All Forum Posts by: Sasha Mohammed

definitely reach out to an experienced and investor-focused brokerage. there are a bunch of good rehab/ fix and flip lenders out there, not all will be a good fit for you. 

as an example, though, yes -- they will loan you the money to buy the property (lets say up to 90% of the acquisition price) PLUS loan you up-to 100% of the renovation budget. they don't cut you a check for the reno and let you run to vegas, the rehab side is usually in the form of draws. As long as your total loan amount (combined, acquisition plus reno monies) doesnt exceed 70% of the ARV, uuuuuusually you're good to go.

these lenders are often experience driven, so the more flips and rentals under your belt, often the higher your leverages and the lower your rates. 

only way to know for sure is to run the numbers, but i suspect you probably wouldn't be happy with the result if you gave up that sub-3% 1st. 

I would look into a cash-out refi on the STR property. any equity there you could tap into?

if yes, then you could look into either DSCR for a long term 30 year fixed on that guy, likely to 75% LTV... or you could look into a bridge at 80% LTV if you think rates will come down in the next 12 mo's or so. Refi it into something long term then.

food for thought. 

I hear Navy Fed is a great option, if you have access. i think lately they've tightened up on who they work with outside of the Veteran's immediate family. 

do you need an actual HELOC where you can continue to draw funds? or would a closed-ended 2nd suffice?

HELOCs are hard to find these days even on primaries. they're out there, just tougher.

HELOANS, on the other hand, can be lent on primaries, 2nds, investment properties.... AND you have options on qualification methods: it doesnt necessarily have to be full doc.

catch is, you get one draw at closing, and the rest is a repayment period. can't borrow against it again without doing another refinance. 

i think a couple of friends of mine are doing this. they borrowed against their primary, i think as a 2nd TD on top of their low-interest 1st, and are now loaning those funds out as private money funds. personally its beyond my risk appetite, but to each their own. They have been profitable so far. i just dont like risking the roof over my head, but that's a personal decision you'd have to make. i suppose so long as your profits exceed your costs, and you are solid about your vetting process on who you'd lend the funds to, then.... why not?

oh man i disagree with the nay sayers. i put solar on my home, i'm almost 1 year in... and i am STOKED!

I'll add - i'm in SoCal, doing a house hack on an SFR. Utilities are all included in a flat-rate monthly rent for these guys. Pre-Solar, I was averaging about $200/mo for 4 adults during the year anyway, BUT the summer months with A/C i was getting bills upwards of $600 - $800/ mo with conservative A/C useage... usually siting between 74 and 76 degrees on auto and switching to windows when it was cooler outside at night.

Solar cost was about $23k, financed for 15 years at a 6.5% rate. no monies down.

SoCal Edison charges me about $12/ mo for connectivity charges, my monthly bill on the panels is about $200 (same as i was paying before, but minus the giant summer a/c bills)

As of now (10 months into my true-up period), i have about an $830 credit with Edison. Since July we have had the a/c running on auto between 74 and 72 degrees ALL DAY AND ALL NIGHT. 

July was a credit of about $30, August will be a bill of about $50... which will eat into the credit i'm owed (oohhh noooo lol). I suspect Sept will likely be about the same. 

i will say from a mortgage broker perspective - purchase is better than lease on your financing ability and ability to sell your property. it is a UCC, which is not a lien, but does require a temporary termination in order to refinance, which does come with an added cost, likely about $300 or so. and if i sell i will have to pay off the remaining balance of these guys for the prospective buyer.... but im totally fine with that. 

All in all, solar was a great move. So far seems to be saving me approximately $2k a year.

@Kris Kempe, may I ask - why private lenders? 

Now a days, there are plenty of institutional investors who have stepped in to fill the creative-financing gaps left by fannie/ freddie. 

Curious if there was a specific reason you were looking for private lending?

Anyway, an experienced mortgage broker (one that specializes in investor-specific lending) could be a good fit too help you find institutional investors and private money options alike. 

Best of luck!

we deal with this from time to time, its a non-issue for most lenders who are familiar and comfortable with closing in an LLC (you wont catch fannie or freddie doing this, though).

The borrower is the LLC which the holds title to the property.

Guarantor is a little more tricky, this depends on the guidelines of the lender. Some will want to see ALL owners of the LLC (in this case the LLC is owed by another LLC, so who owns the "LLC Y" in your analogy?) as guarantors, other lenders will want to see anyone with 20% or more, some give you an option....etc.

the problem arrises if you your LLC Y is now split ownership between other LLC's... i think the term is "equity groups". Say, LLC A and LLC B formed a partnership to create LLC Y.... LLC Y owns LLC X, and LLC X owns the property... then who do you make the guarantor? :) I have had something similar to this once, years ago, but we essentially just had to get a corporate resolution signed by all members of all LLCs to confirm they were okay with our borrower encumbering this property/ moving forward with the transaction. a few signatures, and no biggie!

this is really good advice! You'll feel a lot more confident talking to clients if you have a good understanding of the process from start to finish. 

also, be a master at your craft. sounds like you're already finding ways to emerse yourself in the industry. there are a lot of "professionals" who know nothing and talk as if they do. dont be one of those guys :) check your ego at the door, and understand this industry is always evolving. you will continue to learn 10 years in, 20 years in, 50 years in. 

DRE route opens more options. you could find you hate lending, and prefer to go into the real estate side. as a broker you also have more lending options than you would if you went retail/ direct lending. Our pricing is almost always better as well. 

Best of luck to you! This industry is both extremely challenging and very rewarding.

this is a toughie. truth be told, there are lenders out there that will do an individual DSCR loan w/ a $55k minimum. Problem is, the fees are going to be SO EXCESSIVE... it may not even be worth it for you to press forward.

i would recommend the conventional route if that's an option.