All Forum Posts by: Stephanie P.

In the case of smaller properties that have lax or no financials, what approach to lenders take to underwriting/valuation?  Are some types of lenders better for these than others? My gut feeling is that community banks and credit unions might be the ticket for this type of thing.  

Many new and experienced real estate investors will FALL into the pre-payment penalty TRAP and it might really bite them in the A$$ or cost them on future deals.  Going through the last 2008 real estate crash many people went with longer term loans (commercial loans) with pre-payment penalties that were yield maintenance instead of step down pre-pays.  Many of the banks that would do multifamily loans STOPPED lending so many people flocked to Agency debt ( Fannie and Freddie 5 + unit loans).  At the time is seemed like the best thing to do but when the market, banks and financing opened up years later and the real estate market started to recover these borrowers quickly realized the pre-pay they locked into, literally TRAPPED them from selling, cash out refi or just lowering the rate.  This caused stress, headache, lost opportunity to pull cash out and buy another property, lower rate and save $$.

Now here comes 2022, I am seeing a very similar pattern that is starting to arise in the commercial loan market,  BUT what has me really concerned for borrower that locked into a DSCR loans that many borrowers locked into @ 7,8,9% rates with a 5%, 5 Year pre-pay or even a 5,4,3,2,1. I wonder if they really understand what they locked into, did they think long term, do they really know the cost of the pre-pay? What if they have to sell? What if there property is negative cash flow and they do NOT have the opportunity to refinance to lower rate/payment? Lots of borrowers did these DSCR loans on STR, investment properties and etc. Will they feel or experience the TRAP.  Could this cost them opportunity or could they even lose the property?

If you are considering a DSCR loan, DONT just look at the rate, look at the whole picture? Think short term and long term. Taking a higher rate, lower pre-pay could make the most sense and flexibility in the future is the way to go.

Everyone that I knew that locked up Agency debt after the 2008 crash and did NOT remain flexible regretted it 100% and it really hurt their growth and kept them out of the real estate game for a long time.  

Thoughts?

Ive been reading a-lot about lending and how to get approved for the loan you want, I recently came across a section about how creating a LLC will turn residential lenders away from you. I was planning to create a LLC when the time came to buy my first property but now Im having second thoughts. Has anyone out there created a LLC and ran into trouble when it came to lending ?

I own a single family home free and clear, worth about $350k. I also have about $50k for a down payment. My FICO scores are 750+ and I have no debt of any kind. However, my monthly income is less than $2,000. Traditional lenders have told me I'd be lucky to get a $100k mortgage, which might get me a condo, but really I'd like to start with a duplex. I do have a friend, also with 750+ FICO and no debt, who is willing to co-sign. Our combined income would be about $3,500 a month. What are my options by myself, and with the co-signer? Based on my limited knowledge, I'd guess if I wanted to start with a $250k+ duplex I'd need to cross collateralize? Thanks!

I'm looking to buy properties with cash and then get financing to pull my cash back out. I would be purchasing rental properties (duplex's and possibly small apartment units). These properties would not be owner occupant but under LLCS. The banks I talked to so far just don't seem to have the answers for this type of situation. From what I gathered by reading some posts around here is that the method I may be interested in is cash out refinancing. I'm looking to gain some clarity on if this type of financing is eligible for investment/LLC situations as again, I won't be living in these residences. I'm also looking to understand what type of rates are typically available, are they higher than conventional mortgages, are they comparable to a commercial mortgage as if I was to finance a investment property right out of the gate? What are the lengths of term available, is 20 or 30 year an option? I'm eyeing up properties that I should beable to make some repairs and appraise higher than the purchase price and repair costs. I'm not looking to finance beyond the cash I put into it, but an ideal scenario would be to finance out 100% of that money back out or as close to as the deal allows.

It seems you have to wait 6 months in order to cash out refinance, that can work for me but something like 3 months would allow me to move along into other investments quicker. Are there any other drawbacks or things I should be aware of when considering this type of financing?

I also have the cash to purchase 2-3 properties at a time. Would there be any snags trying to close on financing on multiple properties at the same time. I would have to imagine separate LLCs could avoid that if it is even an issue to begin with but definitely something I would like to have certainty on.

Any other input is much appreciated!

Thanks!

Hello,

I have an investment property in cedar park, TX which I bought couple of years back with cash. I would like to pull $100K from the property to address some urgent items. I was told TX doesn't allow HELOC on investment properties. What other options do I have to pull cash out. Pls advise.

Thanks!

I am looking to purchase my first investment property, a quadplex in the North Georgia area. 

For this deal, I am looking for financing assistance (preferable 100% financing). I am having trouble with getting the funds necessary to secure traditional financing. The quadplex is fully occupied and cash flowing with long term leases in place. Rents for each unit are $1200 and can increase. Newer roof, systems, etc. House Hacking is not an option for me as I am married with a family of 5.

I've been a licensed real estate agent for 5 years now and I have experience helping many real estate investors successfully grow their portfolios and protect their assets. I now believe it is time to finally get into my first investment property and begin to grow my own portfolio.

Looking to keep this for years as a long term rental.

I'm willing to give a significant portion of the monthly cash flow back to help make the deal make sense. I'm more interested in getting my foot in the door with an investment property. 

Please reply if you can help me with this situation. 

Hi guys,

I have a house in Florida. Bought it in 2019 for 180K, now its worth 350k (My realtor says 400K but I am trying to be conservative).

It rents for 1.4K...Way under value. 

I have 2 options:

Option 1: increase the rent to the fair market value (probably 2K). The issue is, there is always something breaking, do I want to keep an asset where always something breaking? (May be its just the tenant, not sure. Changed the stove, plumbing issues few times a year. The roof leaked, fixed, but still leaking, so don't think it really got fixed. Struggling to find the roofer who will actually do a good job, the fence fell from the hurricane, leak in the stucco, etc.)

Option 2: sell. 

The problem is what can I buy with 200K in profit? Not much.... In the Midwest only.. Plus, probably will have to do a 1031 exchange so will have to buy 2 properties in the Midwest. If I buy 2 properties, I will be able to get 3K for both  (1.5+1.5K for each ) in rent... 

3 k (option2)  is better than 2K (option 1)

What would you do?

I will be selling a SFH that will net $90k that will roll into a 1031 for a quadplex. The price of the quad is $525k. Is DSCR loan the most favorable product when I have 17% for down payment? Is there another loan product you like for this situation? I am a W2 employee but trying to avoid conventional loan as DTI may be too high (all RE debt).