All Forum Posts by: Nithin Mathai

Quote from @Bach Anderson:

Hi Nithin,

Please take this with a grain of salt as I’m a newbie. I’ve been learning about this too through the Pace and Jerry masterclass videos. See link below for the video playlist. Pace walks through each of these areas and the questions to ask. Pace also mentioned going on his Facebook page and asking for one of his students in your local area to help you structure the deal. Hope this helps. Good luck! 🍀 

https://youtube.com/playlist?l...

Thank you for this! I am going to start watching these now, and I will also reach out in that group.

Good night BiggerPockets Fam!, 

I have been trying to learn about subject to and wrap around mortgages to try and help this elderly woman to sell her house. Don’t get me wrong, I am trying to buy it from her, but she needs this sold to go to Florida and it’s already been listed for over 150+ days. 

Here is the situation as it is developing: 

Asking price: $669,000

Potential purchase price: $700,000
Remaining balance on mortgage: $293,000

This may be a stupid question, but how can I subject to or do a wrap-around mortgage for this property. This deal only works with a low interest and low down payment, so is it even possible for me to get into this home for 10% down or less. The seller is potentially interested in a subject to deal. Are there any other questions besides her current interest rate and if she already has a new home picked out (maybe the financials on that one?) that I can ask to get a better understanding of her situation? 

I can ask more questions, but she is going through her realtor for all communication, so I don’t want to waste everyone’s time by asking one question at a time. 

I am a complete newbie on this and have a little bit of a time crunch on learning this. I know this is Pace Morby’s wheelhouse, but I couldn’t find much on wraps on YouTube. I definitely don’t feel comfortable going through with this type of a deal without understanding the logistics, risks, and benefits (some of which I know). 

I appreciate any help you can provide. Thank you! 

Thank you for the reply! I tried calling again. This time someone actually picked up but they had no idea about short term rental regulations. He directed me to their website which doesn’t say a lot. One thing it did say was it had to be owned or managed by someone living within 120 miles. Unfortunately, that disqualifies me. 

Good morning BiggerPockets Fam, 

I am looking into possibly buying a property in Rockford, Illinois to use as a short term rental. I haven't had any luck reaching the zoning department at city hall. By any chance, does someone here know the short term regulations...permitting, business license, zoning, etc.? Thank you in advance! 

Quote from @Richard Line:

Quote from @Nithin Mathai:

Quote from @Michael Baum:

Yeah. A DSCR loan will be the way to go, but it's gonna cost ya.

Have you done all the research on the area that it will support your purchase and rehab price?

The loan will have to have some kind of due diligence on what it will cash flow.

From my analysis the property will cash flow with an NOI of $10-20k per year. The property is listed as a single family but it’s actually a triplex with one large 4 bed unit, one smaller 2 bed unit, and one even smaller 1 bed unit. Each has 1-2 baths. It was difficult to find equal size comps with the enemy method, Rabbu, AirDNA, Pricelabs, and Awning. That was the best estimate I could find. Actual property comps were difficult to find as well because it is a multi family, but it looks like the house is somewhere in the 450-500k range. That should be plenty to refinance even if I leave a good amount of money in the deal.  

 If it is listed and zoned as a single family, underwriting will want to see the permits to legally change it to multi-family.  Most likely, that is why the appraiser stopped, he saw it had been converted to multi-family, most likely without the proper permits.  Not too many lenders will allow that, if any.  

Rick Line NMLS #1069991

Acra Lending NMLS # 144549

Oh that’s good to know. Thank you for the info! 

Quote from @Sara Levy-Lambert:

It sounds like you're in a difficult situation, as your high debt-to-income (DTI) ratio is making it difficult to qualify for conventional financing for your property in Vermont. In this situation, it may be helpful to explore alternative financing options, such as a loan from a private lender or a portfolio loan from a local bank or credit union.

I ended up reaching out to DSCR lenders. Thanks! 

Quote from @Jay Thomas:

If you go the DSCR route, make sure to get multiple quotes from lenders so that you can compare rates and terms. You may be able to find a competitive loan product that is suitable for your needs. It also pays to have lenders lined up before you start the project as it could save time in the long run. Good luck!

 Thank you for the advice Jay! I will definitely do that. 

Quote from @Lyndsay Zwirlein:

Quote from @Nithin Mathai:

Hi BP friends! I am looking at purchasing a home in Vermont to use as a STR/Airbnb/Vrbo and vacation home for my family. My DTI is too high to qualify for any conventional financing.

I am looking at DSCR loans, but don't see anything specific for STR rehab projects. I do see LTR rehab loans and DSCR Airbnb purchase loans. I have a HELOC for about $200k for any down payment/other expenses, but the whole project including purchase ($280-300k), rehab ($80-100k), and furnishing ($30-40k) will cost about $390-440k.

I am reaching out to lenders right now, but are there any products I should be aware of or creative lending solutions that may work for my circumstance? I’d appreciate any input. Thanks in advance! 

FYI: The house tried to sell previously and during the appraisal process, the appraiser stopped and the bank cancelled the appraisal since the property had not been close to being completed in its renovation. I’d rather avoid buying the house and refinancing it because of this incident.  

There are fix & flip programs for this. Down payment on purchase depends on how many similar projects you’ve done in the last 36 months. If this is your first project, it would likely be 75-80% LTV on acquisition and the lender funds 100% of rehab. 

 

Thanks! I’ll look into this as well. 

Quote from @Luke Carl:

I think I would use the patience method and wait till I had More money. Or you could bring in a partner but partners usually want someone with a nice track record 

I might start reaching out to family/friends as well to see if they have any interest in this. 

Quote from @Michael Baum:

Yeah. A DSCR loan will be the way to go, but it's gonna cost ya.

Have you done all the research on the area that it will support your purchase and rehab price?

The loan will have to have some kind of due diligence on what it will cash flow.

From my analysis the property will cash flow with an NOI of $10-20k per year. The property is listed as a single family but it’s actually a triplex with one large 4 bed unit, one smaller 2 bed unit, and one even smaller 1 bed unit. Each has 1-2 baths. It was difficult to find equal size comps with the enemy method, Rabbu, AirDNA, Pricelabs, and Awning. That was the best estimate I could find. Actual property comps were difficult to find as well because it is a multi family, but it looks like the house is somewhere in the 450-500k range. That should be plenty to refinance even if I leave a good amount of money in the deal.