All Forum Posts by: Timothy Hero
Timothy Hero has started 25 posts and replied 983 times.
Post: Hard Money Lending or cash-out refinance on investment property
- Lender
- United States
- Posts 1,024
- Votes 494
Folks get caught up on losing their interest rate. Oftentimes, it's a bragging right (ego feeding) to say you have such a low rate. I don't know the numbers on your property, so I'll create a hypothetical:
Assume your principal and interest on a $300k loan is $1,263.
You're sitting on the potential to get $155k (tax free, btw), but the rate will be 7.5%, taking you're principal and interest to $2,100.
Yes, it's $900/month more, but you have $155k of tax free money in the bank. Even if you did a horrible, barely cash flowing property with the $155k, it'll still net the difference + some.
Don't get caught up on the "I don't want to lose my rate". Because eventually the market will turn around and you'll lose the equity, which is worth way more than the rate and again, is tax free.
Post: What to do with $1,000,000.00?
- Lender
- United States
- Posts 1,024
- Votes 494
Quote from @Kevin S.:
Quote from @Timothy Hero:
Quote from @Kevin S.:
Quote from @Timothy Hero:
depends on the life you plan to live in retirement. In my opinion, buying homes all cash with no intentions of refinancing them isn't the way to go. You have dead equity that you never plan to ever tap into, which is arguably one of the best advantages of real estate.
Assuming you have $1M and are nearing retirement, I'd keep $250k in the bank and put $750k down on rentals with 80% financing. This depends on how connected you are for investment opportunities , of course.
The mortgages offer tax advantages and allow you to leverage your capital. Pay a management company to avoid having to come out of retirement.
There's no right or wrong. It's what works for you.
Pretty good input and I voted for it. I see you are a mortgage broker not a lender. What is your take on choosing between a mortgage broker vs lender? I am told broker can shop for better rates, has more choices(of lenders) and use one credit hard check vs more than one credit pull if shopping between 2 or 3 lenders. Thanks.
Being a broker, I may sound biased, but here's the reality: when you call a lender, they are going to sell you that they are the best option, because nobody is going to sell you on using their competitor.
But as a broker, there's no reason to be biased. If i quote you with 8 different lenders, I get paid the same amount regardless, so there's no reason for me to play a favorite.
To add, if you're working with an experienced broker, he or she will know the smoothest lender to work with.
Thank you. What about credit check? Do broker need credit pulled multiple times when shopping with multiple lenders?
Typically don't need a credit check for a quote, and if you use the same lender, credit is typically good for 120 days.
Post: WTF is wrong with investors these days?
- Lender
- United States
- Posts 1,024
- Votes 494
Quote from @Jay Hinrichs:
Quote from @Timothy Hero:
Quote from @Jay Hinrichs:
Quote from @Timothy Hero:
My favorite is when investors reach out to me, a DSCR mortgage broker, want me to find them the best financing, and then say "but I want to save on closing costs, so I'd rather not pay a broker fee".
Those are my favorites lol
well come on they know your getting a service release premium and back end commission so of course they want a free ride. Or Brokers that just jack up the rate and charge no points and get the rate rebate. :)
I don't think you understand the brokering side with DSCR loans, lol. Lenders don't pay us anything. They stopped paying brokers for bringing them business when Covid happened. Since then, we get paid what we charge the borrower.
got it just like us HM guys.. good to know..
Post: WTF is wrong with investors these days?
- Lender
- United States
- Posts 1,024
- Votes 494
Quote from @Jay Hinrichs:
Quote from @Timothy Hero:
My favorite is when investors reach out to me, a DSCR mortgage broker, want me to find them the best financing, and then say "but I want to save on closing costs, so I'd rather not pay a broker fee".
Those are my favorites lol
well come on they know your getting a service release premium and back end commission so of course they want a free ride. Or Brokers that just jack up the rate and charge no points and get the rate rebate. :)
I don't think you understand the brokering side with DSCR loans, lol. Lenders don't pay us anything. They stopped paying brokers for bringing them business when Covid happened. Since then, we get paid what we charge the borrower.
Post: What to do with $1,000,000.00?
