All Forum Posts by: Ryan O'Mara

@Laleh Omaraie - I wouldn't worry about building credit scores for your LLC. At least not for qualifying for a dscr loan as those lenders look at your personal credit, not the entity. Furthermore, there are dscr lenders that allow you to close in your personal name, so an entity is not always needed. You'll have more lending options using an entity. And some states require closing in an entity for business/commercial loans.

Commercial/business loans are for non-owner occupied investment properties.  This can include 1-4 unit residential properties and anything 5+MF and pure commercial.  Short term resort condos would fall under this category.  

@Calvin Quallis - If you need financing for the initial purchase and rehab (not using your own cash) then a short term hard money rehab/bridge loan is what you'll need.  A long term dscr rental loan won't work.  The lender won't do that type of loan on a property you plan to rehab.  You do the rehab first, then do a long term take out loan once the rehab is done and you have cashflow (or soon will).  You need a good broker to find loan programs for you.

@Timothy Smith - You just need to create the new LLC and have an operating agreement that clearly lists you and this partner as owners and the % of ownership you each hold. Then when you refinance the property, you do it under the new LLC and the property gets titled in that new entity.

The refi process will require an appraisal which will give you the evaluation you need to then figure out between your partner what, if any cash, you need to put into the partnership.  Even without the appraisal, you should be able to get a good idea of what the market value is and work off that.  

@Danielle Du Plooy - there are many factors that contribute to a lender's rate besides FICO.  But even for dscr lenders, that rate is a bit high.  If you're bankable and can provide tax returns, you can find much better options.  But I would need to see more details on the deal to give anything more specific.

@Eugene DuShawn Smith - a 5yr seasoning requirement is ridiculous.  12 months is the most I see.  Many lenders only require 6 months and I work with some that have no seasoning. 

Plus these seasoning requirements are typically only relevant for investors that have done some sort of value add (rehab) to the property since they purchased it and are now wanting to refi based on the improved value.  Even in those situations almost any lender will lend immediately on a LTC (loan to cost).  Meaning they will take what you paid for it + any money you put into it and lend a % of that.  

There are many options for you.

@Dave Aheimer - For a 75%LTV; 30yrfxd; with a 712 FICO, those rates are in range of what I am currently seeing.

If you're willing/able to provide tax returns and have your income considered, you could find better rates with a commercial loan through a bank.  

You can also buy the rate down with more points up front.  

@Zachary Carver - There are many DSCR rental lenders. They almost all have min dscr requirements. Many want to see 1.2 or higher. Some go lower like 1.1 or even 1.0. And there are some that have loan options with no dscr analysis. Pricing goes up as you go lower or drop the requirement all together.

But not all dscr lenders will do blanket loans for multiple properties.  That's a whole other factor.  Those that do all have different requirements: min value per property, min loan amount, location, dscr per property, currently leased or vacant, etc...

Without seeing the specifics of the deal and all the properties detailed out, I can't tell you much more than that.  But I'd be happy to take a look if you want.

@Frederic Babeux - You could possible get an SBA loan if its owner occupied. 80-90%LTV could be possible in that scenario. But if you're not a US citizen, then it gets a bit complicated. You'd need a partner that is to guarantee the loan.

@Travis Kay - if you have good credit and liquidity (and experience helps) and a property that's generating good income, then financing isn't difficult.  But the investors doing dozens of deals that you refer to are using lenders that use their personal credit history for qualifying and require personal guarantees on the loans.  

@Travis Kay - What you're looking for doesn't exist.  Are there lenders that will not bother with your credit and just lend on the asset?  Yes, but they are very much in the minority of lenders and they would fall into the category of "very hard" money.  You'd be lucky to get a rate as low as 12%. Since you want a lender that does this with decent rates...I refer you back to my first sentence.

Many lenders will require you to close in a corporate entity, but they will still pull your credit and price accordingly.  You will also need to guarantee the loan.  Even non-recourse loans require someone to sign and take responsibility for the "bad actor" carve outs that will surely be in the mortgage.  This gives recourse to the lender if they find out later the borrower committed fraud or had some criminal past they didn't disclose.

If you have good credit, then there are plenty of options for lenders that don't use DTI to qualify you and the deal.

A good broker helps.