All Forum Posts by: Stephanie P.

Quote from @Mikhael Brown:

Has anyone successfully refinanced MTR property after 6 months - 1 year after placing it on the market? 

Not sure I understand what you call "medium term" rental. Is it by the quarter? Do you have one person responsible for the lease and they rent by the room? You've owned it for more than a year, so seasoning isn't an issue as others have said, but you have to make sure the DSCR number works. PM for more details.

Quote from @Joseph Taylor:

Hey everyone.  I’m looking at purchasing my first property.  I may have to purchase this with hard money.  

It will be a single family home or a 4 or less unit property. The hard money lender is requiring me to start a LLC in order to obtain the funds.

What is the best LLC to start for this purpose?

Thanks in advance!

Joseph

 

 Time to read and then talk to a CPA about structure.

There are some states that are more favorable than others when it comes to LLC's, but you have to determine whether it makes sense to go through the trouble of having a foreign entity when it comes to expense and hassle.

Stephanie

Quote from @Brian Ellis:

Do they allow market/future rents to calculate? Or do they use current rents?

What ive been able to gather is that they will allow future rents if the place is vacant, and current rents if they are occupied.

Finally found an off-market deal and running into financing issues. I either need to bring the loan down by a bigger down payment which I dont have, or ask for seller financing. But I believe the bank may have an issue with seller carrying a second note in the form of a down payment?

Any help or suggestions would be appreciated.

You have a couple of options, but you definitely need a broker that can deliver on each of them.  They don't all go for the same lender, so the rates and fees will vary.
If you need a lender that will allow a seller 2nd, that money is out there up to 90% combined loan to value.  The lender will allow the seller to hold the difference between 75% (their max loan to value) and 90% (the max allowed cltv or combined loan to value).
If you need a lender that will lend on projected gross revenue based on Air DnA information (purchase only), that money is out there as well, but that lender won't allow a 2nd mortgage to be held by the seller.
Stephanie

Quote from @Kelly Diaz:

Hi there! I'm looking to invest in some multi-family units near Gainesville and wondering if there are any areas anyone on here would recommend looking at. Goal is to BRRRR a few multi-unit properties. Any advice on location, agents or other resources welcome!

Thanks BP friends :)

Kelly

Welcome to Biggerpockets

@Stacey Spencer (welcome to you too Stacey) made a good point that needs repeating.  Investing in a multi family in an area where people compete for rentals is always a good idea.  College towns like Gainesville will give you strong returns.  Make sure you have a strong team in place; property manager, lender/broker, realtor and insurance because managing properties from 300 miles away can be a challenge.

All the best

Stephanie

Quote from @Carlos Ptriawan:

Quote from @Jim Duncan:

Hi Andrew,

Lots of good advice in this thread, and most of it is spot on.

I would suggest one of your primary concerns should be how well your communication with the person goes... do they seem to be upfront and realistic about what they can offer, as well as get specific answers back to you quickly, or do you feel like they aren't connecting with your concerns, and/or are not confident in what they can offer?

Because of the complexity and length of time progressing a mortgage from application to funding, it's essentially like you are in a short-term partnership with whomever your loan officer is, so the ability to communicate well with you is of great importance. Picking someone who is easy to communicate with and knows their stuff will save you many potential headaches if challenges arise during the deal.

Additionally, in answer to the earlier answer someone gave you who said "don't believe someone who says they have over 200 lenders," well, as someone who has around 200 lending partners they work with, I'd have to say this is a bit silly :). It absolutely is an advantage the more ability you have to shop your deal efficiently and without cost through as many potential lenders as possible. Different lenders offer terms all across the country for different types of deals they prefer... that's the free market. And I can't speak to anyone else's process, but I often spend hours checking through our wholesale lender network to truly find the most competitive terms for each client, rather than just sending deals to the same one or two again and again. I'm not even sure why a loan officer would do that and potentially lose a deal to better terms elsewhere, unless they were just lazy? 

That said, I wouldn't even just speak with one well-connected broker or correspondent lender at first, but suggest it is to your benefit to check with at least three or four people when shopping for a mortgage partner. There is no harm, as long as they are not trying to force you to put in a full application and pull credit, before giving you at least a rough idea of what they can do. See what terms they offer (and definitely make sure to ask about points and/or fees for the rate they say they can give), and then also weigh in your ability to communicate and how knowledgeable the person seems about the necessary steps to get the deal done for you.

