All Forum Posts by: Nick Belsky

@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!

@Sandra Lopez

Make a spreadsheet and do a side by side comparison; selling and paying off your HELOC versus refinancing to hold long term. Run the costs of making payments to your HELOC versus estimated PITIA to your DSCR mortgage. If you can't pull enough cash out to cover the HELOC, your analysis will have to include paying both the DSCR PITIA and any remaining HELOC balance you'd be carrying.

Your HELOC can be paid off either way... via sale proceeds or cash out proceeds.

From a tax perspective, you cannot be taxed on cash out proceeds from a refinance.  If you sell, you will likely have to look at capital gains taxes.  You can check with a CPA to find out what that impact may be, if you can offset with any improvements you've made, and get a better idea of how that impacts your overall tax liability.

Cheers!

@Chance Quinlan

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!

@George Nadian

Welcome to the community!

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.

I would say, No, those terms are not the norm a bit high IMO.  We are financing first time flippers at 85-90% purchase price with 100% rehab funds for 12% or less and 2-3 points total.  I believe I'd check around for some other options.

Looking forward to seeing you on the forums.

Cheers!

It took me quite a few years and "firing" a few lenders to find a consistent resource for rural properties. Now, I have two in the 1-4 spaces; one for hard money fix and flips and one for DSCR. I am still on the hunt for a consistent rural lender who will do 5+ units... they are definitely a rare thing to find!

Cheers!

@Deonte Hill

The only way you will get 100% financing for an OTC is if you are vet.  If not, you'd need to have at least two completed builds in the past 2 years AND were on title (even then, this lender would only do as an investment, not as a primary).  

Purchasing an existing structure and adding an ADU or renovating is becoming all too easy these days. You can use a conventional based or FHA based loan to do this. If you are unsure of specifics, you should speak with a mortgage broker who can dig into your specific details and help determine what you may qualify for.

Cheers!

@Christina Swaby

That is truly relative to each loan situation.  Generally speaking, the cost to refinance will usually take between 2-4 years to recoup the cost via lower interest savings.  With that said, the loan size plays a large role here.  Typically, we don't see a worthwhile gain for most loans unless you can reduce the interest rate by between 1.5-2.0%.   There are exceptions to this, of course, but generally, that is where most loan can make sense to refi.

Cheers!

@Linda Cunliffe

The All in One loan is also referred to as an Offset Mortgage.  Very few lenders offer these.  Here is one that I know of.  They are a wholesale lender so you must have a licensed broker to have access to the program.  You can check out an overview at the link:

https://www.cmgfi.com/all-in-one

I can help you get in touch with a broker if you have any interest in learning more about them.

Cheers!