All Forum Posts by: Alex Bekeza

@Melonie Wong

What you are describing is indeed called a Cash Out Refinance.  Depending on the terms of your current mortgage a cash out refinance does not necessarily mean you will have a higher interest rate than your current loan and it also does not mean the rate would necessarily be higher than a simple rate/term refinance.  Typically, a cash out refinance may be subject to a slight Loan to Value % decrease.

As an example. A bank may offer 80% LTV rate/term refinances but reduce cash out refinances to 70-75%.

Feel free to reach out anytime.  

All the best, 

@Addam Driver That's awesome.  Our office is on Ventura and Sepulveda right in the heart of the 818! 

@Autumn Rankin  Keep us posted on this thread about securing financing!  What local bank did you use? 

@Autumn Rankin Just curious why you wouldn't want to employ a mortgage broker?  Often times commercial lenders will deal directly with the consumer but charge just as much in origination as you would pay with a broker since a broker receives wholesale pricing....

Your first apartment deal seems like the most important time to consult a broker in order to get a better lay of the land in terms of lending options.  Maybe I'm reading this wrong and you meant you just don't want to use the Listing Agent's buddy?

Also unsure what -5twar is...

@Addam Driver Securing Multi Family investments typically requires heavier underwriting on the property side.  When dealing with a seller you will need to obtain:

-Current Rent Roll

-2-3 years of Profit and Loss Statements

These are the two most basic elements in beginning to "pre underwrite" a loan for multifamily. In 9/10 cases the lender will require a certain DSCR or "Debt Service Coverage Ratio" to be met.

If you cannot obtain these from the seller, then you will either need to construct them yourself from piecing together bank statements and receipts (sounds fun right?) or move on.  The lender will need to ensure your net operating expenses can cover the debt and they can't establish that without solid financials.  

Lenders also have a lot of other things they'll consider like:

-Property Location 

-Local Economy/Population Trends (Figure you want at least 25k people or be nearby a city of over 100k)

-Zoning - Building must be properly zoned for the amount of units it has

-Experience (you have enough experience to qualify for a multifamily investment)

The truth is there is no one size fits all answer because every lender has their own guidelines which is where a broker comes in handy. 

Feel free to reach out anytime.  

@Daniel Rutherford You could avoid having to get into a loan that balloons in 5 years.  Commercial loans are available with 30 year terms and amortization with the rate fixed for the first 3 or 5 years.  Rates will be a little higher than 6% flat after recent hikes.  Depending on where your credit is at 7-8% may be more realistic.  We've recently completed a similar portfolio purchase of contiguous duplexes like this. 

Feel free to reach out anytime.

Best of luck with this purchase!

I'm not familiar with financing properties in Canada but if your investments are in the US there are portfolio products that will lump 5 or more properties into one mortgage and do a cash out refinance at 70-75% LTV.

@Theo Hicks Brings up some good points and I'll add that commercial lenders are also not likely to fund a deal in a town of only 5,000 people unless its very close to a major metropolitan area.  Since these loans are so heavily property underwritten and more flexible on the borrower, they have strict local economy standards to mitigate their risk.  

Even without knowing any numbers its hard to imagine you're going to debt cover with 2/5 occupied. Even lenders with no DSCR requirements want to see 75% occupancy.

@John T. welcome to BP.  To add to @Dan Barli 's spot on post.  The decision on how to vest title may come down to the best loan product available.  

There are commercial loan products available to first time investors although they are normally subject to a slight LTV reduction given the lack of experience. Expect to put 30% down unless you have experienced partners on the deal.

@Aziza Sackett If you haven't already stumbled upon Jefferson Lilly, from Park St. Partner's podcast "Mobile Home Park Investors".  I highly recommend it!