All Forum Posts by: Timothy Hero

"they have plenty of time" would piss me off, lol. When I start a file for my clients, if an appraiser hasn't reached out within 3 days of them paying the invoice, I start making calls, lol.

Quote from @Patrick Roberts:

This is the trap of low ARV properties that I was discussing in a different forum the other day. Financing is difficult to find when the loan amount is under $100k. There are some DSCR lenders who will fund loan amounts of $75k, but you'll likely need ARVs around $100k to make those work. If youre trying to get a portfolio (blanket) loan on these, that will likely be even harder.

What youre currently being offered are true commercial loans - they rarely have tenors longer than 5-7 years. Might be as good as it gets. Maybe some other lenders familiar with the Michigan area have some other ideas. 

Another thing to check into early on is title insurance - many title companies wont issue policies for properties that are obtained via tax foreclosure. Id ask about this up front before you pay for appraisals and everything else to find out a week before closing that they cant lend because of title issues. 

Nailed it. Harsh reality is, no money is made on loans under $100k in the real estate lending space, let alone properties with an ARV of $100k.

The numbers may pencil out for you, as the investor, but from a lending perspective, it takes the same time, effort, and cost to underwrite a $60k loan as it does a $600k loan. Difference is the profit is 10x more for the lender if they focus on the $600k.

Quote from @Sandra McEwan:

Quote from @Timothy Hero:

I'm a DSCR broker, so of course I'm biased, but the DSCR space has come a long way. Sure, some lenders are incredibly high on rates, but overall, rates aren't much higher for an investment property than going conventional.

I've quoted investors 20 bps higher than conventional and they end up going with me, simply because the loan is low doc, not reported on credit, and they can close in an entity.

It's a case-by-case thing, of course.

But they aren't looked down upon. Some of my highest net worth clients only do DSCR.

Expect terms to change with 5+ units compared to the 1-4 unit loans.

Hey Timothy, How do you the terms change with DSCR loans with 5+ units?

Hey Sandra,

LTV is usually reduced by 5% on purchases, so max of 75%. Some lenders still offer 30-year fixed for 5+ unit deals.

Well hello there, Facebook friend.

Most DSCR/hard money lenders that provide commercial loans won't lend for a construction project if you already own the land. They typically want the land included in the deal.

People will always need a place to live. People won't always use crypto. Hell, it's 15 years old and less than 1% of transactions are with it.

Every time a crypto fanatic attacks me for my views on it, I ask the same question each time and they can't answer it: aside from the day trading aspect, when do you use crypto? Did you make your car payment with it? Do you buy gas with it?

It's been 15 years and less than 1% of business world wide accept it as a form of payment. It's a complete guessing game of an "investment".

Newbies dive at these deals from time-to-time. Higher risk due to unit count and higher dollar size, but if you underwriter properly, you can absolutely do it.

I have lenders that'll allow you to add someone for credit benefit. The loan won't be reported on credit and it's a soft credit pull.

Definitely horrible fees, but here's the reality: of all the lenders I broker DSCR with, none will go under a loan amount of $75k.

From a business perspective, there's no money made on those loans. It takes the same time to underwrite and work the file, but won't yield anywhere near the profit for them of a $300k loan. So they need to charge the points up front.

What's wild to me is to pay 4% origination and still be at a 7.6% rate, lol.

Biggest difference between conventional and DSCR:

Conventional is going to win on prepay. DSCR will allow no prepay, but the rate goes up a decent amount.