All Forum Posts by: Rachel Smith

@Lane Kawaoka Great! I sent you a follow up message, I look forward to hearing from you.

@Salvatore Lentini Thank you for the advice. I’ll make sure to keep the point you made about the price point in mind when I do the renovations. I also appreciate you mentioning that you have many different lenders you’ll work with. As I’m going through this initial screening process, I’ll make sure to keep in touch with lenders that are supportive (and knowledgable) of real estate investing.

@Stephen Glover 

Great! I’m already in touch with a few lenders so I’ll make sure to add that to my list of questions.

I completely agree with your point on asking other investors for good banks and lenders to work with. Most of this past week has been taken up with those exact vetting emails and calls. Fortunately, Alexander Felice mentioned banks he has had luck with, so that should help narrow it down.

Also, thanks for the clarification on portfolio loans. Honestly, that is probably what I would have thought at first!

@Dave DeMarinis

Thank you for explaining that there is a possibility to find lenders that don’t have seasoning requirements. That would be a great way to continue building my portfolio at a pace that works for my goals.

The chance of a ballon payment or a large rate increases definitely weighed heavily on the cons of commercial lending. I do have it in the back of my head that there is a possibility to refinance into a conventional mortgage a few years out. I appreciate your point of making sure to asking about the allowable timeframe for a title change and how it could effect the refi to a conventional loan. I wouldn’t have thought to look into that. Thanks!

Hi @Caleb Heimsoth, thanks for the response! That’s a great point. If I end up qualifying for a commercial loan, what I would be getting in return is the chance to use leverage in my investing. The question I must answer is whether or not that is enough to warrant the thinner margins and other points you laid out!

@Stephen Glover thanks for the tip! Do most local banks offer a portfolio loan, or is it a more specialized product? If it’s not widely available, what are the best ways to find portfolio loan opportunities?

@Mark S. I appreciate you taking a look! One roadblock I've been running into when running the DSCR on potential investments is the wide range of rates and terms for commercial lending (as @Caleb Heimsoth mentioned). Any suggestions on conservative terms I should use in preliminary analyses?

@Pat Lulewicz @Abigail Merrill Hope to see you there!

@Heather Easterbrook 

I am definitely keeping my options open. I have some more calls scheduled for tomorrow with smaller banks in the area. I’ll be sure to continue exploring any possibilities of obtaining a residential mortgage.

@Alexander Felice thank you for your detailed response!

I was under the impression from speaking to the commercial broker that the main criteria for commercial lending in my situation would be the DSCR, and then I would qualify as a guarantor based on credit score, and funds available to cover at least 6 months of expenses. Though I will be sure to confirm this since you have brought it to my attention.

I have spoken to a few different lenders so far and they all have identified the fact that I haven’t been an independent contractor for at least two years as a disqualifying factor (for conventional mortgages).

It is interesting timing that you mention Lumbee Guarantee. Just earlier today, a lender I was speaking with referred me to that bank and put me in touch with one of their bankers. I will be sure to keep what you have said in mind when I speak with him tomorrow!

Thank you for pointing out the range in my criteria numbers. I should have clarified that they were all contingent of ideally being 70% LTV.

• A 60k house with 15k reno would require an ARV of 110k
• A 70k house with 20k reno would require an ARV of 130k to be considered and so on

Do you have any suggestions of where I should narrow my focus from there?

And thank you for the reminder that is the long game. I have been acquiring knowledge for a while now and am very excited to finally get some skin in the game. But you’re completely right, the worst thing I could do is rush and make a mistake that sets me back.

Hi All!

I am looking to close on my first deal in the next 2-3 months and could use some advice about how to continue to build my portfolio from there. 

Situation:

*I don't qualify for a conventional mortgage because I'm am an independent contractor with only 6mo of history *no co-borrower at the moment *100k available, good credit score, and weak income/W2 history 

1st deal criteria: *Fayetteville, NC market* CASH purchase and reno, SFH for 50-70k, complete a 10-20k reno, for an expected ARV of 100-130K, rent $800-1000 (~1.2%)

Question:

Should I use commercial lending (long term, fixed) to pull my cash out of the deal so I can continue to grow my portfolio? The lenders I have spoken with say that rates would be around 6.5%, which would make it difficult to find residential deals that would have strong cashflow after the refinance. I would also only be able to do one deal every six months with this strategy. (If I want to get money back before six months I could only get up to 80% of the purchase price)

I am very new to RE and the world of creative financing. I would greatly appreciate any and all advice or suggestions of a different angle to approach growing my portfolio.

Thanks! 

Additional context if interested: My goal is to create a portfolio with $1500 monthly CF in 2 years. I could refinance the commercial loans in a year and a half when I qualify for conventional mortgages (bring CF up to ~$200/door).  But I would still not reach my goal if I can only buy 2 properties a year.

Thanks @Pat Lulewicz !

Thanks @Josh R. I've heard great things about this meetup!