All Forum Posts by: Nate Herndon

Can't speak to David Greene, but I know a next-day funding means three days later on Monday. And any SNAFU that can't be remedied same-day pushes the closing to a different week which is always a bummer. And you just get the weekend to stew over it lol.

@Micaela N. Wolfe there are programs available for ground up construction that will finance 85% LTC / 70% LTARV + closing costs, defer interest, and charge interest on drawn funds only.

@Jane S. Interest only payments are likely your best bet at finding better cash-flow right now. Rates are bumping up-up-up each week, unfortunately. 

In regards to your question about buying the rate down, I like to break it out into your 'break-even period' to visualize how long it will take to recoup your funds paid upfront. Here is an example scenario for a rate buydown:

- $200,000 purchase
- $160,000 loan (20% down payment)
- 8.50% par rate = $1230.26 monthly payment
- Current buydown ratio is about 4:1, or 1% fee for 0.25% off of rate
- Max rate buydown to 7.50% costs 4% fee (or $6400)
- $160,000 loan @ 7.5% = $1118.74 monthly payment

$1230.26 - $1118.74 = $111.52 extra cash each month
$6400 buydown / $111.52 = 57.38 months
57 months or 4.78 years until you recoup your $6400 paid upfront.

Now this ignores the fact that you are paying a lower interest rate and putting more money towards principal during those 4.78 years, but if cash in hand is most important to you, it is going to take approx. 5 years to get your $6400 rate buydown back.

Hey Andre, if this is a purchase then you can finance it at 80% LTC on a 30-year fixed under the entity/LLC from the start. Same goes for a refinance at 75-80% LTV (depending on cash-out or not) and quit-claiming (QCD) into the LLC from your personal name. This does not need to be done before closing, but QCD when you sign closing docs with title company.

DSCR 30-year fixed rates are sitting around 8.25-8.50% right now. Underwritten to property income instead of your own income/taxes/DTI.

The above solution would allow you to own in the LLC and pay the ~8% rate, as you wish to do.

It's all about how you like the numbers, I think. My wife and I are looking at investing in our first deals using lines of credit so it is "cash buy" of sorts, but we will be refinancing immediately into long term loans.

For your rehab budget, the programs that are available could also finance 100% of the rehab budget and hold that in escrow for you. That would allow you to spend $10k at a time, draw on the rehab budget to pay yourself back, and do that three times total to cover your $30k rehab. Or six times with $5k. Whatever suits you - there's typically draw fees of $150-$200 per draw, though.

I think financing is your ally if you prefer to hold onto more of your cash, or want to put 10-20% down on multiple deals vs 100% down on one deal. Cash is king like @Jaron Walling mentioned when reducing the total cost of financing is your #1 goal - again, it boils down to what makes you most comfortable.

Hi @Jacob Lemoine, welcome! You are not off-base at all by thinking about financing your BRRRR project. Many investors, new ones included, will put down 10-20% down on a property, increase the value through a rehab (with rehab budget also funded by lender), and refinance into a 30-year fixed at the new after repair value. Depending on your cost basis and what your ARV looks like, you might be pulling cash out of the project via the refinance to carry into your next deal and do it all over again.

Hi @Cristen Marcotte- I have not heard of those lenders in particular. There are plenty of national private lenders out there but those are not names I have run across yet. Wish I could provide some info on them for you!

Hi Harry, I do know of some loan programs that can go as low as $75k value/purchase price and $50k minimum loan amount. First time investor status is not an issue either, just need to hit a 1.00+ DSCR on a 30-year fixed. Will PM you with some details.

Hey @Shane Crockett- do you own the majority of that LLC? If so, there are STR DSCR programs that can use you as the sole guarantor without issue.

Good looking house in a nice town. 2-4 unit properties are doing well on the DSCR side compared to SFR.