All Forum Posts by: Sanat Bhandari

@Jose Ortega Look into either local community banks/credit unions that you have a good relationship with. They might be willing to amend some internal underwriting guidelines to help you out

Alternatively, look at potentially partnering up with another investor/money partner to take down the next deal. Partnerships have many benefits and being well-capitalized is the name of the game 

@Scott Simpson I second Chris' response. Their cost basis has to be exceeded (or they have to have proceeds) for them to pay capital gains from the sale

@Scott Simpson This is a textbook example for him financing the deal for you. Ask what he's looking to get out of such a financing arrangement and make sure you incorporate those with rock solid legal documents included to have it be a win-win for everyone

If your concern is tying up rehab budget, communicate this with him to come up with as little down as possible. Since this is a private party financing arrangement, the terms are what you guys settle upon

Potentially consider partnering up with an investor who has done seller or non-traditional financing since they could be an invaluable asset to your team

@Dean Diamant You're looking at a foreign national DSCR loan in your situation. Most private investors limit the leverage to 65% on such loans due to high flight risk of default since you're not a US person

Cheapest way is potentially going through a local bank/credit union that won't dock any points for you not being a US person. They may be comfortable with higher leverage since it's in their backyard, so to say

However, the best way might be to partner up with a US-based investor. They would have the credentials to be able to warrant higher leverage and more favorable terms 

@Joseph Bernal HELOCs are primarily I/O (interest only) and unless you're looking to run extensive scenarios, it's a fairly simple math calculation:

E.g Amount drawn on HELOC = $10,000

Interest on HELOC = 8%

Annual interest paid = $800

Monthly HELOC payment = $800/12 = $66.67/mo

@Isua Mbang I haven't used this product but it comes and goes under different monikers, velocity banking/all in one loan/accelerated primary residence payoff etc 

It could potentially work but keep in mind that most people don't have stable enough finances to make this work. Additionally, you have to be disciplined to spend less than you save and keep in mind that you're paying I/O on the principal balance v/s chunking down principal, albeit minimal in the initial years, which goes against the Dodd-Frank rule for qualified mortgages for homeowners

@Deepak Pakala If the buyer doesn't make the payment, the seller has the option to foreclose on the buyer and claim the property back. Seller is essentially the lender so they make the rules on getting paid back 

Seller's bank technically doesn't need to know but the buyer better be a solid, well-capitalized investor to take on a risk like that

Banks are more concerned with getting paid back than who pays back, realistically speaking. Commercial notes, some fannie/freddie notes are assumable so always check that option before subto'ing a seller's notes

Risks are much higher for the buyer than the seller in an owner finance transaction since a savvy seller could potentially make predatory terms. For a subto, the seller is at a high risk since their credit is on the line while the buyer is at a risk since a subto transaction should be legalese heavy to make sure everyone is protected in event of default

@La'Terrius Campbell As the other poster mentioned, local investors would be the best bet for being a transactional lender 

Some medium size lenders might be willing to do it but it would be highly dependent on your relationship with the lender. Feel free to DM me for some resources on the same

@La'Terrius Campbell In such a deal structure, the seller would most likely ask to be paid in 12/24/36 months so you'll have to schedule a refinance to pay him off from the increase in equity

The kickback would be reflected in the lowered purchase price regardless of how you structure the refinance/balloon payment

@Nick Snider A couple options here: 

- 10% down on second/vacation house

- JV with another investor who brings in the funds while you bring the deal/operations etc

- HELOC/LOCs to fund the remainder of the downpayment

As for wording up the negotiations or contracts, talk to local investors who have dealt with the mechanics of such a transaction, whether that be subto or seller financing, since local folks can give you the best advice regarding this