All Forum Posts by: Alex Bekeza

@Heather M.

I've sent you a private message.

The demand for commercial loan products, even on 1-4 unit properties has never bee higher. Rising conventional rates are narrowing the gap between them and commercial. They are ideal for self employed investors or any experienced borrower who does not meet the DTI requirements for conventional financing. This is a common problem for many investors who have significant write offs making their income appear lower.

Many people aren't aware that there are also 30 year, fully amortized commercial products out there.  

@Beverly Hinds

You could also get a commercial loan. They'll base the loan on the income produced by the property not the borrower. Lately, the gap between commercial and conventional rates is narrowing with commercial rates in the 6-9% range. There are commercial products out there with 30 year amortization to help keep payments low and you can cash out between 70-80% LTV.

To answer part of your other question.  Hard Money Lenders will not care about your employment.  Most of them use stated income underwriting methods.

Feel free to reach out anytime.  

@Joel Florek Sounds like you've got a good system figured out.  

-I asked because I was hoping @Darius Falahkhir would share the name of the bank.  I like to make note of local banks terms when I come across them in case it made sense to reach out to them for a client in that area at some point.  The terms are good, especially for an out of state investor who presumably doesn't already have accounts there.  

-As far as small balance commercial loans go those are great terms.  Like @Jay Hinrichs pointed out.  Rates tend to be a little higher on average.  Small Balance Commercial floor rates tend to start in the 6% range and go into the 8% range.  However, the class of loan programs I'm talking about don't balloon.  They're 30  year terms, fully amortized.  For all of the reasons Jay mentioned short term balloon products aren't my first target for clients.

-If you're really only paying $1,500 for a $550k loan and the interest rate isn't swollen with YSP then I have to assume those bankers have pretty sweet salaries.  Considering that is around 1/3 of a point.  Its unheard of.  I keep my origination fees flexible to compete but that's not even in the ballpark of industry standards.  99% of us work on commission alone.  Not a penny until the loan closes.  That being said, if your looking at motivations, we obviously have a way higher incentive to get the loan closed charging a reasonable fee.  

-Allowing some subordinated debt via seller financing is somewhat common in small amounts (10% or so) but I'm always impressed when an investor pulls it off!

-I can only assume that you are one awesome borrower to work for and must make it easy for them to  get these loans closed. 

Happy New Year!  I'd be happy to sharpen my pencil to present a loan scenario in 2019!

If you don't mind sharing. Where are you getting the 80% LTV at 5.25% on a small balance commercial deal like this? Local Bank?

This thread had gone way off the rails...... 

The lender is working within a set of guidelines.  Each box must be checked for a loan to fund.  One of which may be documenting how you intend to use cash out proceeds.  They MIGHT even want it to be handwritten and wet signed.  

They don't get paid unless the loan funds in most cases and the last thing they are trying to do is hassle you.  

Loan Officers work FOR you but need you to work WITH them.  

Like many people have already put out there.  A simple "The cash out proceeds are for business purposes only. This is an investment property." is really all they're asking for.  

Besides, if you are really executing a BRRR, then what in the world is there to hide?

There are a huge variety of answers which are perfectly acceptable in most cases......

Just a few things to make sure you have handy for a HML:

Is this a real deal?

-For a purchase loan, have a fully executed purchase contract ready.  It's fine to have a preliminary discussion with a lender about their requirements but don't expect someone to spend too much time for free analyzing a scenario that you haven't got under contract yet. 

Do you have the funds to close

-Be prepared to show a personal financial statement as well as evidence of funds to close including down payment, closing costs, and reserves.

Experience, have you done this before?

-Experience weighs heavy for HMLs.  Be ready to provide your schedule of real estate.  If your a first timer you need to do everything you can to prove your eligibility.  A cover letter would be a good start and as David alluded too above, you should be able to explain a scope of work and what exactly your planning to do with this deal including an exit strategy.

Show you've done due diligence and aren't throwing around would-be deals.

-Go above and beyond to show you've done your homework and provide any relevant history/data you have on the property including rent roll, P & Ls, etc.

Like @David Cruise said, Every lender is different and has different requirements.  Likewise, every deal is nuanced and will bring its own baggage with it requiring different documentation but I hope this is a good start.  

Best thing to do is to start collecting everything that you need into a Google Drive file that you can easily share with lenders/brokers which gives them the big picture right away rather than having to try to piece every little thing together.  Treat this like a business proposal!

Best of luck securing a hard money loan in 2019!

@Shaun Morgan

Besides reaching mortgage limits like @Philip Mccleary mentioned, I've found that one of the biggest reasons investors end up going with a commercial loan product is because their DTI/Tax Returns won't qualify them for conventional financing. Often times self employed and/or full time investors have large write offs and have to find a commercial loan because it will be "asset based." Rather than focusing the underwriting process on the borrower they will focus it on the property itself and its ability to generate income.

Some other perks of commercial loans are flexibility in terms of: vesting title, seasoning requirements, sourcing funds, and unique properties (commercial lenders take on a lot of bank fall out from obscure properties with mixed uses, grandfather clauses, and other nuances).

@Mitchell Germain Welcome to BP!  Long Beach and the Los Angeles area as a whole has very diverse sub markets.  I lean on the expertise of @Jeffrey Isenberg when it comes to 1-4s in the area.  I recommend reaching out if you need a hand honing in on a specific part of town where the numbers could work out.  He's great at taking a long term financial planning approach to RE investments in LA.  He also hosts a meetup in Sherman Oaks once a month which I would highly recommend. 

Good luck taking down that first house hack and feel free to reach out anytime!

@Kellen Driscoll

Proceed with caution on that financing offer. I don't know of anyone funding that type of deal under those terms for 29 POHs. Please do share the lender if you indeed have an LOI.

The fact is that most lenders do not assign value to the POHs...at all. They will only consider the land and its ability to produce income via lot rent. That 75% LTV would be a lot less than 75% of purchase price in the scenario of all POHs.

Personally, I say keep grinding and searching until you find a park with next to zero Park Owned Homes.  Best of luck adding the next MHP to your portfolio!

Land Brothers Mortgage and Realty offers stated income loan products for Investors that don't require tax returns or proof of income and we have no minimum credit score. We will take a look at any loan scenario in California and have successfully funded many deals that were turned down by conventional financing!

Program Details

• California Properties Only 
• Up to 80% LTV
• 1 year, Interest Only Term
• Rates from 8.50-10.99%
• No Prepayment Penalty!
• No Impounds!
• No Seasoning Requirement for Funds
• No Minimum FICO requirement
• Experienced Flippers could qualify for up to 100% financing of Rehab Budget
• Consistently Close in 10 Days!

Feel free to reach out anytime!