All Forum Posts by: Nate Herndon

@Michael H. here are some markets where I am seeing some good refinances that cover your 'all-in costs' and even get some cash-out to my clients:

o Cincinnati, OH
o Birmingham, AL
o Indianapolis, IN
o Memphis, TN
o Southhaven, MS
o Baltimore, MD
o Abilene, TX
o Kansas City, MO

I've got some points of contact in most of these cities if you are needing someone to speak with in the area.

Yes, minimum loan amount for purchase+rehab is $50k. There is not a minimum purchase price on that program but a minimum equity investment of $10k in the deal. 

The minimum value on the 30-year fixed refinance is $75k, with a $50k minimum loan amount. Low value properties are not an issue so long as we hit those benchmarks. 

Hi @Phil Petite, that's a really good question. The cash that you will receive from your cash-out refinance is going to be pretty straightforward - if the property appraises for $125,000, and you opt for a 75% LTV cash-out, the total loan will be $93,750. Since you do not have a payoff, you will only have closing costs to be deducted from that $93,750 figure.

If we want to use round numbers and say that all lender, title, insurance, and taxes total $7500 in closing costs, then you would receive $93,750 - $7500 = $86,250 at closing.

The clients that I work with on refinances in Memphis are all cash-flowing really well, so I love the idea of picking up another property there. The financing that would be available for purchases will be 80% LTC. For both the refinance and the purchase, the terms would be 30-year fixed and prepayment penalties ranging from 5 years to none at all (depending on the program utilized).

Here's a quick peek at my DSCR calculator - you would only need to hit a 1.00 DSCR in order to pick up 75% LTV.

Hi @Alex Sinunu - sorry you have not received a response yet on how to evaluate brokers. However, I often discuss the ins and outs of working with our team and answer questions for new clients before we jump into evaluating a deal.

Only problem that I foresee is that 2nd position liens are hard to come by on the private lending side. The easiest way to access equity in a property through a DSCR loan is going to be through a cash-out refinance, of which 80% LTV is available in California (down to 660 FICO).

We also have the following prepayment penalties available on 30-year fixed terms:

o  3-year prepay: +0.00% to base rate
o  2-year prepay: +0.125% to base rate
o  1-year prepay: +0.125% to base rate
o  No prepay: +0.25% to base rate

When it comes to 2nd position deals on purchases, there is a program I utilize that allows 90% combined LTV (CLTV). The loan program finances up to 75% LTV and allows for a seller-held 2nd lien for a combined 90%. The buyer simply brings 10% down in that scenario. The lender and seller can split it anyway they like - 50/40, 30/60, 75/15, etc.

Really solid explanation from Ko.

The private side of lending is pretty scarce on HELOCs that are available to investment properties, whereas cash-out refinances are available at 75-80% LTV.

Hi @Emeldine Achili, welcome to BP! Getting started is the hardest part of anything, but it sounds like you already have experience renting, holding, and managing property.

That's one part of the BRRRR process that is no longer a mystery for you and I think that is awesome.

If there are prospective deals that you are considering and would like some assistance for reviewing the numbers, that is one of my favorite parts of being a lending partner. Here is an example of the loan summaries that I utilize for my Baltimore clients, being careful not to exceed certain loan-to-ARV and loan-to-cost limits.

Hi Ashley, my clients have been getting some great returns on their BRRRR properties in both Birmingham and Cincinnati. With 75-80% LTV available to them for cash-out refinances, we have been recycling their funds from one property to the next. From the financing perspective, those are great markets to be in. Indianapolis would be another to consider.

Five BRRRRs in one year will certainly keep you all hustling!

Hi @Spencer Cuello, I will let the experienced FNF folks address the overall deal, but my question would be around the after repair value - does he have an estimate of what that looks like?

Attached is how I would quote this one from the financing side, depending on the location of the property and credit score.

@Jason Henry as mentioned previously, a cash purchase is probably most advantageous for acquiring the property quickly and without waiting for a 2-3 week financing/underwriting process.

What I often do for clients who purchase a property with cash is what we call a delayed purchase, in which case we reimburse the borrower up to 80-90% of their purchase price and fund 100% of the rehab budget. Some borrowers choose to leave more equity in the property, and might only take a small portion of their own cash out of the property to cover closing costs and give themselves some working capital. That depends on your investment strategy.

Once they complete the rehab, we refinance into a 30-year fixed DSCR loan. 90-day seasoning is all that is required to get credit for the full value of the house.

Outside of the major MSAs, I have some clients who routinely BRRRR in the Shamokin, Kulpmont and Mount Carmel area. Seems like they have success finding 1-4 unit properties for $80k-$120k at acquisition.