All Forum Posts by: Alex Roter

Hey @Dakota Rice, lenders will typically use the lessor of the two values to reduce the risk on their end. Can you ask the seller to raise the purchase price and provide seller credits to cover the closing costs? Some lenders would even allow for you to apply any additional seller credits towards principal loan balance reduction (which can provide you with significant amount savings in interest over the life of the loan).

Hope this helps.

Hey @Charyl J. we specialize in DSCR loans, so I can provide you with some insight. Yes, as Jared mentioned, there are DSCR loans available for small multifamily properties nationwide. Down payment requirements are typically 25%.

Qualification is based on the subject property cash flow (or potential cash flow via market rents), Not based on Personal/Business Income (No tax returns, no personal income statements). The formula is cash flow divided by mortgage payment -- that is the Debt-Service-Coverage-Ratio. Some lenders require a vacancy/expense factor to be included in the rental income when doing the calculation.

Within the DSCR loan space, you can obtain a rehab loan, bridge loan (short-term, no rehab financed), and long-term options (30-year fixed). Rates are very competitive right now, and many investors prefer this method of financing because of the light documentation requirements.

Hope this helps.

Hey @Jeffrey Naeger congrats on your first purchase! Is the property cash flowing? Do you qualify based on standard Fannie Mae/ Freddie Mac conventional requirements? How much Loan-To-Value are you looking for?

Yes, you do not need US Credit or Social Security # to qualify. There are limitations to the LTV offered, but they can be done! I'll send you a direct message here to discuss your specific needs.

Hey @Randy B. we have programs for out-of-state investors offer 30-year fixed rate options, with rates starting in the 4's with a 2% origination Fee. Available for Multifamily 5+ units. 

Hey @Danielle Coleman I highly recommend this strategy as long as you do your due diligence in finding a strong cash flowing investment property. Many experts believe that utilizing equity in your property to invest in additional real estate will put you on the fast-track to getting out of the proverbial "rat race." 

Essentially, you are leveraging the bank's money to increase your monthly cashflow. Ideally, the rental income will pay for the mortgage on your primary residence. 

The real estate market in Denver County is strong-- experts are predicting about a 25% cumulative appreciation forecast. The average cost of homes in Denver County is about $523,000. In 5 years, it should appreciate to about $656,000. Worst case scenario, if you are unhappy with the investment you can sell the property and make a profit.

Hope this helps

@Brittani Purman If you can, ask about the lender's "Partial Release" clause (in case they do have one), you may be unable to refinance or sell off one of the properties in the blanket loan until the entire loan is satisfied. Some lenders have this, while others do not.

Hey @Parker Larsen, It sounds like the HELOC option would make more sense, since you do not have an immediate need for the cash out. Both options are leveraging the equity in your primary residence, so they are equally as "risky." But having the cash available in a HELOC would allow you to move quickly on a new purchase when the time arises (2-4 years from what you mentioned).

@Troy DeLong The grand total loan will be determined based on a couple different formulas -- the Lender will take the lesser of the two figures. 

1. 1. 75% of the ARV ($200K x .75) = $150K
   OR
   2. 80% of the Purchase Price + Rehab Cost ($146K + 40K x .80) = $148K

In this example, the grand total loan amount allotted would be $148K (lesser of the two).

The Lender would set aside your rehab budget in a 3rd party Escrow account, amounting to around $30K. Lenders have varying guidelines so these figures can be different from Lender-to-Lender. Typically, you would need to pay out-of-pocket for the remaining amount to start the renovations, as well as loan costs.

The rehab budget will be determined upfront after completed an itemized schedule of improvements. If you end up going under the budget, some lenders would still reimburse you for the entire predetermined budget.

The Initial Distribution (towards acquisition) would be the total loan amount ($148K) minus rehab budget ($30K) = $118,000. You would need a down payment of $30K-- and this amount would be tied up in the property until you did a cash-out refinance.

Regarding the exit strategy with the cash out refinance, typically, Lenders have a 12-month seasoning requirement to allow for a maximum loan-to-value (average around 75%) cash-out loan -- based on the newly appraised value, or ARV ($200K). 

• $200K x .75 = $150K Cash-out (minus closing costs)

Keep in mind, there will be closing costs for both the acquisition loan and the refinance loan (exit strategy).

Hope this helps.