The reality is that most mortgages do have challenges that arise during the process, so you really want to be selecting the combination of best offered terms, and the confidence you have in the individual to get the deal done on time.

Hi Jim, I understand the importance of mortgage broker in CRE activity; but in residential, it's way more straightforward, we have to connect to at least 10-20 different lenders, but my question would be, what broker A and broker B can do for residential, when the lender availability is in the front of our eyes, anyway ?

 It's all about the overlays.  Some large banks like Bank of America and Wells (and others) have overlays meaning they have extra underwriting guidelines because they think Fannie/Freddie guidelines will contribute to their default ratio.  By adding months to cash out requirements or seasoning requirements or any number of other things, they make it more difficult to obtain a loan.  Brokers can navigate the overlays for you and save you time and expense.

Quote from @E Challenger Sr.:

Quote from @Stephanie P.:

Quote from @E Challenger Sr.:

175000 owed, ARV 280k.... renters are in place paying 2k on a 48 month lease. Looking for lenders not brokers for a Cash out refi with the least amount out of pocket. Thank you in advance.

@robin simon is right; seasoning is going to determine where this loan goes and how much it will cost.  Whether you use a broker or a lender,  you will pay about the same amount.

If you owe 175K and the property is worth 280K, then your max loan amount will be 210K. That leaves you with 35K minus closing costs. You'll probably take home 25K after escrows, prepaids and other closing costs. At max leverage, your principal and interest payment will be 1596 (210K at 8.375% interest). Depending on your monthly taxes and insurance, you'll be tight at 1.0 DSCR.

 So this is where I want to be can you steer me in the right direction.

 PM Sent

@Chris Kendrick

There are 40 year, fully amortized, options out there that allow for decent cash flow because of the length of the amortization and they rival 40 year interest only loans.

Quote from @Rick Dreyer:

For those of you following the BRRR method, or buy borrow die, etc, could you share how you have been able to get multiple refinances, or mortgages on your properties?

We would like to hold onto as many properties as possible, and just refinance them to pull out our equity as possible. However, we're worried that lenders will look at our portfolio and see all of the debt we have, without seeing the income

For our market, the rents really only cover the mortgage, but appreciation is one of the highest in the country

You should be able to get a DSCR to work around 75% loan to value. While conventional has the best rates and terms, a DSCR loan will work to scale if you have cash for the down payment, reserves and closing costs.

Yes, the rates and fees are higher than conventional, but if the numbers work and conventional isn't an option because of your debt ratio, these are the next best option.

Quote from @E Challenger Sr.:

175000 owed, ARV 280k.... renters are in place paying 2k on a 48 month lease. Looking for lenders not brokers for a Cash out refi with the least amount out of pocket. Thank you in advance.

@robin simon is right; seasoning is going to determine where this loan goes and how much it will cost.  Whether you use a broker or a lender,  you will pay about the same amount.

If you owe 175K and the property is worth 280K, then your max loan amount will be 210K. That leaves you with 35K minus closing costs. You'll probably take home 25K after escrows, prepaids and other closing costs. At max leverage, your principal and interest payment will be 1596 (210K at 8.375% interest). Depending on your monthly taxes and insurance, you'll be tight at 1.0 DSCR.

Quote from @Chris Kendrick:

Would doing an interest only mortgage be the cheapest for lowest monthly payments, i want to get the most cash flow as possible,  is the interest rate on that higher or maybe doing like a 5 percent 5/1 arm be better or lower payment,  what eveyone thinks

 Interest only loans can lower the monthly payment and increase cash flow, but there are caveats.  The interest rate is generally a little higher than a 30 year fixed, but because there is no principal paid, the payment is a little lower.  

A 5/1 ARM is a better option in my opinion. You get a 30 year amortization and it will adjust after 5 years. Usually the caps will protect you from too much fluctuation in payment.

In your scenario, the max cap is probably 7% above the start rate. Usually ARM's have 3 caps; initial adjustment, regular adjustment and max adjustment. For example if a 5/1 ARM starts at 5% it will have a max initial adjustment (let's say 2%) and a yearly adjustment of maximum 2% and then a max adjustment of say 6%. In 5 years, it will go to a max of 7% and change yearly with the potential to go up 2% per year until it gets to 12%. If it's a 5/5 ARM, then the adjustment period is every 5 years and the same adjustment principal as above applies.

Hope that helps

Stephanie