All Forum Posts by: Patrick Boutin

Hey guys,

I was curious about one thing. I was wondering if there are any traditional lenders (big banks, etc...) that do lend money on rehab properties or are cash, hard money lenders, owner finance and private money the only options when it comes to financing a rehab/flip?

If there are, which are they and what terms do they typically offer?

Thanks everybody!

I'm gonna at a fourth bullet:

• What if the borrower decides to move on to a different job and that job happens to be further away (thus making the commute even more difficult)?

This move is definitely foreseen (borrower decides to change jobs although can't decide the job's location).

Ohh, and a small point I forgot to add to this scenario I am asking you guys opinion on: the property is a duplex, triplex, 4-plex or more units.. (it cashflows @Kaz M. and @Thomas S., I see what you are saying! That being said, does that mean that after one year the lender doesn't care about that as long as the mortgage is paid on time?

If you purchase a home as a primary residence (with a low down payment), and at some point after the purchase (for the sake of giving a number let's say it is 6 months to 2 years after the purchase):

• you realize the commute is much tougher than expected
• you loose your job and all the jobs you can find are not at all close to the property's location
• if you get relocated at your current job

What happens in this case? Are you forced to remain in that property or are you forced to sell the house given that it is no longer practical to have it as your primary residence knowing you need to move closer to where jobs are located?

Wow! Very good points. If you guys don't mind (@Chris Mason, @David Dye and @Albert Bui) I may want to reach out to you to clarify a few things I hadn't considered.

Thanks!

Thanks @Chris Mason! Some of your comments as well as other people's have made me think a lot in ways I hadn't thought of before! I appreciate that.

As for the software.. that's funny your comment right there. I don't know much about the subject of mortgage origination software as that's not quite what I do in IT. :) Sorry the software sucks! I know the feeling when your tools aren't up to par!

Thanks @Leslie Pappas. I am currently researching good REIA meetups in the area in order to start to know more people in the area! At this point I am mostly educating myself as much as possible. Reading a ton, listening to podcasts and trying to see what are all the different strategies available and what would seem like the most viable way for a newbie like myself to get in given the pricing situation in the Bay Area.

Hi @Chris Mason, that's very interesting indeed... I hadn't thought about that.

Just to make sure I am understanding what you are suggesting is:

• getting conv financing for 80%
• 10% using hard money
• 10% myself?

Did I get this right? Kind of like a piggy back loan to avoid PMI..

If so, that does make sense how the expensive loan on the smaller portion would make things much more affordable while the larger portion is amortized over a longer period of time and at a much lower cost..

Could something like this be done only because of the extra home to secure the 2nd HML? I am in need of selling them..

That being said, I do like the idea because it really makes me think "outside the box" and look at angles I hadn't thought of.

Seems like a way to get in the property for less down (and as you say without having to incur the extra risk of having 90% financed by hard money) and without having to go the "house hacking" way just to get a lender to accept a lower down payment.

After having considered those scenarios in my mind (in order to try and see how realistic/feasible these would be) I realized it would be quite challenging to "house hack" my way into some of those houses because of their location.. Commuting from some of those places because at the moment I need to stay close to SF or SJ would mean at 50+ miles commute each way..

Wow! Lot’s of great points from everybody. Thank you everybody!

@Brent Coombs In this case, my idea was for a multi-family property and not a flip therefore I wasn’t considering rehab costs would be needed.

Bottom line is my idea seemed way too simplistic and not taking into consideration a lot of important factors. I am glad I asked!

I guess I am trying to figure out how to get in. Living in the Bay Area everything is so darn expensive that it takes A LOT of money. The only places that aren't too intimidating are located in Solano, Sacramento and San Joaquin counties. Maybe even some parts of Contra Costa as well… (that’s a different subject and prefect for another discussion).

Thanks @David Dye, Chris, @Ralph R. and @John Thedford

@Chris Mason, here in California I don’t. I still have a couple of smaller properties in the Midwest which I am in the process of selling.

Great points @Andrew Michael. Thanks a lot!

Yeah.. I had thought about the additional costs but I still was curious if something like this was done (assuming it was still worth it with the extra associated costs) what could be expected from a traditional lender.

Better to find out now than after you've pulled the trigger! lol

As you say, any opinion from other experienced lenders would be very welcome!

Hey guys,

Quick question as I just got an idea that I wanted to explore. With traditional financing, it seems that 20% down is the norm versus the 3% - 5% lenders may be willing to accept for owner occupied financing (and I can understand the lender's rationale behind this).

That being said, I am trying to find out ways of getting into an investment property with less out of pocket (aren't we all?). I am ok with putting 10% but am a little reluctant to put more as I would like to get into more deals further down the line and don't want to put all my working capital.

Therefore, how feasible or realistic would it be for me to try to finance a deal with a hard money lender and then refinance with tradicional financing? I have found a few hard money lenders which don't require 20% down (I have found a few who might go as high as 90% LVT) and then once I own the property, refinance the hard money loan into a 30yr conventional one with a much lower rate and longer term?

A little bit more about myself. I have a decent stable income from a FT job (+ or - 130k/yr) and can show those #s in my last 3 returns. My FICO score is just under 750 (should be higher by EOY), and I have relatively small monthly expenses versus my monthly obligations (currently putting away about 4.5k per month after taxes and trying to get to 5k).

I would think that based on this, a lender wouldn't have a hard time financing me or in this case refinancing but I am not sure (looking to finance under 400k possibly 300k).

Like I said, I am simply considering the hard money lender route and then refinancing in order to see if I can bypass tying an extra 10% or more in the deal.

Am I missing something? Or does this seem feasible?