All Forum Posts by: Travis Kay

@Travis Kay

I ran into this same issue. I'm up to 10 SFH now and all of them are commercial loans between two local banks. They're portfolio loans. Interest rates are 1% over prime. 15 year amortization. A couple of them

are 5/1 ARM. I signed as guarantor, but none of them show up on my credit report. They are however used in my global DSCR, all of my property NOI/ debt service. The minimum for both is 1.25 global and on the deal. As long as the bank will use pro forma along with tax returns, global debt service coverage is a non issue. Just make sure you're claiming rent income on your taxes and not filing a lot of maintenance that will bring your AGI down.

Multi family is lower cash flow per unit but you can get a lot more units at once than single family. I can buy a 20 unit MF for 2 million but can’t buy 20 SF separately for 2 million in a short amount of time. The banks have told me they can only pro forma so much before it’s too risky for them. They want copies of leases and track my income. I believe this is the real reason so many investors move into multi family. Scaling in single family is a lot more paperwork and aggravation.

 Look up local neighborhood banks by you and call and ask if they portfolio their own loans. Make a list and call.

@Travis Kay you should talk to some smaller local lenders. Ask for their commercial loan officer. If the business (in this case property) is making money then they won’t have a problem lending on the asset. However, they will want to know about you and some of them may hesitate if you have no landlord experience. But if you can prove you are a capable person (good job, education, or other business) and you have a good personal credit history then you should be able to find a loan.

Two things to note, this will be a commercial loan, so it may only have a 20-25 year amortization period and potentially adjustable rate every few years.

The other thing is that they will probably want a personal guarantee. This does not necessarily mean it will show up on your personal credit report though, but you can ask at the bank just to be sure.

@Travis Kay - What you're looking for doesn't exist.  Are there lenders that will not bother with your credit and just lend on the asset?  Yes, but they are very much in the minority of lenders and they would fall into the category of "very hard" money.  You'd be lucky to get a rate as low as 12%. Since you want a lender that does this with decent rates...I refer you back to my first sentence.

Many lenders will require you to close in a corporate entity, but they will still pull your credit and price accordingly.  You will also need to guarantee the loan.  Even non-recourse loans require someone to sign and take responsibility for the "bad actor" carve outs that will surely be in the mortgage.  This gives recourse to the lender if they find out later the borrower committed fraud or had some criminal past they didn't disclose.

If you have good credit, then there are plenty of options for lenders that don't use DTI to qualify you and the deal.

A good broker helps.

@Travis Kay I'll send you a dm. We provide DSCR loans. The dscr looks like it will be strong just based on ARV and rent. Property will need to be in a business.

Hi Travis.

You would have a couple options here speaking as someone that does residential lending.

If you business generates income then you could look to take out a commercial loan on the property and work with it that way. Usually this will require your business to have 2yrs history complete with tax returns, Profit and Loss etc.

Otherwise, i do know of lenders that will utilized cash flow and statements without a personal guarantee however you are looking at significantly higher interest rates which would adversely affect your cashflow since they operate outside of QM guidelines.

Lastly, you might want to consider crowdsourcing this deal as well since current interest rates are in the 6s and you might be able to offer a similiar return to retail investors/crowdfunders.

With your score as high as it is, why not secure the property in your name and then refinance it into your business's name once you have the income and credit established?

I used Global Integrity Finance, they are a true hard money lender that will do a 30 year fixed. It will all be based on the asset income and done through the LLC name. They even made underwriting expectations for my property in Columbus, it was 3 units but only zoned as a duplex. The down side is the rate is slightly higher.