All Forum Posts by: Stephanie P.
Stephanie P. has started 186 posts and replied 4622 times.
Post: DSCR Loan for non-owner occupied 7 acre multi-family STR opp
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
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- Votes 2,759
Quote from @Alex Lanctot:
That's exactly why we are looking to see of anyone has any creative ideas.
Oh. Sorry.
Seller financing or a LOCAL bank is the ticket on this type of property. Conventional financing and the myriad other types of loan products out there will not work.
Post: DSCR loan as a first time home buyer
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
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Quote from @Chabelin R.:
Hi everyone, would you recommend a DSCR loan for a first time home buyer who's newly self-employed? If not, is there perhaps a better option?
Great way to go for an investor property in your situation.
Post: DSCR expert lenders , 2 lease contracts in a SFH ?
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
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Quote from @Rosie Small:
Hi NICK
in this house both tenants will have the same address just A and B at the end of the address , this house has to entrances, 4 bedrooms 3 bathrooms, plenty of parking . house it self will rent for $ 3,000 , but its harder to find the tenant for a large house, if I rent both sides it will a minimum of $ 3200, but it is a lot easier to rent 2 unites at $ 1600. Thank you Nick, as you see some other mortgage brokers said no to 2 lease contracts, that's why is so confusing
There's confusion because you're missing the underlying issue; zoning. Absolutely, lenders will take both leases If it's zoned for 2 units. Before you purchase the property, check the zoning. If you buy it and try to get permits to do the work and make it into a 2 unit and then it's not zoned for it, you'll have to get a variance and they're not always given. If you go ahead and do the work anyway without permits because you want the rents, when you go to get a loan, the appraisal will say "non-conforming" in the zoning section. That's a dead loan whether it's conforming or DSCR. If it's non-conforming to zoning, then you'll have to get a 100% rebuild letter and if you the variance wasn't given in the first place, they probably won't give you a rebuild letter. On top of that, if you went ahead and did the work without a permit, a building inspector could come to your home and make you tear out all the renovations you did. @Robin Simon is right.
Post: DSCR Loan for non-owner occupied 7 acre multi-family STR opp
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
- Votes 2,759
Quote from @Alex Lanctot:
We are looking at a property that we do not intend to occupy that sits on just over 7 acres and has 2 homes. We would like to use the buildings as STRs. We are running into issues with finding a lender because it is over 5 acres and not owner-occupied.
Does anyone have any leads on financing products that would provide exceptions and not need 25% - 30% down??
We have good credit and STR rental history. We are also partnering with our friends who have good credit and MORE positive STR history.
The property is in a HUB zone, but I'm not sure how to take advantage of that angle. Maybe I need a different forum post for that question.
Thanks fellow realestators for any help or info!!
You down payment requirement kills the loan, not to mention the difficulty finding comps for properties that have 2 houses on it with similar acreage.
Post: DSCR expert lenders , 2 lease contracts in a SFH ?
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
- Votes 2,759
Quote from @Rosie Small:
I'm buying a 2000 sqf SFH, corner lot with 2 entrances , 3 bed 3 bath, I was planning to make a 4th bedroom, and add a second kitchen and rent the 2 unites, my insurance will cover both tenants and the property even is used as a multi family even if it is a SFH. I'm planning to cash out refinance in 3 months with a DSCR LOAN. WOULD THE LENDER TAKE BOTH RENTAL AGREEMENTS in order to cover the debt service?
To answer your question, not likely. If it's a single family, they'll take the rental amount that's on the appraisal. If it's not zoned for 2 units, it would be considered a single unit.
Post: Is it normal for NQM lenders to charge 8% closing costs?
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
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Quote from @Eliott Elias:
It's getting kind of crazy. I was charged $8k on a 112k DSCR refi.
If the broker charges 2 points. That would be $2240. They may charge a processing fee of $450 (that's low, but...). The lender will charge anywhere from $999 and a point to $1995 at par for underwriting depending on the lender. Which lender usually depends on your particular circumstance. Using the more expensive option, you're at $4809 in lender/broker charges. If your taxes are $2500 per year and insurance is $1500, that's another $4000 for escrows before the title company and prepaids, so I can see $8,000 on a $112,000 loan.
On a conventional loan, you may not pay points because they're built into the lender paid comp, but your underwriting fee will be around $1250. Add that to the $4000 in taxes and insurance and then title charges and you may be close to $8000.
Closing costs aren't that much more now than they were 3 years ago; in some cases, they're less.
Post: Is it normal for NQM lenders to charge 8% closing costs?
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
- Posts 4,876
- Votes 2,759
Quote from @Account Closed:
Is it normal for NQM lenders to charge 8% closing costs for purchasing investment residential 2-4 SFHs?
You're obviously conflating 8% in total closing costs including escrows, to 8% that goes directly to the non qm lender. Big difference.
Post: Are We Headed Towards Another Housing Crash?
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
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Quote from @Drew Sygit:
The 2008 husing crash was in part caused by easy mortgage qualifications pushing up housing prices and then ARM rate spikes making payments unaffodable.
That shouldn't be an issue this time around, but...
What about the relatively easy mortgage qualifications for investors?
With zero experience and 20% down and inexperienced investor can get a no income verification loan as long as they have the credit score and the PROJECTED rents meet the DSR.
Many have used these loans to bid up the prices of SFR's in vacation areas, purely based upon projected STR income.
What happens to these STR investors if inflation causes a dip in vacation travel?
Can they get enough rents converting them to LTR to pay their inflated mortgage payments?
The number of people using DSCR for STR's won't move the needle at all when it comes to foreclosures. There just aren't that many of them relative to the rest of the industry.
Post: Where to start with investment loans
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
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Quote from @Frankie Azhocar:
Hi all, looking to get some advice on what type of loan i should be looking for to buy a rental to hold. This will be my first investment property and I just want to get some insight on loans. I know there's DSCRloans and Second home loans, but what would be the best option for a first time out of state investment and where should I start on the finance end? Budget range is $150,000-$250,000. I have the 20-25% down in cash, but not sure where to start on the applying for a loan end. Do I need a pre approval just like I did for my primary? If so, how long are they good for? Any info is much appreciated. Thanks BP people!
The definitions of second home and investment property are really two different things. Once you decide whether the property will be a place where you'll live or just an investment, you'll be able to decide which path to take.
Post: Thoughts on DSCR Loans
#5 Mortgage Brokers & Lenders ContributorPosted - Washington, DC Mortgage Lender/Broker
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Quote from @Elisa Waldman:
Quote from @Jamie Small:
DSCR Loans are a great tool that helps a ton of our clients with their buy and hold investment properties. A few of the highlights would be:
Not needing to use your personal income or tax returns to qualify- just the income of the property. Many lenders will require a 1.25 DSCR to qualify for a DSCR mortgage loan but we can go down to .75 ratio or sometimes even lower. Interest rates are better on DSCR ratios of 1 or above and a DSCR ratio of less than 1 *typically* requires 12 months of reserves.
Interest rates are higher than conventional, but much less than hard money if you plan to keep the investment long term.
There are also interest only, or ARM options that help keep payments low/cashflow higher during a variable market.
Who are some really good DSCR lenders? Are you familiar with any that will do a short term land/build then convert to 30 year fixed?
You really need a DSCR broker rather than a lender. When using a lender, you'd be locked into their specific guidelines and sometimes, that's not the best for you. Having a good broker that can tailor the loan to your specific situation is better because they will weed out the lenders that may not go down to your loan amount or may require seasoning of funds or may not allow short term rentals etc...