All Forum Posts by: Willie James
Willie James has started 0 posts and replied 78 times.
Post: New investors in multi-family
- Posts 82
- Votes 42
Pretty, there are two ways to finance the acquisition of real estate with money other than your own. Debt and equity. If you cannot or do not want to borrow, you have to split profits with someone with money. In order to do that you have to find good deals. If you focus on getting good at that, the money will come, "A good deal attracts money".
Post: Canadian investing in US real estate
- Posts 82
- Votes 42
Originally posted by @Cody Shearer:
@Caroline Gerardo appreciate your reply. You are a hard money lender then? Or what do you mean by a debt service ratio loan. I know what a DSCR is, but you just have to have a good ratio along with a good credit score to qualify? Is it a hard money loan? What are percents typically? Any info is appreciated
A DSCR loan is a kind of hard money loan, a loan where the asset drives the rates and terms. Debt service ratio typically has to be at least 1.1. Current rates start at a little under 4%, and I've seen as high as 7-8%. Lowest DSCR I've seen is 1.10. Anything from 5-30 year terms , ARMs, interest only are available in the market.
Post: Scaling with high DTI (STR)
- Posts 82
- Votes 42
James I am not too knowledgeable about the conventional side, but if you are going to Look into a DSCR lender (aka hard money, asset based, portfolio loan, commercial loan), I haven't seen any that will do less that 25% down as a minimum down payment. Just keep in mind that's the going rate. Did you only put 10-15% down on the property you own now?
Best way to go might be to find a different bank. A local credit union or small local bank might be able to lend you the amount you need with a 10-15% down payment, and not be bound by agency DTI rules.
Post: Hard money lender wanting an upfront payment
- Posts 82
- Votes 42
Good for you to at least ask. Some people just pay and get scammed. If you know zero about hard money or working with asset based lenders, do a little research here on BP. It will be well worth your effort!
Originally posted by @Michael Plante:
If you fix and rent do you have a good enough credit score and income to get a mortgage to pay off the hard money loan?
That's a good point Michael. But more important than credit score even (which from what I've seen can go as low as 620 for a commercial loan) is cashflow. If the property cashflows after all expense and debt service, FICO shouldn't be a big deal when applying for a commercial loan on a residential rental property.
Anthony, that consideration in turn should drive whether you hold the property to rent or sell it.
Hey Christian. The most common low money down strategy is to get an FHA mortgage for 10% or 3.5% on a property, rent out a portion of the property to cover the mortgage then move out a year later to do it again. Now to take advantage of FHA you generally have to have two year's work history and your pay has to demonstrate that you have enough to cover the mortgage. The FHA mortgage has a 203k option which has the low down payment and would finance repairs as well. Reach out to mortgage brokers in your area to see if you qualify if your interested in this solution.
Otherwise, you could find an owner who would be willing to finance your purchase. The owner would accept payments toward the purchase of the property and you could negotiate however long it takes for you to get conventional financing or pay the property off. If you want to go this route, do some research on lease options, rent to own, and owner financing. Good Luck!
Angel, are you looking for hard money lenders, or properties that would need hard money to renovate? Hard money lenders abound, BP has it's sponsored lenders, and there are who knows how many members who are lenders in some shape or form.
If you mean, how do you find deals in your area, the standard advice is network with agents, other investors and wholesalers(a subtype of investors) in your area. Good luck!
Post: Private loan to fund future commercial land purchase
- Posts 82
- Votes 42
Originally posted by @Greg Houts:
Thanks @Willie James for the comments. Confirmation that I'm half insane! I have the cash available to complete the rehabs, as well as a reserve for down payment on the land. I also have a lender lined up for the refi loans. We will start the underwriting process as soon as the properties are nearly completed and an appraisal can be performed. That leaves a gap for the balance of the land purchase (e.g., say the land purchase would close in late Sept or Oct but the refis might take to Dec or Jan to complete).
Just trying to sort out some creative financing ideas to bridge that gap without doing anything that would adversely impact my ability to complete the refi loans. Seller financing is a potential option. Friends and family was another thought, since they know me and what I'm about plus they know where I live...
@Greg Houts now I'm following you. Sounds like a loan from friends or family would get you the best rate and no personal guarantee. Especially since you are concerned about affecting your credit for the refinance. Any inquiry or new line is going to temporarily drop your score.
Post: Investing in commercial real estate
- Posts 82
- Votes 42
One of the pros of asset based lending,' hard money' lending, is that the deal matters more than the borrower. If you have a good deal that cashflows and you have enough to put down speaking very generally, you are lendable. Stabilized self storage for example can be funded with an SBA loan.
Same thing with a partnership. A good deal will attract people with money who want to work with you.
The most important things you can do are: 1. Network with people who are actively looking for deals and 2. Find good deals.
Post: How to find real estate consultant?
- Posts 82
- Votes 42
What is a real estate consultant? What are you looking to be consulted on?