the other property? Or is there an alternative I’m not seeing? Closing on the duplex is the priority, as it was an incredible deal, so I just don’t want to jeopardize anything.

Is the current property you own in livable condition? What kind of rehab work remains? 

Maybe you want to consider doing a cash out bridge loan to finish up those repairs and use your current funds to close on the duplex? 

The flooring has been taken up, but I already have the vinyl plank flooring. The walls cracked due to the foundation repair and that payment for the contractor has already been paid. The plumbing needs to have a few slight repairs though. It would be livable after that, but there is no skirting around the pier and beam foundation. I hoped to have the exterior painted as well, along with the 2nd bathroom remodeled. The windows also need to be replaced. I was a cash purchase. I'll probably do what I can until this duplex closes. After that, it seems smart to avoid credit cards for the completion. I plan to refinace it after it looks nice and is cosmetically renovated. You think a cash out bridge loan is the best route?

I recently purchased a property in cash and planned to use the brrr strategy. It needs about 45k in repairs. So far I've invested 20k. I have a large amount of cash in the bank for the repairs. However, I found a duplex deal that was too good to pass up, as it was priced about 100k+ under its true market value. I received conditional approval for a DSCR loan and got the duplex under contract. We are in the very early stages of the underwriting.

Now for the issue. I have enough cash in my bank account to cover the downpayment and closing costs etc. However, now I may need to put the cash property’s renovation on hold since my funds are now taken atm. I considered using my credit card to pay for the renovations and then the pay them off via the refinance. However, this would affect my credit by suddenly having 25k+ in usage on my cards, possibly affecting my loan for the duplex.

Is it better for me to just wait until the duplex closes to continue renovations on the other property? Or is there an alternative I’m not seeing? Closing on the duplex is the priority, as it was an incredible deal, so I just don’t want to jeopardize anything.

Thanks for all the info guys!

Thank you for your reply. I’m ok with just getting 75% out of my initial cash purchase, if that reduces the seasoning. I can always do a full cash-out refinance in a few years if the rates make sense.

I recently found an off-market property and was able to negotiate the price down due to foundation concerns. I plan to purchase it in cash and repair the foundation. Other than that, I will be adding a closet to a bedroom and fixing a few small things. Everything else is in good shape. My question is, are there conventional or DSCR lenders that would allow me to refinance 70-75% of just the initial purchase price, not the ARV, with no or little seasoning? I have a few other properties I'm watching and would hate to have a large chunk of my funds tied up for 6 months. I'm talking with one lender that seems promising, but if anyone knows a good lender, I'm open to suggestions. I'm in north Texas.

Quote from @Jay Hurst:

Quote from @Axel Scaggs:

Quote from @Patrick Roberts:

Quote from @Axel Scaggs:

Quote from @Alan Lacey:

I would certainly recommend shopping that around a bit just to make sure that is best available. Assuming dscr because that would be too much in fees to be allowed on a conventional deal

It is a conventional cash-out refinance on an investment property I own. My W-2 was required to meet dti.

I actually went through a broker recommended here by several people on BP. 

This is conventional? Yeah, you definitely need to get another quote. This would be reasonable for a DSCR with a short PPP and FICO below 700. If this is conventional, the lender fees are ridiculous.

This loan should be somewhere around 7.125 - 7.375 at worst with a decent FICO while going borrower-paid. I could see this quote being realistic if it was lender-paid and you werent having to pay the broker out of pocket. Total loan fees (not including broker commission) should be at or under $2,500; maybe $2,700 at worst. Even below 700 FICO, you should be at or under par at 7.5% on borrower-paid and under 75% LTV, not paying points.

I appreciate the the feedback. My FICO is a 770 and the LTV I believe was over 75%. It’s unfortunate, but I guess I learned the importance of shopping around as I only talked with one other lender. If I’m locked into this, I’ll just be much more careful in the future.

 @Axel Scaggs  You are NOT locked in until you sign the closing documents. Assuming you credit score is 770 that is an awful loan, and you should NOT close with those terms. 

Ok thank you for the advice, I’ll look elsewhere. What is a generally expected closing cost on a loan of that amount? I was expecting $7-10k. Second, would this lender modify the fees if I presented a competing offer? Or is that not a typical thing to do.

Quote from @Patrick Roberts:

Quote from @Axel Scaggs:

Quote from @Alan Lacey:

I would certainly recommend shopping that around a bit just to make sure that is best available. Assuming dscr because that would be too much in fees to be allowed on a conventional deal

It is a conventional cash-out refinance on an investment property I own. My W-2 was required to meet dti.

I actually went through a broker recommended here by several people on BP. 

This is conventional? Yeah, you definitely need to get another quote. This would be reasonable for a DSCR with a short PPP and FICO below 700. If this is conventional, the lender fees are ridiculous.

This loan should be somewhere around 7.125 - 7.375 at worst with a decent FICO while going borrower-paid. I could see this quote being realistic if it was lender-paid and you werent having to pay the broker out of pocket. Total loan fees (not including broker commission) should be at or under $2,500; maybe $2,700 at worst. Even below 700 FICO, you should be at or under par at 7.5% on borrower-paid and under 75% LTV, not paying points.

I appreciate the the feedback. My FICO is a 770 and the LTV I believe was over 75%. It’s unfortunate, but I guess I learned the importance of shopping around as I only talked with one other lender. If I’m locked into this, I’ll just be much more careful in the future.

I may be too far along in the process to back out now. I’m not super familiar with refinances, but I’d assume there’s a grace period to pull out and I have probably passed that by now.

Quote from @Alan Lacey:

I would certainly recommend shopping that around a bit just to make sure that is best available. Assuming dscr because that would be too much in fees to be allowed on a conventional deal

It is a conventional cash-out refinance on an investment property I own. My W-2 was required to meet dti.

I actually went through a broker recommended here by several people on BP.