All Forum Posts by: Stephanie P.
Stephanie P. has started 186 posts and replied 4622 times.
Post: Sarasota Area Short Term Rentals
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
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Quote from @Doreen Linder:
Do you have to rent yours out for a week or longer? Yes, there is not even much for sale on Longboat Key. I would not be doing a condo because I would use a DSCR loan.
You can do a DSCR loan on a condo
Post: DTI is too high with 2 mortgages in my name
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
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Quote from @Charles Hathcock:
Hello, We have 2 homes so far, one is rented out and we live in the other. Both are FHA as the bank said it was legal since we lived in the first home for more than a year. My problem is that my credit score has tanked due to my DTI (Debt to Income Ratio). I have 2 vehicles and 2 homes in my name along with other credit cards for rehabs. Can I put one or both of the home loans into an LLC? I just called today and both lenders said that the LLC couldn't assume the loans. There's got to be another way around this, we just don't know of it yet. Any advice is greatly appreciated.
My lenders are Wells Fargo and Safe Credit Union.
Putting your homes/loans into an LLC won't solve your DTI problem. Even with an LLC, your debt is personally guaranteed so it will count against your DTI. Also, with a DSCR loan, your DTI on a conventional loan will be impacted because you have to disclose the debt (again, personal guarantee).
If you purchase with a DSCR loan, your DTI won't preclude you from buying. You'll need, depending on where you buy, at least 15% down.
Post: 4 unit to 5 unit conversion for refinancing - good or bad idea?
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
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Quote from @Frankie Lotrec:
I am looking to get some cash out of an existing 4 unit rental but the residential value for a refi is too low for any significant amount of money. What about adding a 5th unit (very easy to do since we prepped for this when we did the original 4 units) and getting a commercial appraisal for a larger refi? The units have very good cash flow which I can't use when calculating value for the 4 units but would add to the value if it were commercial. Is this a good idea? The main goal is to get cash for another property purchase so things like higher interest rate, shorter loan terms etc... are not as big an issue as they might be otherwise.
The short answer is no.
Financing will much more expensive and difficult to acquire for a 5 unit.
What's the cost to build the 5th unit vs the cash flow differential?
What would the value for a 5 unit be vs a 4 unit?
Have you tried to do a HELOC on the 4 unit? That may solve your goal of getting cash for another property while saving the construction money.
Post: Loan for a 2-family residential property zoned as commercial
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
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Quote from @Bao Da:
I heard from one lender saying that they would not provide loan for a duplex zoned as C-2B. Is that common?
And any reason for that?
Any lender who does not have that restriction?
ALL lenders (conventional, government, DSCR and even hard money) will have restrictions if C-2B doesn't have verbiage in the zoning regulations that allow for 1-2 unit properties or multi family properties. There are no nuances here and commercial zoning doesn't necessarily mean you need a commercial appraisal. If it's a 2 unit, residential property and the proposed use is as a residential property, it needs a residential appraisal with a form 1007 and 216. Also, 2 unit doesn't mean it's "mixed use". Mixed use is a property that has a retail portion and a residential portion and has nothing to do with your specific zoning.
It will take some research on your part, but with a little bit of reading you should be able to get a handle on the path you'll have to take. You have to find the definition of C-2B zoning in your municipality. Then you have to determine if the property conforms to that zoning. If it doesn't, then you have to see if it was built prior to any regulations that are making it not conform to current zoning regulations. You MAY be able to get a "rebuild letter" from the zoning authority that essentially says if the property were destroyed, the owner may rebuild it as is, without conforming to zoning.
If you can't get a rebuild letter, you will not get a loan. If the property is considered non-conforming, you will not get a loan. If you can get a "legal non-conforming" designation, you will. It's just that simple.
Post: Lender Options for Investment
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
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Quote from @Haneesh Lakkamsani:
Hi Guys!
I am in the Chicagoland area and looking for a lender to refinance my home into an investment property. Any suggestions on who I should reach out to to start shopping around for best rates? I have talked with a few and Rocket Mortgage. Any help would be appreciated. Thanks in advance!
Heneesh
Are you trying to pull cash out? That would be the only reason to refinance your property. If you've lived there the requisite time the lender requires, you can just go get another property and leave the inexpensive owner occupied financing in place.
Also, getting a DSCR loan DOES NOT lower your debt to income ratio if that loan has a personal guarantee (and all of them do if the lender is a national, institutional DSCR lender).
Stephanie
Post: 5 year Loan is due
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
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Quote from @John McKee:
It's one of this situations where both parties forgot that the loan was ending so now the bank expects full payment instead of working out a new loan agreement. The bank would like another signed lease (renewal option) before considering but the tenant is dragging their heals.
We do "dark financing". LOL.
