All Forum Posts by: Robin Simon
Robin Simon has started 636 posts and replied 3875 times.
Post: Best rates/lenders in Nashville?
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
- Austin, TX
- Posts 4,576
- Votes 4,423
how small a multifamily are you talking?
Post: New to the investing industry-
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
- Austin, TX
- Posts 4,576
- Votes 4,423
Quote from @Courtney August:
Hi All,
My name is Courtney, I have been on the BP FB for a little while and just made it over here, I am very impressed with all the support you provide. I'm not able to get the pro account yet, but I would like to get there soon.
I have worked in property management, and mortgage reconciliation, so I do have a grasp of the industry. I would like to invest in a multi-family unit with someone, ideally using an FHA loan. I would live on sight for the first year and manage the property from there, I know a lot of you would rather avoid CA, but I just can't give up the weather.
What my ideal property would be:
Minimum 2 units
Close to event/ attractions- Beach, shopping, entertainment, etc.
Economically middle-class area
I have one close to where I already live, which hits most of the markers- but there are a few things that are causing me to pause.
1- the price is too dang high for the area, it has been listed though for 158 days with multiple decreases, so I think there is wiggle room (400->350K) I'd like to get it to 285K
2- I am unsure of the rent currently being charged, local rent is going for between 1K to 2K depending on the quality. All 3 units have tenants, 2 are long-term.
3- I am guessing as to repairs but there might need to be some work done beyond basic paint. 1 of the units was semi-recently remodeled.
My question to you:
1- What would make you feel comfortable teaming up?
2- What is your ideal percentage?
3-What can I do to add benefit to your time and experience?
Thank you for reading and have an amazing day,
Courtney
Welcome Courtney!
Not exactly in response to your questions, but one thing I would suggest as advice is to go get the answers to those items that you mentioned that are giving you pause. They are great things to be thinking about and show that you are approaching investing in a very smart way, but it begs the question, if this property has been on the market for six months - what has stopped you from taking the initiative and getting those answers (on rents/tenants, repairs needed, etc.) already? I'd think any serious investor that may partner with you would be much more comfortable/impressed if you came with that info already
Post: DSCR loan profitability (buy&hold)
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
- Austin, TX
- Posts 4,576
- Votes 4,423
Hmm - sounds like your lender may have dropped the ball on the term sheet and failure to discuss some other options such as reduced points or interest-only
Post: DSCR loan profitability (buy&hold)
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
- Austin, TX
- Posts 4,576
- Votes 4,423
Quote from @Charles Granja:
Hello everyone,
I reached out to 4-5 lenders regarding DSCR loans and found it difficult to make a deal work, even in areas meeting 1% rule.
Here’s a recent scenario:
Purchase price: 244k duplex, good condition
25% down 63.5k
Current rents: 2200, cannot raise
Rate: 7.25%
Mortgage- 1570
Lender fees- 7500$ Origination/underwriting
5 year prepayment penalty
This didn’t include discount points. I found a lender who would do 6.5% interest with 40% down, but it would come at a cost of 3 points so I ended up walking away.
It seems that DSCR lending is better for situations where you can significantly improve the property or where you don't mind paying 10k more for a loan + 15-20% increase in mortgage costs each month.
For those that use DSCR loans how have you made it work? Do you balance cash/conventional properties with DSCR so that you are at least cash flow neutral? Are we just at a state in the market where it is difficult for deals to work? Do you use a different form of lending?
Where are you getting the monthly mortgage amount (are you including tax and insurance escrow)?
From my numbers I'm seeing on a 30-year fixed:
$183,000 Loan Amount / 7.25% Interest Rate / 30-year fixed fully am = $1,248 per month
Also, if you choose an IO option (for DSCR thats first 10-years interest only)
$183,000 Loan Amount / 7.25% Interest Rate / 30-year fixed, 10yr IO = $1,105 per month
TBH - this seems like a pretty good deal, maybe you haven't found the right DSCR lender?
Post: capital reserve requirements for underwriting
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
- Austin, TX
- Posts 4,576
- Votes 4,423
Quote from @Reginald Silva:
Does anyone know how much money an underwriter looks for in reserves when underwriting a loan? I am closing on a $650,000 home in 25 days. My all-in cost is $19,500 which I have currently and I am considering taking a home loan on my 401K for reserves. Does anyone have experience in this regard?
