All Forum Posts by: Ryan Stuckey

As long as the cash flow is sufficient to service the loan (hence DSCR), you can expect a 65-75% LTV loan amount depending on your credit score

Hi Brian, are you a broker or just posting affiliate links?

I recommend to take a look at Rehab Valuator software, very good for managing project expenses and draw requests on rehab projects.

As a first-time investor/rehabber, with your hopefully very accurate rehab and ARV numbers indicating a sufficiently profitable project, you should potentially qualify for 75-80% financing on purchase (i.e. 20-25% down payment) and 100% financing on the rehab cost (funded to a reserve account and available in periodic post-expenditure draws).

Sounds like you have a pretty profitable project and enough liquidity as described above. As it appears you are under contract but not yet closed, you just need to find a short-term purchase and rehab loan from a reputable hard money lender. They will assess the project details in depth and let you know if it can be funded and how much. You should compare 2-3 options to get a range of terms.

What kind of loan are you planning to get to cover 70% of purchase under your current financing plan? You should get a short-term purchase and rehab loan, then post-rehab sell it or (cash-out) refinance to a long-term rental loan per your preference.

Take a look at REI Blackbook and/or Rehab Valuator software to manage your rehab project.

Hi Michelle,

Welcome to USA investing. We just closed one today for a true foreign national (not permanent resident) and we are in Ohio. You would be looking at 60-65% LTV on purchase via an Ohio based LLC entity with you as a personal guarantor.

Hi Brian, are you a broker or just posting affiliate links like this?

"The formula being: Profit = ARV - Purchase Price - Rehab Cost"

Please don't forget to include the very important TRANSACTION COSTS into your calculation or your "profitable deals" will be anything but. These are composed of BUYING, HOLDING, and SELLING costs and can eat up most or all profit on tighter deals.

Have you used any of the deal analysis tools or programs out there? These normally include calculations for transaction costs.

Quote from @Murray Reginald:

Quote from @Ryan Stuckey:

Simple way to look at it: Is it rent-ready (i.e. no rehab needed to get to market rates)?

Yes - pursue a long-term rental loan (generally either conventional with all the hoops to jump through, or non-bank DSCR loan with a bit higher rate but a much easier process (qualify on the property, not your income...and close in a business entity to scale better)

No - pursue a short-term hard money loan (expensive but can be worth it if you plan and execute well) to buy the property and obtain rehab funds in one go, execute the rehab over a few months, then either: 1) flip/sell or 2) hold/refinance to the lower-rate long-term loan mentioned above. This refinance could potentially involve cash out if you've added enough value (i.e. the purchase price was very good) and seasoning requirements are met.

 Hi Ryan,

My plan is to look for distressed properties that need rehabbing however, if I found a good deal on a rent ready property I would not be opposed to it. It seems like a DSCR loan probably is my best option because I don't have the capital to use to purchase a property. Do you know if DSCR do loans on rehab properties?

Hey Murray, you will certainly need capital to close any loan, especially a DSCR which is 20% minimum DP these days. The least DP options are on short-term rehab loans, possibly 5-15% DP but you almost certainly need prior rehab experience (as owner) and good credit to reach those levels. Also, closing costs of 3-5% are added to any loan and are usually paid out of pocket by the borrower at closing (i.e. further capital required).

DSCR loans are only for rent-ready properties. It depends on the rental income to drive the loan terms.

Simple way to look at it: Is it rent-ready (i.e. no rehab needed to get to market rates)?

Yes - pursue a long-term rental loan (generally either conventional with all the hoops to jump through, or non-bank DSCR loan with a bit higher rate but a much easier process (qualify on the property, not your income...and close in a business entity to scale better)

No - pursue a short-term hard money loan (expensive but can be worth it if you plan and execute well) to buy the property and obtain rehab funds in one go, execute the rehab over a few months, then either: 1) flip/sell or 2) hold/refinance to the lower-rate long-term loan mentioned above. This refinance could potentially involve cash out if you've added enough value (i.e. the purchase price was very good) and seasoning requirements are met.