Post: Buying a 4-plex with commercial loan and seller carryback complications
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
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Quote from @Brian Ronning:
I have a 4-plex I put out an offer on. Asking $320,000, with a potential $80k Seller carry back. Current rents would cover all expenses plus cap ex, maintenance and vacancy. Rents are low and after talking to a PM they said that property should bring in $900 a month per unit ( in a college town). With the updated rents, which should happen in October this place would cashflow well. The realtor said the seller would entertain a 40k under asking, (its been on the market for over 90 days) with a 80k seller carry back. So I put in an offer with my realtor at those numbers and they got back without any counter offer saying its "too little of a purchase price to do any sort of seller carry back."
The units need some work, but shouldn't be any major gut and remodel. Also the water heaters and the boilers for the units were replaced within the last two years. The current owner has only owned it for 1.5 years approximately.
My question is this: Could I offer again at 20k under asking, maybe with better interest on the seller carry back note, (which was 4% with balloon at 5 yrs) and possibly ask for a interest rate buy down on the commercial loan? Commercial loan is currently at 6.8%. It would work really well at 5.8% if that is an option.
If you're looking for DSCR financing, your rate will be significantly higher, especially with a seller 2nd.
Post: 2 million, starting out
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
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Quote from @William Adamsson:
Hello everyone, I am an aspiring real estate investor and would appreciate some help from you guys.
I am 20 years old and have had a regular upbringing in a normal family, but through e-commerce made over 2 million dollars to my name and am planing to invest in properties. I am planing on using these 2 million as leverage for around 10 million worth of rental properties since I would like a steady monthly income. How much would I be able to make from this properties and were do you guys recommend starting?
William
What suits you best? Once that's defined, then you can figure out your way.
Post: DSCR lender recommendations?
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
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Quote from @Doug Smith:
Quote from @Robin Simon:
Quote from @Doug Smith:
Keep in mind that most lenders that do DSCR deals have to sell them into the same pools, so their terms are going to be somewhat similar. Most of the investors we work with go with a 3-year prepay. UWM is the only lender that allows no prepay that I know of, but that's not a true DSCR and they won't lend to an entity. It's really a conventional loan that's been twisted a bit. Most of the investors we work with opt for 3 year prepays. Most lenders start with a 5-year prepay as their base and then add to the rate for each year you shave off, but almost none go below one year. I've notice a huge jump in rate between 3 years and 2 years, so most opt for 3 because if they are doing a DSCR, they plan on holding the property for a bit, otherwise they would simply do a bridge loan. I don't know of anyone that does seasoning less than 6 months for using the appraised value over the lesser of appraised value or purchase price. Regarding points, the lender has to make money and cover overhead. Otherwise, why would they be taking any risk in being in business. They can bump the rate a bit to shave a point or two, but you'll likely have points. 75% LTV...even 80% and in some instances 85% is doable depending upon several factors...but 75% is pretty common. With regard to rate, most investors we work with opt for a 5/6 ARM, which is fixed for 5 years and then adjusts every 6 months thereafter, but many will take a bump in rate to go interest only during that initial period. Pretty much every lender, other than UWM that is not really a DSCR lender, will require that the loan be in the name of an LLC with the owners of the LLC personally guarantying. That how they get around Dodd Frank and CFPB requirements of proving income on a consumer loan. A loan to an entity like an LLC or S-Corp on an investment property technically makes it commercial, which allows them to avoid personal global cash flows. I hope that helps. It many not be the answer you're looking for, but it's the truth. Good luck and let me know if you have any more questions.
Not accurate - almost all DSCR lenders will have zero prepay options
Perhaps we're working with the wrong funds. We have several and we even do them in house to securitize out, but one thing that perhaps I should correct myself on...some states don't allow a prepay (like AK, IA, KS, MD, MN, MS, NJ, NM, RI & VT), but they are required with most lenders in most states. Others limit prepays. Which good funds that back DSCRs have no-prepay options in all states that won't cost a borrower a kidney? I would love to know so we can sign them up. I would appreciate the education.
Your generalizations are what are getting you. All DSCR lenders offer a no prepay option, but the borrower has to pay for it. Does it cost a kidney? In some instances, yes.
Not all lenders agree regarding the states that do and don't allow prepays. I've done many loans in Maryland where prepay isn't an issue. Same with New Jersey. Many lenders won't lend to an individual in Jersey, but don't consider lending to an entity an issue and allow the prepay. Same with Rhode Island and Kansas.
You brought up UWM a few times and mentioned the products they offer aren't really DSCR loans. You're right.
Just putting a loan into an LLC doesn't necessarily allow for a loan to not be considered a "covered mortgage" and subsequently subject to Dodd Frank and the CFPB. Fannie allows for LLC's. Here's the verbiage from the CFPB that defines a business purpose loan. Essentially a rental property is "business purpose".
https://www.consumerfinance.go...
We offer ARM's and haven't had anyone take them yet. They're either opting for the 40 year amortization or a 10/40 interest only product.
Post: US Commercial Great product mix/Great pricing/Great Service all wrapped up in one
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
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Here's what we have:
Up to 40 year fully amortized loans.
Short term rentals for refinance and purchase
Cash out on DSCR up to 80% loan to value
Purchase and rate/term on DSCR up to 85%
1-8 units on DSCR
DSCR is still hot.
Join the fun
Stephanie