All Forum Posts by: Kevin Romines

Depending on the location of the property, as you push out from Portland you get bigger tracts of land around here. It will be harder to find comps, but no matter what type of loan you do, that will be the case. 

I would just go forward with a Fannie Mae type loan and cross the appraisal bridge when its that time. 

@Joe Bourguignon Fannie Mae will go 85% as a duplex on an owner occupied. Less than 40 acres there is no problems. Once its 40 acres and above, we then need to contact underwriting for a decision. No overlays in this area?

If the property is a non-owner occupied, the LTV would be 75%

@Shane M Freddie Mac has a loan called Home Possible, which will allow 5% down on a 1-4 unit as owner occupied. I would look into that loan.

@Eric Gross one option would be, with that amount of money, you can look at owner financing. It may not be available on every deal your looking at, but if you find one that works, put part of your savings down and get put on title, then keep the rest for reserves. Collect the cash flow while your working on your credit. Refinance it in 1-3 years and pay off the seller. 

You can also consider doing a bit of rehab or upgrade to help force appreciation and make the refinance quicker and easier?

@Christine Kankowski I have talked at length about this very subject. As any investor goes, eventually they get to this point. You can get Fannie Mae loans beyond 10 financed properties, but in order to do so, you must also get portfolio or commercial financing set up. Fannie Mae view's LLC's differently then they view Sub S or C Corp loans.

If you were to take 1 or more of your existing portfolio and move it to a Sub S and then refinance it with a portfolio lender, you then have opened up the slots of available loans that you can do through Fannie Mae financing. Fannie Mae doesn't consider a property that is financed in the name of the Sub S or C Corp to count in the 10 financed property rule, because its commercial. This is true, even if you have to sign as the guarantor of that loan on a personal basis. Primarily because the loan is in the name of the Sub S or the C Corp.  

So look at investing like this; you should hold all properties in your personal name up to the point of 10 financed properties. From there you move as many properties as you wish to open slots for into the Sub S and get portfolio financing on them. By doing this, you can always buy your new homes as a Fannie Mae loan. I would age out my oldest financed property or the properties with the smallest balance to the portfolio loan, and minimize the higher rate that way. 

Below in the actual Fannie Mae guidelines. 

See below from the reference guide for FNMA multiple financed properties in MyKey. If they own 25% or more of the LLC or partnership then it would count.

Type of Property Ownership to include in Financed Property Count:

 Joint ownership of residential real estate. (This is considered to be the same as total ownership of an individual property).

Note: Other properties owned or financed jointly by the borrower and co-borrower are only counted once.

 Joint or total ownership of a property that is held in the name of a corporation or S-corporation, even if the borrower is the owner

of the corporation; however, the financing is in the name of the borrower.

 Obligation on a mortgage debt for a residential property (regardless of whether or not the borrower is an owner of the property).

 Ownership of property that is held in the name of a limited liability company (LLC) or partnership where the borrower(s) have

an individual or combined ownership in the LLC or partnership of 25% or more, regardless of the entity (or borrower) that is the

obligor on the mortgage.

 Ownership of a property that is held in the name of an LLC or partnership where the borrower(s) have an individual or combined

ownership in the LLC or partnership of less than 25% and the financing is in the name of the borrower.

 Ownership of a manufactured home and the land on which it is situated that is titled as real property

Type of Property Ownership NOT to include in Financed Property Count:

 Ownership of commercial real estate.

 Ownership of a multifamily property consisting of more than four dwelling units.

 Joint or total ownership of a property that is held in the name of a corporation or S-corporation, even if the borrower is the owner of the corporation and the financing is in the name of the corporation or S-corporation.

 Ownership in a timeshare.

 Ownership of a vacant (residential) lot.

 Ownership of a property that is held in the name of an LLC or partnership where the borrower(s) have an individual or combined ownership in the LLC or partnership of less than 25% and the financing is in the name of the LLC or partnership.

 Ownership of a manufactured home on a leasehold estate not titled as real property (chattel lien on the home).

As a follow up to @Michael Cohen comment. The Fannie Mae Homestyle renovation loan is good for a purchase of an owner occupied 1-4 unit, a second home or a single family rental property. 

As they say, cash is king. 

Keep the money in the account. If the loan officer sees that the debt ratio is to high after paying debts off through the loan, they can then apply the cash you have in the account. If it doesn't get used then its good for reserves, which is a better scenario.

Keep it in there until you are told it needs to be used as part of closing?

My suggestion would be to take a 1st mortgage with Fannie Mae or Freddie Mac small balance commercial loan. They start at 1 million and go to 6 million. The down payment would be 20%. They have the best terms of virtually any lender in that space. So on a 2-4 million purchase, your down would be 400-800,000. If you don't have that much cash, consider syndicating to get the cash into the deal that you need. If its a good enough deal, you can find syndication money. Look in the market place on here. Market your deal to get the partners that you need. 

It sounds like they are giving you a Fannie Mae loan with decent rates and LTV. Unless you are looking for more cash and willing to pay a higher rate, I would go with that deal. Its spot on.

I'm seeing conflicting reports on that? It looks like its a case by case based on the MI company and it could also be the lenders overlays as well? It is possible, you just may need your lender to shop MI companies or in the worse case scenario, you may need to shop the lender?