All Forum Posts by: AJ Exner

Quote from @Colton Bridges:

I recently bought a duplex that I plan to convert to a fourplex. I used a hard money loan to purchase this off market deal.

I rehabbed the upper two units within two and a half weeks and have a renter already lined up for one unit. I believe after the holidays the other unit will go quickly.

What is the rule to refi into conventional loan? If I secure renters and show a lease agreement and deposit can I get into lower interest rate mortgage?

I wasn't planning on going this big for my first investment but the deal, location and potential to value add was too good to not go for it.

Thank you!

If you are deadset on refinancing into a conventional loan, then you will likely run into seasoning issues. The fact that you have made such good time on the rehab of this one means that you will not be able to refinance on its new value until you have owned it for 12 months, otherwise they will go off of the 'value' that you bought it at.

Whereas if you refinanced it into a 30 year DSCR loan, you would likely be good right now, or worst case most are good at about 90 days. Honestly, I don't think you will be sacrificing a lot if you choose DSCR over conventional these days, and it will give you access to your capital/equity a lot faster.

Happy to connect if it would be helpful.

Good luck!

Quote from @Kevin Lynch:

Hello Bigger Pockets,

I am currently in the process of looking for fix and flips or BRRRRs in Cleveland, Ohio. I plan on using a Hard money lenders, does anyone have any recommendations or experience with which company to use? Thank you very much. 

Completely agree with @Katie Smith, utilize that tab and other BP resources, but make sure when you talk with a lender, that they are upfront with their minimum property value that they will lend to, as well as their minimum loan amount. You will flirt with the bottom limits of some groups in Cleveland, so make sure you know before you BRRRR.

Good luck! Happy to help if I can.

Quote from @Paola Astrid:

Have some cash on the side that would like to deploy on another property. I don't want to liquidate my stocks to buy it full cash and so I'm looking for a DSCR loan. Appreciate any tips as well!

Hey Paola,

Do you currently have a tenant in the property? Just make sure you have proof of rental payments if you do from the last couple of months and you should be good to go no matter what direction you go.

Good luck!

Hey Rod,

Congrats on where you are at! As the great philosopher once said, "mo' money, mo' problems".

I think the reduced leverage plan is a good choice to free up some DTI but obviously the extra fees on DSCR could start to add up a little. I guess my question would be, if each deal would cost an extra 2% going DSCR would it be worth it to be able to scale and accomplish what you are hoping to accomplish? Feels like the most straightforward plan to get from point A to point B and sometimes it pays to KISS

Acknowledging that I don't know all the numbers you are working with, but if each deal costs an extra $3k-$5k, but because of the efficiency of DSCR loans and the ability to ignore your DTI, you could maybe squeeze an extra deal or two a year in? I guess that is where hopefully the LOC could help you there.

Could you pair the LOC up with a DSCR lender? Use the LOC from the CU for the purchase of new properties?

I don't know, certainly takes money to make it, but I would worry about when the CU would start saying 'no'. Rate seems about right, so I wouldn't get too hung up on that (DSCR would be about there too, maybe even a little less based on that leverage).

Sorry, a bit rambling there, but would be happy to connect and talk through things if that would help? Happy to assist where I could.

Good luck!

Quote from @Gene Hacker:

I am looking for a lender that works with rural properties in California.  The property I am trying to refinance is in town, and in a neighborhood and just up the road from the regional hospital but I guess the local population is low enough that it is considered rural for some lenders.  

I am hoping for recommendations of lenders that lend in rural areas like this.  

Thanks!

Hey Gene, 

Have you done an appraisal in that area before? If you have an appraisal from your purchase, a lot of lenders will go off of what the appraisal says (Urban, Suburban, Rural) as much as anything.

Otherwise, any lender that would do it would likely be at 65%. Unless it is a Short-Term Rental in a desirable area, then some programs might include it anyways.

Happy to take a look if it would help

Hey Noey,

The way I see it would either be a bridge (depending on how low) which wouldn't necessarily satisfy the 30 year stuff or getting creative on a 30 year.

You could bring on a person onto an LLC to act as a credit partner and to find a lender that would utilize their score for pricing. Another option that I know of that would cap you at 50% LTV.

So as long as the value is there (minimum loan amount = $75k), then you should be able to get something out of it.

Happy to help where I can, good luck!

Quote from @Ram Gonzales:

I have a property in Austin that I acquired recently for cash. Value is $475K+. Looking for an asset-based lender for an interest-only loan of around $250K for up to 5 years. I'm leasing to a family member for minimal rent, certainly no where close to market, so I don't think it would work for DSCR. I plan to use the proceeds to purchase another property. Any ideas of lenders who could do this? 650 credit score.

Ram,
Actually, I think you are really going to struggle to find a lender for a deal like this, but not due to a lack of options.

Analyzing the situation, I see a couple of potential lender implications that would make it tricky from a lender's perspective:
-Having it not DSCR is a decent sized hurdle to overcome, and in TX it is a little trickier due to the higher than average property tax. Having that tenant in there helps, but the other issue is..
-Leasing to a family member. Its a little thing, but for a lot of lenders if they are aware of that fact they won't lend. This is because most people would rather lose the property than lose the relationship with their family member
-That's a decent amount of money to payback, especially on a 5 year balloon. You would really need to show some kind of a payback/refinancing strategy to make most feel comfortable
-The 650 credit score is tricky as well, not impossible, but tricky.

Its a tough spot, but its especially tricky when you compound issues. I think there might be some options, but it might not be what you are hoping.

Good luck! Happy to help where I can.

Quote from @Tyler Herman:

Quote from @AJ Exner:

Hey Tyler,

I know of a few that require a certain leverage on the lower amounts, and I'm sure they would want to know your experience in spaces like that. That being said, I can certainly work within the 90k-120k refi.

Depending on the area, I'm not surprised that banks/CUs would struggle. Just shot a DM, happy to help if I can.

Good luck!

Thanks. Yeah the DSCR out is a lot easier. It's the initial loan that's more the issue. Would be nice to work with one person for both.

Totally understand,

Generally that initial purchase-rehab loans will also be driven by your experience in the area. So any additional exceptions, whether for purchase price or even total loan amount, would be more likely if you can show a healthy SREO. 

Hey Tyler,

I know of a few that require a certain leverage on the lower amounts, and I'm sure they would want to know your experience in spaces like that. That being said, I can certainly work within the 90k-120k refi.

Depending on the area, I'm not surprised that banks/CUs would struggle. Just shot a DM, happy to help if I can.

Good luck!

Quote from @John Semioli:

Hello, community! I'm looking for advice on refinancing a STR property in Pennsylvania. About a year ago, I took out a mortgage and recently added significant value to the house. However, I'm hitting a roadblock with traditional lenders, as my loan-to-value ratio (LTV) isn't matching their criteria. This seems to be a result of some smart accounting moves on my part, thanks to an investor-savvy accountant. As luxury vacation short-term rental hosts, has anyone faced a similar situation or have suggestions on how to proceed? Our goal is to pull out some of the rehab money we put into the property. Thanks in advance!

Hey John,

Sounds like the answer would be to utilize a DSCR lender that utilizes either pre-established STR rental income (if you can prove with AirBNB/VRBO statements) or a few that are still UW with AirDNA or a similar STR income projection program.

I am aware of a few still doing it at this time, and if you can show that you know what you are doing you shouldn't see much of a cut in LTV if at all.

Happy to connect and see if we can help.

Good luck!