For DSCR loans we require 6 months of PITIA for reserves for loans up to $1M, 9 months of PITIA for loans greater than $1M
Post: Strategy to Go from 2 to 4 unit
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
- Austin, TX
- Posts 4,576
- Votes 4,423
I echo what @Leslie Anne Morris said, its going to be hard to find a lender that would be comfortable w/o the full down payment and reserves, especially in this uncertain environment. Have you considered going in with a partner and taking financing through an LLC (50/50 partners or even 3 or 4 partners)? This might be the best way forward for you if you are anxious to expand but don't have all the capital by yourself
Post: Best Bank for a New LLC
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
- Austin, TX
- Posts 4,576
- Votes 4,423
Have you considered non-bank lenders? There are a lot of current options outside of banks that serve real estate investors very well, specifically non-bank "non-QM' private lenders. Typically will have a bit higher rates than traditional banks, but a much easier time qualifying and a friendlier borrower experience
Post: Cash Out Refi on a Flip
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
- Austin, TX
- Posts 4,576
- Votes 4,423
This is definitely possible with a lot of private lenders. Can you confirm this is a pure investment property that is leased out (and not your personal residence?)
Post: Is this Hard Money Lender a scam or not?
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
- Austin, TX
- Posts 4,576
- Votes 4,423
Quote from @Bryan Normal:
First time vetting hard money lenders for a flip I have under contract but not closed yet. One potential lender has attractive terms (8%, 2 points, 100% financed, no prepay penalty), but on the phone he has very spotty English so it's hard to talk to him, and his contract seems suspicious in areas too. However, he does appear to be registered with the State of Ohio as a business entity, and also "Licensed by the OHIO Bureau of Real Estate (BRE) (#01925898)", which I could not find this organization via Google (I am in Michigan). In his loan terms sheet, he is asking for about $1400 Loan Origination Fee, and my bank account # and routing # to deposit into. His address for his company is just a UPS Store mailbox, and the phone number is just his cell.
Does anyone know of ways to sure-fire guarantee he's not trying to rip me off, short of just not using him? His website seems mostly legit (The Private Funding LLC) and his loan application does too. I can also offer the loan application he sent over, if that helps. Thanks for any insight anyone might offer, I'll probably run it by a lawyer tomorrow.
Good stuff here already but yeah, rule of thumb "if it seems too good to be true / terms and rates much better than competitors" its likely a scam. Theres too many hard money lenders out there and too big an industry for some lenders to offer much better rates than others and have a successful business (w/o it being a scam)
Post: Question about DSCR
#3 Private Lending & Conventional Mortgage Advice ContributorPosted - Lender
- Austin, TX
- Posts 4,576
- Votes 4,423
Quote from @Stephanie P.:
Quote from @Julian S.:
Hi everyone,
I am a house flipper hoping to segue into rental properties in the near future in hopes of earning cash flow. I have short term goals of house hacking a fourplex, and long term goals of owning larger apartment buildings.
My question is regarding debt service coverage ratio (DSCR). From what I've been reading about the types of loans I will be pursuing for multi family buildings, I should be looking for listings where the DSCR is 1.2 or greater. Am I missing something or are properties yielding such a ratio basically non-existent? Are such deals only attainable if you can rustle up a seller on your own and persuade them to sell at a discount?
Would the correct course of action be to purchase a value add property using a bridge loan, rehab, raise rents, and then find a proper loan with better terms?
I should mention that I have a nest egg of about 1.5m at my disposal. Does having a decent net worth afford me any flexibility from prospective lenders?
Thank you for any insight.
Some lenders will allow you to go down to a .8%, but why would you?
I remain in the camp that there are solid justifications for going under 1.00x, including:
-In-place rents lag market rent (most lenders will use the lower of in place and market, so the property will cash flow when the lease rolls but is underwritten at sub 1)
-Going to be used as a short term rental (lender will underwrite as a LTR or give a haircut to STR projections, but you are confident in actuality your STR systems will get it to cash flow)
-Just slightly under 1.00x, but you have a big portfolio of cash-flowing assets, and the tax benefits of the loss in the first year or two of one will be substantial
-you really believe in the market, lots of markets like Austin have made a lot of people very very rich the last few years who bought non-cash flowing investment properties