All Forum Posts by: Nick Belsky

DSCR lenders will have their own set of rules that will change from lender to lender. If you are trying to get more credits out of the deal, try working with a broker who can help you maximize the credits you have so you can take advantage of them in the fullest. Many DSCR lenders have been dropping rates this week, a few are still lagging, but most are in the 6's and low 7's at 80LTV right now for the average file.

Cheers!

@Courtney Roycroft

As others have pointed out, be sure you understand the differences between stacking entities versus a true series entities. From a financing standpoint, series LLC are not widely accepted by most lenders. It removes the guarantor too far from accountability should they foreclose. The series structure is a strong vehicle for personal asset protection with no doubt, but you will find financing far more difficult than most realize.

Stacking entities if nearly just as good as a series by most measures.  Stacking still protects your personal assets, even more so if you are more than a sole member.  Do not over complicate things when getting started.  Far too many folks create unnecessary hurdles for themselves when getting started without realizing it.  Investing is taking on risk... being so bulletproof that you can't "move" is contradictory to getting things done efficiently and with less costs.  

Loads of information on the forums and BP tools for you to expand your knowledge or find just about anything.

I am on the lending side of things and am always happy to talk shop with investors looking to learn more about financing options out there, even if not in my resource pool.

Looking forward to seeing you on the forums.

Cheers!

@Hillary Bingham

Loads of information on the forums and BP tools for you to expand your knowledge or find just about anything.

I am on the lending side of things and am always happy to talk shop with investors looking to learn more about financing options out there, even if not in my resource pool.

Looking forward to seeing you on the forums.

Cheers!

@Ramya Manchu

What kind of financing program are you working with exactly? Different rules/guidelines for different programs. Lender contribution is usually a credit for taking a higher interest rate... A builder credit is treated more like a seller credit that has guideline limits... E.g. FHA has a seller credit of 6%, whereas Conventional is limited to 3-4%. Realtors can also contribute up to certain amounts, but these are called IPCs and treated differently from seller credits. If you are working with private money lenders, they can make whatever rules they want; some even have no limits at all.

Cheers!

@Jeff Rocheleau

Definitely sucks, especially if you are in an area that is experiencing increase HOI or tax rates.  However, this isn't really a BPC issue so much as your loan officer.  Whomever originated your loan should have discussed this with you, not to mention in the loan docs there is a paragraph or two talking about escrows and how they are updated each year to reflect what your HOI carrier and taxing authority bills.  You would have signed off on this in your loan package.  Assuming you signed a fixed rate mortgage, your interest and principal payments will not increase throughout the entire loan term.  

The good news is that you can always reach out to your carrier or even other carriers to shop your HOI coverage to better rates and keep your monthly payment down.  There's little you can do with taxes save the county/city saying your property is worth far more than it is and you dispute the value.

While the BPC is a wonderful resource for learning, every single situation cannot be expected to be covered.  That's just not realistic.  

Cheers!

@Burnis Chitwood

Welcome to BPC!  I am on the lending side of things and work all over the country.  If you'd like to talk shop on financing options, I'd be happy to discuss, even products that I don't necessarily have access to.  

Always happy to talk shop!

Cheers!

@Gp G.

Seems like you may need to get with the title company that filed the deed and have an amendment done.  Fairly easy and straight forward to do.  Mistakes happen.  A new title company may also be able to do this.

Cheers!

@Spencer Moore

Bigger Pockets is a great resource for market research and to help build your team! In terms of your 1099/W2 income and offsets, those are key if you plan to finance with agency financing. If you plan to hold long term properties with DSCR financing, your personal income and personal debts are not even a factor...

If you pursue conventional financing (agency), then your education debt is calculated in one of a few ways:

If a monthly liability is reported on your credit report, that is the amount that will be used in the DTI calculation.

If there is no monthly liability on your credit report (shows blank or zero), Fannie UW will use 1% of the total debt towards your DTI calc and Freddie UW will take 0.5% of the total debt towards your DTI calc.

Depending on what type of 1099 income you have, you may be able to offset your income with deductions or credits to essentially "zero" out the impact on your DTI. Obviously, a positive impact is better for a loan, but it also means more tax liability... hence the double edge sword. All easily avoided with DSCR financing.

If you plan on doing fix and flips, most lenders will not look at your personal income or debt, some do, but most won't.  They will focus more on the deal itself, your FICO, your experience, and your liquidity.

Be sure to speak with a mortgage broker about these things as well.  Most of us won't give you legal tax or legal advice as we are not attorneys nor CPAs, but we can tell how the various strategies will impact your eligibility for the various loan products out there.

Cheers!

@Nick Gauss

Unfortunately, that is exactly what all these 'gurus' sell... it's easy.  The reality is using OPM is actually possible.  However, as a beginner with no proven experience, good luck finding anyone willing to invest in you to the extent that is presented.  At the BPCON in Cancun, a few speakers got up talking about this topic exactly after being asked by the audience.  

Once you have an established formula for success and have proven you can do it on your own, then and only then are you likely to attract investors to invest in you and your skills. As a broker, I work with many investors from all ranges of experience. Rarely, have I met or spoken to anyone who get private money funding with 100% financing that doesn't actually cost them an arm and a leg. There are benefits of not having to have to go through an application process every time. The PML reviews the property, scope, and ARV, then agrees to finance it or does not.

For those starting, the first 3-5 deals can be taxing and even brutal.  You may read a lot in books and go through numbers over and over, but hands on experience can go very differently compared to the plan.  Financing with no experience can be done with as little as 10% down and no reserves, but costs are a bit more than most might care for.  Those first few deals to gain the experience needed to get to the "good" financing will test you for sure.  If you can survive and keep your sanity, you may become more appealing to other lenders with better rates, lower costs, higher leverages, better draw processes, etc... 

Lenders are all about risk assessment.  One with no proven experience is very risky to them compared to someone with a proven track record of completion AND exiting.  Lenders actually do NOT want to repo the property and deal with Foreclosures and litigation, despite what some may think.  They want to make money and see you succeed so you can make money and maybe build a relationship from repeat business.  It strikes a nerve when I see these ads where 100% OPM is being offered without context around adequate experience.  I will not say it doesn't exist out there for beginners, but it is exceedingly rare for sure.  I can't imagine why any lender would take on that kind of risk... it's bound to bite them sooner or later.

Cheers!

@Ryan Miller

For 10 Properties, that is a little on the high side, but its also a lot more work than doing a single property.  I'd be 1.5-1.75% on something like provided there isn't a bunch of "hair" in it.  Blankets can be a huge amount of work.  While 2% seems a bit high, it isn't crazy high.

With that said, all brokers are not created equally.  I play quarterback and coordinate all parties when I broker.  Many (probably most) do not and leave all the heavy lifting to the lender or 3rd parties and sit back expecting a check for doing as little as possible.

Cheers!