All Forum Posts by: Richard Scholtz

FNMA caps you at 10 loans ....so commercial loan is the way to go. There are also hedge funds that will do a Stated Income No Doc portfolio loan ....I just did a refinance of 6 properties refinance to finance the purchase of more with no extra money needed by the buyer- all closed simultaneous and the purchase was wrapped into the portfolio...It is not the loan that is difficult - It is the HUD 1's and co-coordinating the escrows if there are more than 1 seller. That was the nightmare. Trying to figure the pro rated interest costs and percentage of costs..,.for each escrow for each seller is virtually impossible...as each escrow company wants to do it their own way. You will have to get all the sellers to agree to ONE closing agent and ONE closing date....otherwise you are juggling knives.....and headed for an implosion at closing time..or should I say closing times... :-) Funds wont be released until they all RECORD simultaneously...no funds disbursed for a partial recording....and how much is disbursed to which escrow company once they have recording numbers??

There are Washington based institutions that offer Canadians similar rates and terms as US Residents - mean there is  NO reason to go the Hard Money route... 

1) Plan A  If you have decent credit and the deal cash flows......look there first.  30 yr year loans.

2) Plan B is Hedge Funds stated income loans..made to LLC's. 30 year Amort - 5 or 10 year terms....rates about 2 points over FNMA

3) Plan C - Hard money loans.

Of course if you are looking at a REHAB hard money may what is needed to get the property ready for a 30 year loan.

Anyhow .... seems Canadians....are granted a special dispensation from  some NW based banks//institutions...so keep that in mind,

I had an investor take 240,000 to pay for a 4 plex near Portland. He was able to complete the REHAB and then get FNMA ""delayed financing"" which allowed him to use the NEW A.R.V. appraisal and waived the 6 months seasoning requirements. {{ FNMA normally requires you hold a property for 6 months in title before you get the benefit of a new appraisal and any improvements done}} This new higher appraisal within 45 days of acquiring the property - allowed the investor to get a new FNMA 30 year investment CASHOUT loan for 75% of the ARV so recover most the invested funds and allow him to put the IRA money back within the 60 day window so not pay any penaly.

Not for the faint of heart....but a good way to use IRA funds...instead of HARD MONEY

Guidelines are just that -- a minimum standard...

For example - 

FHA guidelines allow a manual underwrite with scores down to 580 --Wells Fargo and BofA just raised their minimum scores up to 640 for FHA. So while the Feds have their guidelines lenders can and DO add their overlays....after all they are making the loan.

So find an aggressive broker who will deal with the smaller FHA wholesale lenders who are less picky and will do a manual underwrites with NO overlays. Then you can a assume you will get what FHA says they will do.....

Golden Rule ---  They have the gold so they make the rules....

 Why not I just hand you our licenses and sign over our company and my livelihood.....and come to work for you for $3.oo per hour......

 The B2R portfolio program minimum loan size is $300,000 which is not a problem for Seattle but in Detroit and Milwaukee.....you need a dozen homes to get there :-)

LTV's were 75%

30 year Am - 5 year fixed rate - low 7%

30 year fixed 10 year rate - mid 7%

Fees at only 1%

Normal 1.2X DSCR

What I did not like ---

1) Once the portfolio put together hard to sell individual properties as no provision for deed releases...

2) Insurance requirements are high so that bumps the cost of the Home Owners Insurance - Blackstone has since cut a deal with AON for a new blanket homeowners policy to mitigate that.

3) Attorney Legal Review...a cost of about $800 =  Junk fee....I.M.H.O.

What I liked

Accepted pure stated income,..No income or rent history required.

Used proceeds to pay off massively past due property taxes and liens. :-)

Was able to acquire more property and simultaneous close the purchase and refinacne as part of the refinancing using the existing equity as a down payment

----------------------My Two Bits....

In Washington a local community bank will do the same loan portfolio with cross collateralize multiple properties -- multiple 1-4 family with a $250,000 minimum

30 year amortized

Rates between 4.75% to 5.375%

5 year or a 7 year term commercial loan

Fees under 1.75% - No junk fees --No legal review --No jacked up insurance requirements

Normal 1.20X DSCR

What I like

1) I know the banker well ....so getting him on speed dial on a Sunday helps

2) Insurance is normal --No extra LLC policy - No legal review fees

3) Deed releases  and per property sale figures and required principle reductions figured in upfront....and written into the loan so selling properties are easy

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I would go there first....if you file any kind of taxes (4506 needed)  as the underwriting is based on rental cash flow 

My two bits discounted for inflation is now only a penny for my thoughts...

Richard Scholtz

Recently been focused on providing "Stated Income" commercial loans funded by hedge funds since the banking crisis and regulatory changes of 2007-2008. Nice to see three (3) new hedge funds are now serving the Northwest with combination Rehab and Fixed 30 year takeout - Combination loans. Since they are one lender it saves on costs and no surprises.... Since they are Stated Income they serve the LLC's and Investor market well. They say as things change they stay the same... My experience includes Fifteen years structuring and negotiating loans from origination to funding....