- Lender
- United States
- Posts 1,024
- Votes 494
Quote from @Kevin S.:
Quote from @Timothy Hero:
depends on the life you plan to live in retirement. In my opinion, buying homes all cash with no intentions of refinancing them isn't the way to go. You have dead equity that you never plan to ever tap into, which is arguably one of the best advantages of real estate.
Assuming you have $1M and are nearing retirement, I'd keep $250k in the bank and put $750k down on rentals with 80% financing. This depends on how connected you are for investment opportunities , of course.
The mortgages offer tax advantages and allow you to leverage your capital. Pay a management company to avoid having to come out of retirement.
There's no right or wrong. It's what works for you.
Pretty good input and I voted for it. I see you are a mortgage broker not a lender. What is your take on choosing between a mortgage broker vs lender? I am told broker can shop for better rates, has more choices(of lenders) and use one credit hard check vs more than one credit pull if shopping between 2 or 3 lenders. Thanks.
Being a broker, I may sound biased, but here's the reality: when you call a lender, they are going to sell you that they are the best option, because nobody is going to sell you on using their competitor.
But as a broker, there's no reason to be biased. If i quote you with 8 different lenders, I get paid the same amount regardless, so there's no reason for me to play a favorite.
To add, if you're working with an experienced broker, he or she will know the smoothest lender to work with.
Post: WTF is wrong with investors these days?
- Lender
- United States
- Posts 1,024
- Votes 494
Quote from @Jay Hinrichs:
Quote from @Timothy Hero:
My favorite is when investors reach out to me, a DSCR mortgage broker, want me to find them the best financing, and then say "but I want to save on closing costs, so I'd rather not pay a broker fee".
Those are my favorites lol
Mr. Hero can I ask a quick question off topic about how your appraisal process works.
Back in the day when we did all the BRRRR upfront loans.. my borrowers would get a pre approval of course so I knew they had an exit form my high cost loan. Then the lender would appraise the property for ARV in its current condition .. When rehab was done they would do a 442. and boom docs to escrow within a few days of the 442.. Kind of like my buyers of my new builds do they will do the appraisal a few weeks before CO then when we send the CO its clear to close and we don't start the appraisal process after the Co and have to wait.. this will save your borrowers time and money if this can all be done upfront as the appraisal time lines can drag things. ?? Is bizz done this way on DSCR loans or No. ?
Can depend on the lender and loan type. For DSCR lenders, pre-approvals require a credit pull and the assumption of the property appraising for near what the borrower states.
The idea is to collect all the docs before appraisal comes back, because once it comes back if all docs are collected, it's straight to final UW review. If it clears UW, then give title 48 hours and you close.
Post: Is 7.5% too high for investment property if I have great W2 and excellent credit scor
- Lender
- United States
- Posts 1,024
- Votes 494
I've quoted a few DSCR loans at that rate, so if you're talking conventional, yes.
DSCR loans are low doc, close in an entity so you're more protected, and aren't reported on credit. No point in dealing with the conventional headaches for the same rate.
Post: Asking price for a property I own
- Lender
- United States
- Posts 1,024
- Votes 494
Seattle region is the prettiest place in the U.S. I've ever been, so if the property offers mountain views, I'll pay 3x the ask, lol.
Post: Red Vs. Blue States real estate investing
- Lender
- United States
- Posts 1,024
- Votes 494
I try to keep political stuff away from business and investing, but I guess ultimately it cannot be ignored, as it does play a part.
One thing Covid showed us was as a real estate investor, blue states are often more tenant friendly and allow many months and in some cases years of tenants not having to pay rent if a case is currently open.
I'm not an attorney, so I only know what I've been told with no first hand experiences on the matter. But I'll say this: of all my high net worth clients, I only have one investing in a blue state.
Post: Should I create an LLC before I buy my first property?
- Lender
- United States
- Posts 1,024
- Votes 494
I'm not an attorney, so take my advice with a grain of salt: a broker who works with investors of all walks of life, big and small, I've noticed most form an LLC once they have two properties or more.
Many will form one if they just have one, but if you're talking about house hacking, keep in mind, conventional lenders don't allow entity closings and they are the only lenders that'll allow you to live on the property.
DSCR/hard money lenders allow you to close in an entity, but you can't live on the property.