All Forum Posts by: Andrew Postell

@Tobi Isaacs this would be better answered by other investors in your market.  You might be some answers here but local people will be better.  If you haven't connected with local people in your market there are several methods here.  For in person connections try some local real estate meetup groups. Meetup.com is a good resource for those but some of the groups will also post here on Bigger Pockets Marketplace too. For virtual,  facebook will have some good local groups for you. Some of those facebook groups have thousands of members. Eventbrite too. But post locally for this. That’s the best bet.

@Godsheritage Adeoye when you purchase a property "subject to" the existing mortgage you will then make payments to that mortgage company.  The closest analogy I can make here is when someone "takes over payments" on a vehicle.  That new owner then makes the payments to the lender even though the loan stays in that previous owners name.  Same here.  You make the payments to the lender.

Oh, and just in case, there are more items to know about when considering a "sub to" transaction but this is just a comment on the payment aspect. 

Hope that makes sense.

@Mike Gi yeah, so if it's 5+ then it's commercial/multi-family.  A 40 year is not a normal product in the commercial/multi-family space. 

@J. Mitchell Bernier yeah, 10 year I/O with P&I for 30 years. The rate is fixed in most products and the prepayment penalty is normally 3 years. Certainly can show choices for a 2 year and 1 year (and 5 year) prepayment but most people choose the 3 year.

@Joseph Lavoie this is more of a residential forum.  For this type of a question I would suggest posting it in the multi-family forum.  I mean, you can leave this here...but you'll get significantly more responses in the other forum.

@J. Mitchell Bernier 40 year mortgages are very common in the DSCR, residential space. But in the multi-family (5+ unit) space they are not. We'll wait to see how @Mike Gi responds to his unit count and that will determine if what he is looking for is possible.

@Alex V. you've got some good responses above but this specific forum is more for residential stuff.  I mean, you can leave this here but you would get significantly more responses in the multi-family forum.  Likewise, I would suggest to connect with some other investors locally.  Now you could try some local real estate meetup groups. Meetup.com is a good resource for those but some of the groups will also post here on Bigger Pockets Marketplace too. I might say that most of those are going to be residential in nature as well.  But Facebook might have some good local groups for you. Some of those facebook groups have thousands of members. And that's the kind of local exposure I would suggest to try.  Some of those Maryland/DC pages will have experienced investors that can point you in the right direction for local lenders.

Hope some of that helps.  Thanks!

@Anthony Vaganos thanks for posting.  You've got some different comments above so let me help clarify some things if you don't mind.

1. The benefits of the DSCR vs. Fannie/Freddie (Conventional) loans aren't just about rate and transfer taxes. For instance, Fannie/Freddie don't have a prepayment penalty. Most 30 year, fixed rate loans DO have a prepayment penalty.  That's pretty important if rates were to decrease in the next couple of years.

2. Fannie/Freddie do NOT care if you transfer your property to your LLC. As mentioned above, they specifically allow this. The "due on sale" clause is a non-issue here. I can into this at length so if you need more details let me know but for the sake of time - it's allowed.

3. Just transferring your property to your LLC doesn't really provide much shielding. And honestly, even a DSCR loan by itself, under an LLC, also doesn't provide much shielding. For most investors, to provide true separation would be cost prohibitive (between $10k-$15k). Again, this topic can be discussed AT LENGTH as well so let me know if you want to go further into it.

My suggestion to every new investor is to trust your instinct.  Learn of course, but many of us have purchased properties throughout our career without "iron clad" veils and have done just fine.  

Hope all of that makes sense but feel free to post with anything else.  Thanks!

@Nicholas Bourgeois thanks for the post.  You have some good comments above but I would also suggest to try some local real estate meetup groups. Meetup.com is a good resource for those but some of the groups will also post here on Bigger Pockets Marketplace too. Even facebook might have some good local groups for you. Some of those facebook groups have thousands of members. Eventbrite too. Thanks!

@Summer Shelton yes, FHA loans do allow this but make sure you speak with your lender about some of the trip ups from these loans. Mainly the "self sufficiency test". And as mentioned above, if the lender you are speaking with doesn't know what that is...then you need to go to a different lender. Seriously, it's important.

And as mentioned above, the amount of rent you receive on multi-family properties is based on 12 month rental comps. FHA will not use any short term rental data.

Something else to think about - any reason why you wouldn't use a Fannie Mae loan here?

Hope all of that makes sense but post more if you would like.  Thanks!