All Forum Posts by: Stephanie P.

US Commercial is the BEST DSCR broker to help with competitive pricing and quick closes for DSCR loans and BRRRRs!

Why US Commercial?  Here are just a few reasons.

-40 year amortization available for better cash flow

-Down to 3 months seasoning to use the appraised value in many cases

-We can use the Air DNA data on purchases for short term properties

-Up to 80% cash out with just 6 months seasoning on title.

-You don't have to wonder when someone is going to reply to a voice mail, text or email.  We return calls, texts and emails same day, every day without exception.

www.uscommercial.us to get a prequal, preapproval or just apply.

202-491-6461  

 Is construction finished yet?  If there's any way you can move in and refinance it as an owner occupied condo, that may work.  Is there anything you can sell to get the cash?

What's the condo worth now if you have to sell?  Will they take it back or give an extension?

Welcome to BP.

Lots to unpack here.

If you're looking for the best rate and can qualify, a LOCAL bank's commercial division would be your best place to go.  

If you don't qualify, then a DSCR lender would be great. Plenty of good ones here on BP. DSCR qualifies on the property and the guarantor's credit, no income verification, tax returns or paystubs to qualify.

One key to your purchase is finding comparables.  Are there any other similarly situated properties in close proximity to the subject?

Don't buy a SFR or even a 2-10 unit without a personal guarantee. The cost is prohibitive. If the wife wants to take a more conservative approach, indulge her without stopping your momentum. ALWAYS remember, you two are the real partners, not the business partner. Compromise. Change up your strategy to keep yourself in the game and use less personal capital. If you find a great deal, do a fix and flip or two or three until you have the money to pay for properties with cash. Once you have the cash, see if it makes sense to spend it or not. She may change her tune once there's a ton of cash in the bank.

This business is a marathon, not a sprint.  The wife is smart.  

Here are the numbers.

Right now, the LTV on a 4,000,000 purchase would cap out at 70% giving you a loan amount of 2,800,000 and the rate would be 7.875 (today) with a couple points. That's 1.2M out of pocket for down payment and then 60K or so in closing costs. Your monthly payment would be 20,301 without escrows. Those are today's numbers. I'd originate that if you've got the cash and credit. Not sure if I'd personally like that kind of debt, but I'd originate it all day long as long as Air DNA numbers supported it. Not sure if that answers your "shooting too far for the moon" question, but...

All the best

Stephanie

In the DSCR world, credit is one of the few things that matter. Guarantor's credit determines A. Whether they're in the game, B. Whether the deal makes sense because credit determines rate and C. Whether anyone will lend them money.

In my opinion (and I've done loans down to 600 before) if you don't have a 700 credit score, you have no business investing in real estate.  If you don't have a 700 credit score,  you should fix your credit issues before you potentially compound any problems you had.  The money is more expensive below 700.  The loan to values are generally worse below 700 and because of the last two, the cash flow is going to be worse.

 Thanks for the kind words.

You could be right and oversimplifying and of course focusing on math. I would agree that selling your property and then buying a bunch of properties in a new area is not simple nor is it easy. That's why I allowed for a property management company and lopped 20% off of the gross revenue right off the bat and I wasn't expecting her to buy with all cash. She should leverage the cash. I explained that her leveraged position is 75% so she only has to come up with the closing costs and 25% down. If she uses a DSCR loan, no income is required and credit can go down to a 650 middle score. Not sure how bad her credit is, but 650 isn't always pretty.

Regarding the neighborhood, there are some pretty nice 4 unit properties in Pittsburgh and other mid markets that would do just fine at that price point.  Those were the areas and rent targets that I was referencing.  

 If you took the 500K and bought (5) 4 unit buildings in a market like Pittsburgh, you'd be making well above the 2800 per month.

If you bought 1 300K property at close to max leverage of say 75% loan to value, that's a loan amount of 225000.  Principal and interest at 8% is 1651, so you're all in at 2K per month in payments.  If you make 900 per unit, that's 3600 in income and 1600 in revenue.  Now instead of 1 property, buy 5 because that's how far your 500K will go considering reserves and you're grossing 8K per month.  Take out 20% for management and whatever costs and you're netting 6400 per month.

 If you can make that much money vs the monthly cash flow, I'd personally sell and then buy in a less expensive market.  It's really just a math problem if you boil it down.  It'll take 176 months to make the money you'll make and be able to reinvest.  That's over 14 years.  If it was close, I'd say hold, but that's a pretty big margin.

 You are so right.  House hacking is the best and cheapest way to go.