All Forum Posts by: Sasha Mohammed

im not sure if this is allowed on BP, but maybe look into Bitcoin?

disclaimer: im not recommending you BUY bitcoin, im recommending you LOOK INTO bitcoin for this specific transfer of money between borders. lenders will likely need the funds to be sourced 2 months before useable in a real estate transaction, and i would def. talk to a CPA about tax liability here. but just on a surface-level.... you could in theory buy bitcoin with your colombian pesos, and then sell it for US dollars. 

GL!

first of all, Kudos! you've done a great job setting yourself up to this point! 

a lot of these posts say to wait, but i think as of right now, at 17, i would suggest you start looking for a job in the field. Many realtors or loan officers would want to take on a junior -- someone they can teach and share knowledge with, who don't already have bad habits to unlearn. you might find yourself working for "free" just to gain experience and knowledge in the inner workings of the industry, but if you happen to be fortunate to have a roof over your head, no spouse and kids... this is a period of time you may never get back. its a real opportunity that most people who start later in life can't tap into. check local job postings for anything in the industry that could get you a leg up learning the inner-workings. Processing for a loan officer or broker, Transaction coordinator for a realtor, even something in title or escrow will give you experience looking over other people's transactions and learning alongside other industry pros. 

...and then when it is time to buy, whenever that comes, you'll have a leg up over many others, even some twice or 3x your age. 

Best of luck! 

my assumption is that you are attempting to sell to someone who intends to live in the home. If that's the case, i would suggest you stop with price reductions and begin offering seller credits instead. 

I'll give you an example - a $10k price reduction for a buyer planning to put 20% down will save the buyer $2k in cash. that same $10k as a seller credit saves the buyer $10k in cash (seller credit can be applied to closing costs for example). it's the same net proceeds to the seller, but makes a much bigger move for the buyer. Also, if the buyer wanted, they could apply that seller credit to buy down their interest rate, potentially increasing their purchasing power due to DTI. there are limits to this, and its dependent on the loan the buyer is attempting to take out in order to buy. but you can talk to their agent or loan officer about how to best structure the sale in a mutually beneficial way.

cash-out refi is not a bad way to go, if the property debt covers with a tenant in place. but as @Caroline Gerardo said, this could be a pricey solution if you don't intend to keep the property long-term, as you'd be paying points to obtain the loan, which may have a prepayment penalty. 

just to throw it out there, i do have one lender for properties in CA or TX that is allowing for fantastic interest rates on DSCR with NO prepayment penalties (i think they start in the low 6's)... its a 6 month ARM, so it adjusts pretty aggressively, but something LIKE this could be a good fit as a short term solution until you have better traction selling the property. there are options out there, but its all a trade off. I suggest reaching out to an experienced, investor-focused broker who might be able to guide you into the best loan option for your specific scenario.

Best of luck!

Hi there! Most lenders will have some sort of seasoning period for cash out. Most typical is 6 months before you can go off of appraised value and not purchase price. some lenders will go shorter, if you can document some sort of improvements to the property, but this is not typical. i would say on the refinance, it would likely be necessary to wait at least 6 months in order to tap into that equity, and i would see where the rates are at that time before determining how to proceed forward. at this pace, it could be significantly higher than you're currently paying, chopping your cash-flow to a point you no longer feel comfortable. also, consider if you have a prepayment penalty on this existing loan. 

As for the LLC, i would recommend an LLC, specifically for the protections. i would even go as far as to recommend a special-purpose entity (one for each property independently). But i would recommend you reach out to a tax advisor to see what this would look like on your taxes.

Sometimes, moving title (wether into or out of an LLC, or any other change to vesting) is seen as a "sale", and sometimes will result in a property tax reassessment. i typically recommend if you're going to move title, you do it soon after purchase as to potentially prevent this, or limit the chances of this reassessment.

bridge financing would be the move. you could do something like 20% down, 80% LTV, but the term is short. usually 1 year. the pro to this is it gets your foot in the door, with no prepayment penalty, but con is the loan will balloon after that first year. these are also typically Interest Only payments.

