All Forum Posts by: Alex Bekeza

Commercial Loan products are available for a commercial cash out refi at 80% LTV.

However, with the ones I'm familiar with, they will require 3 years of real estate investing experience and have a minimum loan amount of $100k. 30 year fixed is also possible but you may need to consider an ARM which is still 30 years and full amortized by only fixed for the first 3, 5, 7, or 8 years.

@Justin Holley

Well second home has its own guidelines but what I will say is that lenders are asking you to state your intention. (intentions change). Investment properties immediately get grouped into "NOO" or "Non-Owner Occupied". This is where things change.

Bigger Pockets spends a ton of time talking about house hacking. Which is an awesome technique! But certainly does not work out for everyone's lifestyle. The way so many people have been able to put down less than 20% on an investment is typically by occupying one of the units OR by using an individual private investor to hold the lien. You may want to consider that because they may be willing to accept a lower down payment. Also I'll say that many commercial lenders require 25-30% down but will allow a CLTV (combined loan to value) of up to 80-85%. Meaning they will loan 70-75% and allow you to get an additional 5-10% from another source as long as that second source holds a second position lien and is subordinate to the lender.

A residential mortgage is defined by your intention to occupy the home when under 4 units.  When you intend to live in a building 4 units and under it is governed by a whole different set of laws RESPA, TILA, DODD FRANK, etc as well as different underwriting standards.  The fact that you are not going to live in the building is what makes it a "commercial mortgage".  

Besides having others pay your rent, the whole point of house hacking is to get those residential mortgage rates on an investment.  

That doesn't mean you can't get great rates if you're a very well qualified borrower.  

The lenders point of view is that someone living in the building has a much greater incentive to not go into default since it would mean losing the roof over their head.  

@John Hamrin Getting a feel for how underwriters operate is a great idea.  There are different types of loan programs for all types of investment strategies and all types of borrowers.  Based on the little we know about your strategy I would say you'll want to study up on different hard money lenders.  Hard Money is the most common form of lending for flipping houses. 

A "Hard" Money Loan is based on the "Hard" asset (the property) more so than the borrower.  These are often companies who have pooled money from investors (doctors, lawyers, etc) looking for a good return.  They lend at higher rates but are also willing to fund deals for borrowers with poor credit, income, debt levels and experience.  They're also willing to fund deals on buildings in need of serious renovations which traditional banks and even most commercial lenders won't.  

They are able to make quick decisions and close deals in 1/3 of the time it takes to fund a standard RE deal.  They often put together interest only payment deals with the entire not becoming due at the end of a short term, typically 1 year but sometimes 2, 3, or 4.  

All they really care about is the deal. If you can demonstrate a clear plan via a scope of work, contractors bids, and budget and give a compelling argument for an ARV which would allow for the loan to be repaid then you can get a Hard Money Loan.

When comparing hard money lenders you're going to see a wide range of offers. You'll see 100% financing at crazy high rates with lots of hidden strings and you'll see what is obviously more prudent lending such as 80% LTV on purchase + renovation costs disbursed in draws as the work is completed. HM rates have a huge range (8%-15% is all possible). There's also a wide range of points or origination fees among HML. Anywhere from 2-5 pts is possible. Try to find programs where you can be on the low end of both of those.

Best advice would be to partner with a broker who works with multiple hard money lenders, understands their guidelines, and can help place you in the right program for your situation and needs.  

Long Term financing for multifamily is a whole different beast.  One quick thought on multi unit underwriting is that you'll always want to be able to get a rent roll and profit and loss report from the seller.  The bank will require it since the loan is going to be based largely on the apartment's ability to generate income.  One guideline that is pretty consistent with MF lenders is that they want to see at least 70% occupancy.  

Hope this helps a little.  Feel free to reach out anytime.  

@Sameer Jain

Many lenders are competing with one another over their cash out refi seasoning guidelines. Many will do them right away but restrict the loan to be based off of the purchase price + rehab costs rather than the appraised value until either a 6 or 12 month seasoning period.  However, a few are coming out and going off of appraised value much sooner (2-3 months) as long as the person on title remains the same.  

I used Allied Business School.  They had competitive prices and good support staff.  I'd consider it ideal for a do-it-yourself style learner because there wasn't any face to face lectures.  You had to grind through the material, take the practice tests, and get it done yourself.  I used them to get both my RE Salesperson License education as well as my required coursework for the MLO endorsement. I passed both tests the first time.  They're based out of Laguna Hills.  Here's a link:  www.alliedschools.com

Just one of many points to cover... If the property has a tenant, preferably in a long term lease, perhaps you could highlight their stability and position in the economy.  

Also make sure to highlight any potential for lowering operational costs, raising rents, as well as value-add opportunities.  

With over 80 Lenders within our database. We can confidently offer custom tailored financing on SFR 1-4s, Multifamily 5 + Units, Mixed-Use, and Commercial Properties.

No Tax Returns? No Problem. We offer asset based programs for investors who have been turned down by the banks because of Debt-to-income ratios or maxing out their mortgage limits.

We offer everything from 1-year interest only fix and flip loans to 30 year, fully amortized mortgages for your long term buy and hold rental properties.

We can assist with every stage of the BRRRR strategy and keep your portfolio growing at the speed you want. We can acquire the property with hard money very quickly and have solutions to overcome potential seasoning requirements when it comes to refi.

Feel free to send any questions to my email at [email protected]

Additionally, here is a link to our borrower questionnaire. A completed questionnaire, schedule of real estate, and a copy of a recent credit report (credit karma ok) would give me everything I need to generate a specific pricing on a given scenario.

https://forms.zohopublic.com/landbrothersrecom/for....

All the best, 

Loans_By_Alex

@Navin Francis that's awesome, I'm glad you found a solution!  I love brokering commercial loans because so many of them are willing to be flexible with the nuances associated with certain properties.   

@Robin Searle Thanks for the update! I'll be sharing this with my family in Colorado. Every city in the nation is scratching their head at how to regulate this stuff. At the same time, it's very hard to get financing on the STR properties because lenders can't securitize the loans to sell on Wall Street in most cases.

I hope you come out on top of the ruling!