All Forum Posts by: Stephanie P.

If you created/rehabbed an additional $90K in equity I'd be flipping this property. Even after taxes and listing expenses you'll clear $70K between the two of you. Like Doug said you won't find a lender offering 90 LTV, and rates went up. Sell it and invest in the next deal (with LESS LEVERAGE). Maybe the next opportunity panes out as a STR, LTR, or other strategy. The property you own with the partner and numbers provided tell me to sell. As a SFH investor I want flexible cash-flow or multiple exits.

THat's just my 2 cents. 

BP Community,

In this blog post, I'd like to discuss my situation as a self-employed individual seeking financing for a new construction project on a triplex in Charleston, SC. Despite having a credit score over 700, local banks require a consistent income of $10,000 per month for the past two years, which doesn't align with my variable income as a business owner. However, I've come across the concept of DSCR (Debt Service Coverage Ratio) loans, which could potentially provide an alternative solution for financing new construction projects.

To provide a full picture, here are some additional details: I already own the lot for the new construction, which has a balance of $25,000 and an estimated value of around $175,000. Each unit in the triplex, once completed, is projected to rent for $2,500 per month, totaling $7,500 in monthly rental income. The completed triplex is expected to appraise for approximately $800,000.

Given these circumstances, I'm seeking advice and insights from fellow investors who have utilized DSCR loans specifically for new construction projects. Are there specific lenders or loan programs that are more accommodating to self-employed individuals with variable income, even with a credit score above 700, for new construction endeavors? What steps should I take to improve my chances of securing financing for this new construction triplex, considering my ownership of the lot and the projected rental income? Additionally, are there any potential downsides or considerations I should be aware of when opting for a DSCR loan for new construction in the Charleston, SC area?

I greatly appreciate your expertise and insights! Your experiences and guidance will be instrumental in helping me navigate this financing challenge and move forward with my real estate investment goals related to new construction.

Thank you in advance for your valuable input!

Hey everyone,

I'm pursuing a whole deal for this portfolio of two properties (9 unit apartment / quadplex) and having trouble finding financing options and was hoping for some advice.

I am new to real estate investing and finally closed on my first property two weeks ago, a duplex in Milwaukee, and now have this Indiana wholesale deal that I'm very interested in but can't seem to find a way to finance the deal.  

I've called local banks and commercial lenders and they all have said no for a mixture of reasons but the highlights are:

* I'm an out of state investor (based in CA that will use local property management)

* The deal is less than $1M ($400k to be exact)

* I'm not a seasoned investor (yet)

I'm in a position that I can purchase the unit with cash, borrow against stocks as a bridge loan but want to refinance shortly thereafter. The units are stabilized with good cash flow and fully leased so no immediate rehab but there will be some down the road. The units cash flow pretty well with my conservative underwriting with a 1.35 DSCR and 11% cap rate

So any guidance would be helpful.

My strategy is to invest in multifamily for cash flow and long term hold so these affordable 5-12 unit apartments are enticing seems that finding financing is a struggle?

Hello, I'm doing my first DSCR cash out refinance on my short term rental in Indiana. It's currently owned under an LLC. I'm working with a broker right now and just received the initial disclosures. This is where I'm not sure if this is normal. On the initial disclosures it has only my personal name on as the borrower as well as my personal debt listed. They also asked for my personal home mortgage statement. Nowhere on it does it list my LLC as the borrower. It only has my name. I asked the broker about this and he said this is normal and they'll fix it at closing but I didn't feel comfortable signing the disclosures yet unless I knew we were closing in the LLC. I've only used hard money so far with my LLC's and they've never asked for my personal stuff other than to run my credit so I'm just unsure if this is normal or not. Any guidance is much appreciated!

-Grace

HI BP, 

I'm under contract (along w/ two partners) on a legal 2-unit (ran as an attorney's office) that is next door to a construction site in the Bronx. I want to understand the various financing options we have at our disposal.

Are there any lenders in the market that finance small multifamily properties in the Bronx?

Sorry Steph, Kindness begets kindness, sarcasm begets sarcasm.   Enjoy!   -B

Thank you Doug for your kind and helpful reply, unlike Stephanie Sarcasm and other naysayers.   I must not be completely insane, because I currently have have a 30 year, Prime +0 deal with minimal conditions (so far) on the table, so there’s that, mockers.  And I will be splitting the 10% down payment with the seller 50/50 (5 year note at 7%), so I do have a bit of skin in the deal, which is good.  I guess the big question I have is regarding the deposits (liabilities).   Initially the seller didn’t want to include the deposits for unexecuted weddings in the deal, but I want the $500k in cash at closing for working capital/reserves/investment.   Some are saying I should just ask the seller to lower the price $500k and get a line of credit for $500k (which the lender has offered) in lieu of the $500k at closing.   Any thoughts as to what is best?    Thank you!       -Brad.  

I've been a banker/lender for 32 years, so I understand your request. That's got SBA written all over it. Most of the time in BP people say "I want to get an SBA loan for my rental home". That's not what the SBA is for. That being said, the SBA is all about making loans to operating entities. It's not my field of expertise, but the SBA is your best option. P+0% based on the narrative you lay out on the deal, unfortunately, is likely not going to happen. 

Here's my biggest concern for you. The seller is pumping in your cash injection, not you. That's going to be the downfall of your deal. Lenders are going to want to see skin in the game from you. Lenders aren't stupid. When a seller pumps in money, they are saying "I know the property is only worth $900K, but I'm going to charge the buyer $1M and give them $100K in "closing credits" to get them financed. The default rate for those that don't put in a reasonable cash injection from their own funds (not borrowed or provided as a seller concession) is exponentially higher. If I were person underwriting the deal, I wouldn't do it without a reasonable cash injection directly from you in funds that I can "source", meaning I have a paper trail of where the money is coming from. 

I know it's not the answer you want to hear, but it's the true answer from someone that has been in both bank and non-bank lending for 32 years and has a formal commercial credit background. I wish you well in the endeavor and I really hope you can find a way to put it together. 

   Who's offering 30 yr fixed 20% down financing with no reserves on a duplex in this market?

@Stephanie P.

How many 75% LTV DSCR loans have you closed in 2023?

What’s your current rate? 7.5%?

Just asking. 

I doubt many deals pencil at 7.5%. Maybe 60% LTV at best.

What are you actually seeing in today’s market?

From what