All Forum Posts by: Stephanie P.
Stephanie P. has started 186 posts and replied 4622 times.
Post: DSCR Lender Suggestions?
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
- Votes 2,759
Quote from @Robert Rutledge:
I've been in touch with a lender for a DSCR cash out throughout the rehab process on a purchase through an LLC.
We are now ready to move forward, but the terms have now changed.
Before proceeding, I wanted to check in on here and see if there's any suggestions of lenders people have had a good experience with.
Details:
- MFH
- Memphis, TN
- DSCR ~1.5
- Est. Appraised Value = $180k
Being offered 70% LTV cash out at 7.5% and 2% origination for 30 year fixed, with a 5yr. prepayment penalty structure.
We have not completed one of these loans yet, so trying to learn as much as I can - any help/insight is greatly appreciated!
Post: DSCR LOANS. Where to get approved?
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
- Votes 2,759
Quote from @Jonathon Morris:
Quote from @Stephanie P.:
Quote from @Nolan Dalton:
I want to get approved for a DSCR loan. I have walked through a few properties that I know would cash flow. Where can I find a lender? I talked with a manager at my local KeyBank and she told me "There is no such thing as a DSCR loan. That acronym is used as a ratio to determine if a loan would cash flow to qualify."
This would be my 4th property. I am 26 years old and I work in the trades. I am open to all options of lending.
Congratulations on your success. At 26, having 4 properties and looking for more is quite the story.
KeyBank man should be ashamed of himself.
I'd disagree with some of the assumptions in this thread.
Rate locks don't need to be for more than 30 days. 45 days can cost you a quarter point depending on the lender and it's really not necessary.
Always remember that origination points and discount points are two distinctly different things.
For us, some origination fees can be just 2 points and some are just 3 points. It depends on what you qualify for and what lender works best for your situation.
Here's an example. One of our lenders charges no points, but they charge a $1995 underwriting fee and a $600 closing charge. Another lender charges 1 point and $999 to underwrite. Either way, US Commercial is going to charge 2 points and a $450 processing fee. Both lenders will go to 75% cash out. Lender 1's rate is 9.49% on a 30 year fixed and Lender 2's rate is 7.5% on a 30 year fixed and both have a 5 year declining prepay. Loan amount is 200K. The borrower is a long term hold borrower. Using just those variations of closing costs, Lender 1's closing costs would be (not counting our 2 points) $2595. Lender 2 would be $2999. But oh no, you paid a point!! The monthly payment for Lender 1 would be $1680 and the monthly principal and interest payment for Lender 2 would be $1398. Same 200K loan.
Why would we send you to Lender 1 vs. Lender 2? Lender 1 doesn't require reserves. They don't care where the money for closing comes from and they don't need to season the funds. They just care that you have it and they really don't care if your property has a 1.0 DSCR or not. They want to make sure you have the credit and not much else. Lender 2 requires 6 months reserves. they want the borrower to document any large deposits and they want mortgage statements on any investment properties listed on the 1003.
The point is different lenders do different things and it's important to not generalize as a broker, but interview the borrower, find their pain points and marry them with a lender that will minimize those pain points for a successful close.
Thankyou for your incite and case study. It answered questions I had and opened up a few more to ponder on.
My pleasure. Any additional questions, feel free to PM me.
Stephanie
Post: BRRRR with CASH?
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
- Votes 2,759
Quote from @Nicholas L.:
good thing to point out. but i've gotten conventional offers from normal regional banks for appraised ARV after 6 months seasoning, not 12. and DSCR after 3.
Freddie Mac just increased their cash out seasoning requirement to 12. Fannie Mae is expected to follow suit. In my post, I wrote that they should "be able to use the new appraised value after 3 months" if they went with a DSCR loan.
I've gotten cash out refinances done at 6 months in the past as well, but I guess that ship has sailed. I don't think regional banks are going to originate loans they can't sell unless they're looking to increase the number of loans they're holding on their books.
Post: BRRRR with CASH?
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
- Votes 2,759
Quote from @Philip Sriployrung:
@Stephanie P.
But if he buys in cash, there is not title seasoning period.
That's not entirely correct. There's no seasoning period if he wants to use the purchase price as a basis for the new loan, but if he wants to use the appraised value, there is a seasoning period of up to 12 months depending on the lender.
Post: BRRRR with CASH?
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
- Votes 2,759
Post: BRRRR with CASH?
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
- Votes 2,759
Quote from @Robert Sadler:
Quickquestion...
Looking at my First BRRRR deal. I have enough to buy the house with cash and do the renovations. Once I have completed the renovations and have it rented, I can then refinance the house (to my understanding). My question is would this be a regular 30 yr loan or would this be another type of loan since I paid cash for everything? It will be in my LLC but it seems like I will be financing what I already own. Thanks
Something no one has mentioned is title seasoning.
Conventional loans have a 12 month waiting period before you can use the new appraised value to refinance meaning you're going to be capped at the purchase price minus 25%.
