All Forum Posts by: Richard Scholtz

Residential 1-4 family caps at about 800K for FNMA -- but they will not touch commercial or muti-family (5+) properties. FNMA commercial (5+ multifamily) considers  $2 million too small for the time and effort and fees. Commercial lenders will do 30 year fixed all day long. Richard.

I agree with the above - FNMA type loans are still fine - Plan on delays for appraisals and some counties are not recording loans but rates have moved up from Feb lows and you will need 20% DP on rentals. It is the creative Bank Statement Loans and No Doc Loans Hard Money loans that got crushed. I know of at least (7) Seven of the NON-QM - Institutional lenders that have quit the D.S.C.R loans //No Doc Loans // Professional Investor loans. Had one do that with docs in Escrow :-( Flagstar was the largest bank warehousing those --They quit providing warehouse lines for Non-QM lenders - Home Express -TheLender- New Rez- Royal - DeeepHaven - Carrington - Angel Oak, etc - That all was securitized and investors have totally redefined risk. Find a lender/investor that has already tightened their LTV's and credit score requirements and you should be good for a few more months and they will adjust. Personally, this is an opportunity as banks tighten up we will see loans that would never have needed us 6 months ago. Reminds me of doing Blackstone deals in 2009 when they were the only Hedge Fund lending on rentals and rental portfolios. Travel Well Richard

I agree with the above - I know of at least (7) Seven of the NON-QM - Institutional lenders that have quit the D.S.C.R loans //No Doc Loans // Professional Investor loans. Had one do that with docs in Escrow :-( Flagstar was the largest bank warehousing those --They quit providing warehouse lines for Non QM lenders - Home Express -TheLender- New Rez- Royal - DeeepHaven - Carrington - Angel Oak etc - That all was securitized and investors have totally redefined risk. Find a lender/investor that has already tightened their LTV's and credit score requirements and you should be good for a few more months and they will adjust. Personally, this is an opportunity as banks tighten up we will see loans that would never have needed us 6 months ago. Reminds me of doing Blackstone deals in 2009 when they were the only Hedge Fund lending on rentals and rental portfolios. Travel Well Richard

20% down is a gift.  We had NINE (9) separate lenders bail or quit the non-QM loan arena this week and the rest dropped their loan to values and raised their credit score requirements - requiring a bigger down.  We all know values will get hit in the next 6 months...so be thankful for the 20% down and take the money and run.

Personally, I would NOT call the police immediately. They'll bring Fire and HazMat and you will be paying for their Xmas party not yet in the covered in their 30% budget increase. 

In Washington (Tacoma)  a neighbor rented out a house to a nurse. She moved in a new boyfriend and finally left him there ...when they split. This mystery tenant was busted for manufacturing meth - They put him in jail and sent in the men with the yellow suites  "as a precaution."   That little HAZMAT precautionary cleanup cost $30,000 which became a lien on the house that the landlord had to pay since the uninvited tenant was doing a 3-year stretch rent free paid for by the taxpayers...

I would look at privately getting that cleaned up and carpet cleaned and replaced as needed...The scariest words in the English language are...  "I am from your Government and I am here to help"

All that is good...

Strong w2 income etc....Strong credit 

However, it needs to be a commercial loan since your traditional FNMA lenders

( 1) won't accept more than 10 financed properties and

(2) will not loan to an LLC.....period

So a commercial loan is your only choice for an LLC....

Your only decisions are ...

Do you go Stated or  Full doc.... with a 1.5% yield difference...?

Most commercial lenders and banks --who finance residential NON-owners will want 6-month seasoning to use the new appraised value so allowing a 75% LTV refinance cashback to recover your acquisition costs...and even some rehab expenses if the final value is quite improved over your initial purchase price...otherwise they hold you ot75% of what you paid and so you do not recover your costs

Since you do not have 2 years taxes to support the loan --  you may need a STATED INCOME COMMERCIAL LOAN -- Hedge funds and finance companies provide those using only the Credit report of the LLC principle and new rental agreement and an appraisal to support the loan

Full Doc = If banks can use your taxes figure high 4.75% - 5.5% --- 30 year am -- 5 year or 7 year adjust 

Stated = if only to the new LLC with no taxes then Stated is going to price at 5.5% -7% for a 30-year loan with either a 7 or 10-year adjustment depending on LTV and Score

Note regarding the LLC with a 91- tax ID number won't show up on a credit report regardless of whether its recourse or non-recourse...we just refinanced a dozen homes held by undocumented folk who got 91- ITN numbers and financed homes that way --- none of the underlying loans with multiple lenders reported to their SOCIAL SECURITY NUMBERS

FYI = The stated commercial lenders --(70% of them do not report to bureaus ANYWAY)  ...

Anyhow....if you are new acquire them with Stated loans and 2 years later wrap them all into a bank portfolio loan once the portfolio is complete and stabilized....meanwhile, you can B-R-R-R-R multiple deals.

Finance companies have no 10 unit limitation and are not an FNMA lender and make loans to LLC's --

So you can get all kinds of Stated income or full doc loans from lenders that portfolio loans and do not sell to FNMA....

Some Federal credit unions fit this bill too...as do some Savings and Loans....they portfolio the loan....so no FNMA limits.... 

There are a bunch of lenders doing Portfolio loans where you can combine your existing loans into one ......

They want them in LLC name.

Could be recourse 

or

no recourse...to the LLC principles

Some banks will do them --  underwriting is tough and personal taxes get reviewed

Commercial lenders will go Stated income --and underwrite based on the DSCR ..meaning if the rents cover the payment they will lend to the LLC and NO TAXES AND NO 4506t needed.

• A portfolio loan could be from a bank or a hard money loan or a hedge fund...and this is many properties (portfolio) all wrapped in one loan ...so they are cross-collateralized.

Banks loan to US residents and are now required to get a 4506(t) from the IRS on loans they close...if they are Federally insured and regulated. 

So the Hedge funds and Finance companies have come in and do what the banks cannot. They are not as cheap as the banks but will still do 30 year fixed loans @ about  6% whereas banks are under 5% for the same loan. A bank will not make a commercial loan for longer than 10 years...so you will get a 30-year loan with a 10-year adjustment or call. (This way they place the interest rate risk on you) 

I have posted on those before so read my posts...............

Well, maybe lenders do not want to finance your speculation and a first timer  (since you do not have other rentals to cross-collateralize for a down payment).   

Heads you win and the lender may break even  - tails the lenders lose... You say = "I’m a winner and need the opportunity to succeed""    I suggest you take that pitch to Vegas and see if any of the Casino's will stake your play...