All Forum Posts by: Nick Belsky

Ihor,

Looks high to me.  I messaged you.

Nick Belsky

Haresh,

I sent you a message.  I can get you a no obligation rough quote pretty quickly.

Thanks!

Nick Belsky

@Anish Tolia

Makes sense. But I still get hung up here...

Let's say PL provides $125k to purchase, and I put $25k into in rehab. The rent revenue increases and rehab yields a new appraisal value of $200k. I refinance with a bank up to 80% LTV ($160K) and pull out as cash to pay the initial loan to the PL, my costs, then am left with $10k ... That isn't counting interest owed to the PL...

It may take 2-3 years to build enough equity where 80% LTV Refi covers the initial investments. Again, maybe I am wrong here but I wouldn't think investors would want to wait that long to get paid? My top priority would be paying my investor first. I could short myself and pay myself back over time with positive cash flow?

Thoughts?

Nick

@Aaron K.

Good eye. Yes, I am a mortgage broker and work with more than 30 lenders in Texas alone. I have two banks that will work with me on a second position down payment.

Aside from those challenges, would a PL even consider a proposal like this?

Nick

Hi all!

First time starting a post on BP and new to REI. I have been researching Private Lending options and resources to use for BRRRR, but am hitting a walk on grasping loan structures that are feasible to a PL. I realize that details vary from lender to lender, but is this scenario even remotely close to what is feasible:

I'd like to secure a loan from a bank but need help with the down payment. Would an investor consider fronting the DP? I'd take on all the costs of rehab. 6-12 (based on seasoning requirements) months later, refinance and pull cash out to repay the investor with interest and I'd hold the property to rent and use any proceeds towards another property (DP or Rehab costs). Eventually, I'd be able to roll proceeds to cover my own down payments.

I see several issues here and perhaps the community can offer some clarity or other points of view.

I don't know if PLs are going to be interested in only working with say $40k of capital to return such a small dollar amount ($6k @ 15%)?

It's tough to find properties where I can rehab them and make enough margin to cover the PL return, recoup my rehab costs, and make reasonable ROI. Was targeting properties 20-25% under value, but is looking like I need to be targeting 30-35% to make rough numbers work...?

It's going to take several (maybe 5 or 6 or more) "rinse and repeats" to get any substantial cash on hand to invest in DP on my own...

Maybe I am looking at this all wrong. Does this sound at all how a PL deal may be structured or are there other ways to structure financing with PL to accomplish a similar outcome?

I've spoken to several PLs and got a wide range of answers... Lol. Wondering what you all thought.

Thanks in Advance!

Nick Belsky

@Jessica Piff

I've got a few lenders who will go as low as $75k on a single property. $100k is the typical floor. Another alternative could be finding multiple property deals and doing a portfolio loan to get past the minimum loan amounts but that comes with other complications. Keep researching or try to find private lenders as the other suggested.

Nick Belsky

@Adam Keith Sloan

All my lenders will require an offer letter from a new employer or a letter from your current employer about working remotely. Pretty sure that will be standard with most lenders.

Nick Belsky

Hannah,

I am a mortgage broker and have access to many programs that are build for new self-employed folks just like you. Many "standard" programs are going to require the 2 years of history as you describe plus more details and docs. If you are looking into investment properties that you won't live in, there are certain loan types called DSCR (Debt Service Coverage Ratio) loans that do not use your income, employment history, or DTI to qualify for a loan. These loans focus on the property, your credit, and cash flow of the your business operations for the Subject Property.

If you are looking for investment properties that you are planning to occupy, there are also other programs that you might qualify for.  Not sure which state you are in, but find a mortgage broker that works with non-QM loans if you won't qualify for the standard QM loans.  Expect higher interest rates, but you can always refi out of them after 6-12 months once you are more established as SE.  If you happen to be in Texas, I can certainly help guide you with more info.

Cheers!

Nick Belsky

@William DeLuca

A DSCR loans doesn't look at income, employment, or DTI. You could qualify for this type of loan based on cash flow and credit only. Most will look for 1.00 ratio of NOI/PITIA. Some go as low as .75 while others require 1.15+. Interest rates will be a little higher on these type but could be a good option if conventional constraints become a problem.

Nick Belsky

@Zachary Jones

In DFW, the competition is fierce. Multiple offers over asking and finding on market prices below value are a challenge. Look on the outskirts of the metroplex and for off market properties. The whole area is expanding like crazy, especially north and south.

Good luck!

Nick