If you go with a DSCR loan, you'll be able to use the new appraised value after 3 months. The rates are higher, but not having to wait is a big deal.
Stephanie
Post: Looking for advice on my next move (buying rentals in other markets?)
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
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Quote from @Tim Callahan:
Hey everyone,
So far, we have completed 3 rehab projects in the past 2 years locally in Southern Maine, and I find myself being burnt out because my partner and I have done a lot of the work ourselves to save money. I don't want to do that anymore, and I am looking to do more in terms of buying and holding assets, rather than just rehabbing and flipping. Right now, my wife and I are debt free except a small medical debt that we are working on paying off. And we have about $110k in equity in our 3 unit that we live in. The tenants pay our mortgage, but we still pay for heating, plowing, maintenance etc.
I really love the idea of finding another market, somewhere south, where we could pick up some rentals or BRRRR, and make it cashflow. Even just buying a SFH and making it work would be huge for our confidence in doing this. I used to own rentals here in Maine 20 years ago, and I invested in western PA about 11 years ago, bought like 4 cheapie rehab houses at once, and failed because I couldn't spend the time to go there every month to check up on things. I basically wasn't ready to invest out of state yet. I sold them off and had a bad taste in my mouth from the experience. Now I'm super cautious, not like the old days. But I love the idea of buying rentals in cash flowing markets, and the south looks very warm to this Mainer (GA, FL, AL).
Just looking for any ideas on how to get started, what a good strategy would be, etc. HELOC on our home? Hard/private money, then refi into a regular loan on the rental? I've worked on my personal credit a lot after a foreclosure in 2010 and a bankruptcy in 2017 (very bad time in my life), now my score is 700+.
Thanks!
Sounds like you're ready to get back into the game.
My advice; mid markets close to you like Providence, west as far as Kansas City and maybe even Pittsburgh. In all of those markets you can find multi family properties that cash flow well. Hard to find down south.
I'd agree that hard money and then refinance into a long term lending vehicle would make sense. You'll need about 20% down and once the acquisition is complete and the property is stabilized, you should be able to refinance. Keep it below 70-75% of the ARV and you'll be fine.
Post: US Commercial highlights the Loan Product of the Week
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
- Votes 2,759
Short term loan product designed for rehab of 5+ unit commercial apartment buildings.
80% loan to cost
Max loan to value for ARV is 70%
Rates between 9 and 11, interest only
3 points total.
Minimum loan amount 100K
Just found an 11 unit building that needs the renovation completed. It's been owned by the current owner for almost 3 years while they've done their renovation. It's got 9 of the units rented and the other 2 are uninhabitable. No mortgage on the property currently and the goal for the borrower is to get cash out to do it again. No problem. Valued at 300K. Max ltv is 70% or 210K. 9.5% with 3 points on a 24 month interest only. Borrower has a 730 middle score.
Call the office to go over your scenario to see if you qualify
Stephanie
202-491-6461
Post: How are people financing their first real estate deal?
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
- Votes 2,759
Quote from @Jason Voskuhl:
Hello everyone my name is Jason Voskuhl, I am currently being pre approved for a loan. I have a pretty solid lender that is working pretty close with me to finance my first home. I ideally would like to do a brrr on my first personal property, and be able to buy a distressed property so that I can create equity to do more deals in the future. Right now my lender is leaning more towards FHA loan but my question is since FHA is a lot more stricter about the conditions of the home would there be any complications trying to use FHA for distressed properties. Curious to hear what you guys did for your first deal or maybe what you wish you did. Thank you a ton in advance!
House hacking is the best way to get started. Go with FHA to get multi family properties if you can and let the lender pay for the renovations using FHA's 203K program. From there, you can use conventional financing.
All the best
Stephanie
Post: How are people financing their first real estate deal?
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
- Votes 2,759
Quote from @Jason Voskuhl:
Hello everyone my name is Jason Voskuhl, I am currently being pre approved for a loan. I have a pretty solid lender that is working pretty close with me to finance my first home. I ideally would like to do a brrr on my first personal property, and be able to buy a distressed property so that I can create equity to do more deals in the future. Right now my lender is leaning more towards FHA loan but my question is since FHA is a lot more stricter about the conditions of the home would there be any complications trying to use FHA for distressed properties. Curious to hear what you guys did for your first deal or maybe what you wish you did. Thank you a ton in advance!
Jason
You're on the right track to getting your real estate journey started. FHA is the perfect vehicle for first time homebuyers. Another way would be the Fannie Mae or Freddie Mac equivalent that only require 3% down. These are all owner occupied loan products. If you're looking for something distressed, go all the way and look for multi family properties and go with FHA's 203K. That way the renovations will be paid for by the lender. You're in the beginning stages of "house hacking" and it's the best way to grow a portfolio.
DSCR loans should not be in your lexicon until you've exhausted your conventional and government loan products first.