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All Forum Posts by: Patrick Roberts

Patrick Roberts has started 4 posts and replied 950 times.

Post: Can I take a 401k loan and transfer it to my LLC to purchase a property?

Patrick Roberts
#1 Mortgage Brokers & Lenders Contributor
Posted
  • Lender
  • Charleston, SC
  • Posts 976
  • Votes 779

Can you use a loan from a 401k? From the lender's perspective - Yes. There will be additional documentation for this, but these funds can be used either for DSCR loans or for traditional loans. For traditional loans, this will not impact your DTI.

Should you? That's a different question. There are a lot considerations, including those of what your custodian will allow, tax implications, cash flow impact, opportunity cost, etc. 

Unless you're looking at a screaming good deal, keep the assets in the 401k where they can double as emergency reserves and just save up the downpayment. There are also SDIRA's that could allow you to use the retirement assets in other ways without the risk of a distribution. 

Post: Who’s Heading to the Paper Trail Note Conference in Arizona Next Month?

Patrick Roberts
#1 Mortgage Brokers & Lenders Contributor
Posted
  • Lender
  • Charleston, SC
  • Posts 976
  • Votes 779

I wont be able to make it, but it sounds promising. Lots of solid speakers lined up. 

Post: Disabled First Time Homebuyer

Patrick Roberts
#1 Mortgage Brokers & Lenders Contributor
Posted
  • Lender
  • Charleston, SC
  • Posts 976
  • Votes 779

Are you receiving income right now? If youre not working and not receiving disability payments, it's going to be hard to qualify for anything. 

203k loans are for renovations. These are more cash intensive, more involved, and there is more risk when buying distressed. If you want to minimize use of your cash and stay low risk, this likely isnt the best way to proceed. 

Househacking is relatively straightforward and one of the lowest risk onboarding paths to start investing. Duplexes and SFR's with ADU's are both solid options.

You mentioned strong credit and having some savings. I strongly recommend you look at Conventional rather than FHA.

Post: closing costs question

Patrick Roberts
#1 Mortgage Brokers & Lenders Contributor
Posted
  • Lender
  • Charleston, SC
  • Posts 976
  • Votes 779

What are the itemized closing costs? "Closing costs" could include anything. Also, what's the price of the land? If you're paying only $10k, then yeah, it's going to be more than 3%. If you're paying $5M, I would expect costs to be alot less. 

Are you also paying agent commissions in that? Commission on raw land is much higher than on a home, usually 8-10%.

Post: Buying a home for no money down. Is it possible if the home has equity?

Patrick Roberts
#1 Mortgage Brokers & Lenders Contributor
Posted
  • Lender
  • Charleston, SC
  • Posts 976
  • Votes 779

Unless you have entitlement for VA loan for a home purchase, there really isnt a way to buy with no money down with a traditional loan.

Post: FSBO, on MLS

Patrick Roberts
#1 Mortgage Brokers & Lenders Contributor
Posted
  • Lender
  • Charleston, SC
  • Posts 976
  • Votes 779

Yes, the market has slowed a ton here. Also, to Ned's point, depending on how your listing reads and is set up, buyer's agent may not be showing it because they dont want to work for free. I wouldnt either. 

Post: Is a refinance right for me right now?

Patrick Roberts
#1 Mortgage Brokers & Lenders Contributor
Posted
  • Lender
  • Charleston, SC
  • Posts 976
  • Votes 779

Get a quote and look at the breakeven on it. If the breakeven period is under 2 years, its not bad. Under a year is almost always worth it. 

Post: BRRRR - Questions on Hard Money Lending, Reserves, DSCR

Patrick Roberts
#1 Mortgage Brokers & Lenders Contributor
Posted
  • Lender
  • Charleston, SC
  • Posts 976
  • Votes 779

100% financing is a pipedream, especially as a first time investor. Expect to bring at least 10% down to the transaction, with 15%-20% being more realistic. Some lenders will allow the monthly interest to accrue, but most will expect the interest to be paid monthly. 

Once the rehab is completed, you can use a DSCR loan or similar loan to payoff the hard money. Most refinances are going to be limited to 80% or less of the new value, so if you owe more than this when the rehab is complete, you will need to bring cash to close. The majority of lenders will also want to see reserves on these loans, which is a multiple of the monthly payment. So, if the new monthly payment will be $2k, expect to need to be able to show $6k+ in liquid assets leftover after closing.

It seems like you have 0 cash right now. This is not a no-money game; you will need capital. You're best bet might be to find a partner who can bring the capital in exchange for you doing the work. 

Post: Financing a property inside an entity sale

Patrick Roberts
#1 Mortgage Brokers & Lenders Contributor
Posted
  • Lender
  • Charleston, SC
  • Posts 976
  • Votes 779

The only thing with this is that you're buying any potential problems with the existing LLC in addition to the assets. My understanding is that if a lawsuit were to be filed for something that happened prior to your ownership, the entity and it's assets could still be exposed. I would consult an attorney on this before moving forward.

Post: Need Advice: (800+ credit score) I may need to give my property back to the bank

Patrick Roberts
#1 Mortgage Brokers & Lenders Contributor
Posted
  • Lender
  • Charleston, SC
  • Posts 976
  • Votes 779
Quote from @Stuart Udis:

@Greg M. This likely isn't the case. Someone would have to review the HOA declaration but I would anticipate the interior of the unit finishes are not a common element. This is where the unit owners policy should come into play. A roof more commonly would be a common element and covered by the HOA unless there's private access such as a roof deck in which case that's often reserved as a limited common element. Rarely will this be the case for the interior of a unit but HOA Declaration control. What if one unit owner spends $500k on a renovation of their unit decking it out with high end finishes whereas no other unit owner improves their unit for more than $100k. Why would the HOA be responsible for covering the unit owners interior unit renovation? This is why interiors are rarely common elements.

 Proper procedure in this case would have been to file a claim under the unit owners policy assuming it’s not a common element. Depending on whether the unit was insured with replacement or actual cash value would dictate whether the insurance would cover the depreciated value of finishes or replacement of like kind but new. The carrier would then likely seek reimbursement from the responsible party through subrogation. 

 I was trying to make sense of this whole mess while reading through it, but this is what I was thinking as well. The damages are the result of someone else's action or inaction, and therefore the liability should rest with them. This is not a natural disaster like a flood. OP (assuming they have insurance coverage) should be filing a claim with their own insurance, and then letting the insurer go ham on whomever is responsible for this whole mess. If there is no insurance, then I would imagine that a consultation with an attorney to determine the viability of a suit against those responsible would be the best next step. 

Either way, I would not be filing BK or going into foreclosure over this. I would be in the unit each night hanging drywall and laying flooring while documenting everything. Then, it's lawyer time.