All Forum Posts by: Alex Bekeza

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!

@Brendan Mcdaniels Mike is correct. LLC Vesting with a commercial loan is not a problem. 30 year amortization also available at similar rate and LTV.

Are you looking for cash out funds to purchase another property or make some renovations?  Feel free to reach out privately.

All the best,

@Amir M.

Do your due diligence on the lender and feel free to always ask why but ultimately its important for the lender or Broker to ask for as much information up front to 1.  Not waste either of your times and 2.  to predict any potential hurdle in the loan approval process and plan accordingly.  They may spot something on your tax returns that they know will cause a hiccup in underwriting and can plan ahead of time to meet a certain guideline another way.  Best of luck on your next multifamily purchase in DC!

@Cody L. Sounds like you we're talking to a brick wall at B of A. Active investors like you, who might have a DTI higher than some banks want, should ask to use alternative UW methods like asset depletion. Sometimes don't even need to look at tax returns, even on a primary, in that case. And STILL get slightly sub 5.875% on 30 years. Anyway, glad you found a way to pay it off that made sense but I love sharing the asset depletion approach since I know so many great real estate investors also play the tax strategy well enough to end up with DTI issues.

Depending on what type of underwriting method a Mortgage Broker found most suitable for your scenario + your credit score, you could get slightly lower interest rate although 6% is a good number to plug in to be conservative.