Hard money is also an option, you could get a 3 year term, but Hard Money is very equity-driven, meaning you'd likely have to put at LEAST 35% down to even have a conversation. In most cases, potentially even more. 

Lastly - private money (BP investors who have nowhere to park their cash is a good start).... terms are really whatever you can negotiate. 

Rates can range, and we are in a very volatile rate environment.... if i had to throw out numbers, i'd say expect anywhere from like 8% (bridge) to potentially 14% (hard money)

HI Bob! I suppose what's the goal here? is the intent to pick up the margin between what your bank is charging you vs what the buyers would pay you on the seller financing? or is your intent to sell while deferring capital gains tax? 

The latter is what i see most of, and its not a bad play... but if you don't pass title to the buyers, technically you still own the property (which allows you to defer taxes until its actually "sold") which might make it challenging for the buyer's to eventually refi out of your loan if they are not holding title.

if its the former, i suppose i would consider some time of provision that would guarantee you some level of guaranteed interest for a certain period of time. I would consult with a local attorney about what types of pre-payment penalties (if any) are allowable in your state specifically. this would potentially prevent you from going into this with the expectation of 5 years of payments (for example) only for the buyers to refi next year and you've now sold your property AND get no monthly proceeds from the lending side. 

if your business is paying for the car, it will be reported as such on your tax returns, and you should be able to omit the payment on your DTI. there are specific guidelines to this -- i believe the car payment needs to come out of the business' bank account, no lates in the last 12 months, ... etc. but if you know the rules and play by them, you could potentially omit that car payment from your ratios. talk to your favorite mortgage broker or lender about these specific guidelines so you can make sure your situation fits before you move forward with any of it.

Usually; cars, credit cards, personal loans, etc. are all amortized over a much shorter period of time than a mortgage. meaning paying-off a $20k debt will typically make a bigger impact on your DTI than $20k more down payment (in a positive way).

But this strategy is one i personally like to look at on an individual basis, because lets say you have a $5k debt with a $75 monthly payment, $10k debt with a $200 monthly payment, and a $20k debt with a $250 payment... just going straight to pay off that $20k debt will help, but you'd get more bang for your buck on your DTI paying off the 2 smaller debts instead (savings of $275 monthly with $15k cash in my silly example instead of $250 savings with $20k cash).

i hope this was helpful!

i agree with @Kevin Romines, either private money or even investor-focused institutional lenders will offer you a construction loan. BUT you will have to have some experience in this field these days. usually they will want to see some ground-up construction on your portfolio from the last 3 years, supplemented with maybe some rehabs or long term holds. Depending on experience, they may force you to use a GC, but the funds-control lets them get comfortable with financing more than 100% of the as-is value. 

first of all let me say, there is NO one size fits all when it comes to loan programs. what makes sense for you may not make sense for someone else, so take my opinions here as exactly that - my opinion. 

i am personally not a fan of DPA. reasons being the rates are always higher than traditional counterparts, and they're not usually even gifting you any money. Typically DPA takes the form of a 1st and 2nd combo, sometimes a 1st, 2nd, and 3rd combo where the down payment and closing costs are basically financed. in some cases, that chunk of money is either silently accruing interest without a payment, and under certain circumstances, forgiven if you play your cards right. but it does pose a challenge for refinancing as you are not walking in with equity -- you're starting out a little over-leveraged. 

Generally speaking, you're paying for this feature in the form of higher-than-market interest rates, and interest-accruing balances that are not often paid down. 

with FHA allowing for 3.5% down, conventional allowing for 5% down (and 3% down in some cases as well), the barrier to entry is not massive. if my mother were asking these questions, this is what i would advise her. small down payment, but a significantly better loan IMO.

hope this was helpful! 

My only recommendation is to work with a broker who is familiar with these loan types. i know a lot of loan officers who were primarily A-paper or refi-focused are slowing down business-wise and starting to get into this field to keep their pipelines and bellies full. 

Most of them are newer at it, dont have the experience to guide you on the nuances of the program, nor have more than one or two options for this loan type. A brokerage who focuses on this type of loan, or is primarily investor-driven, would give you better expertise, more lending options, and potentially a much better experience.

Happy to answer any other questions you have regarding DSCR financing :) wishing you luck!