All Forum Posts by: Andrew Postell

@Account Closed there are portfolio loan products that will qualify either based on the cash flow of a specific property or based on your assets.

The "Cash Flow" type of product ignores all taxable income.  It is based solely on the cash flow of the property.  Since these are portfolio loans they will be slightly different dependent on the lender but some will approve the property with $1 of cash flow and some will adjust your downpayment based on the cash flow (so the more it cash flows the less your down payment).  

The "asset" based loan again ignores all taxable income and bases your income on an amortized amount of your assets AFTER you purchase the home.  So after your downpayment is taken to purchase the property.  If you are refinancing this isn't applicable.

Also, even a conventional loan will use rental income to qualify you.  It's important to get to know a lender that is an expert at lending on investment properties to help you best.  Some portfolio loans will have loan minimums, etc.  Maybe even a broker might be a good choice.  Private message me if you need help with finding a lender in your state.  Hope this helps!

@Jason Pavloff these are very common questions and I can provide you with the correct answers:

1. If you purchase and occupy a duplex then you can do 15% down with a conventional loan. If you purchase and occupy and 3 or 4 plex then you would need 20% down with a conventional loan. If you do not plan to occupy the property then you will need 25% down for a conventional loan. If you were to use an FHA loan then you can use a lower amount but you can't have 2 FHA loans in the same area. You need to have a job transfer that would move you out of commuting range for the 2nd FHA loan. You can have different ratios with portfolio loans but those will have higher interest rates or other features that are not as favorable as a conventional loan.

2. What you are being told here is absolutely a lender overlay.  An overlay is an extra rule that a lender will add to the guidelines to have a more conservative approach.  The reasons why lenders do this is too time consuming to explain but the important item is that you need to find a lender who doesn't have this overlay because you CAN use your rental income to qualify. 

3. Reserves are always important for conventional lending.  If you do need 6 months of reserves (sometimes you may only need 2 or 4 months) then it's 6 months of the mortgage payments...not the rents.  Also, retirement assets can count as reserves.  Some banks have overlays attached to this reserve condition so look for a lender that does not have overlays and you will be better off.  

4. Cashing out your primary residence is limited to 80% of the value of the property if it's a Single Family Residence.  If it's a duplex it's 75%.  That is a conventional lending rule (not an overlay) but you MIGHT be able to find a portfolio loan product that does differently.  

Let me know if I can help in any other ways.  Thanks!

@Michelle Romano got it now. That sounds like a good turn time on work.  You had me concerned there for a minute.  Let us know if we can do anything else to help.  Good luck!

@Chimi Changa (nice name by the way) 15% on a "conventional" loan is what you should expect if you are going to live in the property on a duplex.  If it's 3-4 units then expect 20% down on a conventional loan.  And that is if you live in it.  Conventional loans are the loan types with the lowest rate, fixed rate, etc.  They have the best terms on the loan itself.  A portfolio loan on a duplex, tri-plex, or quad may have a lower down payment but I have not seen a portfolio product on a multi-unit have that.  Usually portfolio loans are more flexible on the qualifying part of the loan but they normally require a higher down payment, higher rate, etc.  Since there are literally 15,000 banks there could be 1 that has a different approach but I have spoken with many, many banks on this subject and not found any portfolio loan with a lower down payment requirement.

@Gordon Way what you are experiencing in a lender "overlay". An overlay is an extra rule that a bank puts on their loans in order to be more conservative. I can explain why they do this but it really doesn't matter. What does matter is refinancing under 6 months at ARV is entirely possible.  I'll Private Message you now.

@Ian Price you will not be able to use hard money on your own residence.  The lending laws are highly strict on loans secured by your primary residence and that's why hard money lenders do not lend on a primary home.  There are three other solutions for you to consider:

1. FHA 203(k) loan

2. Conventional Homestyle Loan

3. Portfolio Loan

Again, the refinancing step is not the issue for your scenario.  It's just the fact that you are looking to house hack.  Once you declare it's your personal home Hard Money is out.

@Randy G. this sounds like a lender "overlay".  An overlay is an extra rule the bank puts on top of the normal set of rules that Fannie/Freddie have on their loans.  The lender even references "our conventional guidelines" and that certainly sounds like the case.  I'm not an expert an Indiana laws but it sounds to me that you just need to find a lender with no overlays.  Private message me if you need further assistance.  Thanks!

@Michelle Romano based on your description a hard money loan or a portfolio loan will be your solution. I would also encourage you to speak with a standard lender to see if you could be qualified for a Line of Credit type of product that could also help with this type of work. Even if you have "not standard income". Lines of Credit will have significantly lower costs but it could take a lender to 30-45 days to complete the LOC. Also, 6-8 months of work at $20,000? Most work at $20k should be done in a week or two. Time is money. Get on that contractor to get your job done quickly. 6-8 months would not be acceptable to a lot of investors.

@Herve Alce there's a couple of questions that may need answering but I think you should have 2 solutions:

1. if you bought the home with cash, then you can take a cash out loan under the delayed financing rule with a conventional loan. This rule allows you to receive back the purchase price + closing costs or 75% of the ARV....whichever is LOWER.

2.  If you did not buy the home with cash then you would need to find a portfolio lender to lend you the money for a cash out property.

@Adam Jason please check out Finishing Touches.  They do a ton of investment property jobs each year.