All Forum Posts by: Andrew Savage

@Erik B. I stumbled across the Fannie guidelines that @Jerry Padilla was referring to:

"If the property was owned prior to closing by a limited liability corporation (LLC) that is majority-owned or controlled by the borrower(s), the time it was held by the LLC may be counted towards meeting the borrower’s six month ownership requirement. (In order to close the refinance transaction, ownership must be transferred out of the LLC and into the name of the individual borrower(s). See B2-2-01, General Borrower Eligibility Requirements for additional details.)"

https://www.fanniemae.com/content/guide/selling/b2/1.2/03.html

Thanks @Andrew Postell and @Jerry Padilla! I'm trying to do a cash out refi. Would transferring the title on the day of closing be a seasoning problem with the bank? ie I have only owned it for a day, technically.

@Erik B. When you say lender are you referring to hard money lender or the traditional bank? At this point both the HMLs and traditional banks seem have an issue with transferring the deed.

Hey everybody. I've dug through the forums and seen only a few light discussions on this issue, which confuses me a bit.

I've read a lot about BRRRR, and everybody talks about buying/rehabbing with hard money and refinancing in a conventional loan. Sounds pretty straightforward. But now I'm going through the approval process and learning that hard money lenders only lend to entities (LLC, corporation, etc) and conventional loans only work with individuals. So it seems impossible to rehab with hard money and refi to conventional. Is everybody either refinancing into a portfolio loan or rehabbing with cash and I've just been mis-understanding?

Thanks guys! My goal is to build a portfolio and I realized I need to focus on the positive cash flow after refinance.

I got my first multi-unit rental last year, cash flowing well, looking to BRRRR on my next. I know the rules (1%, 70%, etc) are just guidelines, but I'm looking for clarity on how to apply them. I'm getting hung up on how to decide whether, after rehab, to sell or hold. Look at the below example:

PURCHASE PRICE: 40k

REHAB: 55k

HOLDING COSTS: 5k

TOTAL INVESTMENT: 100k

ARV: 150k

RENT: 1100

After the rehab is complete, before refinancing, should I look at it like I'm purchasing the property for the ARV? The purchase, rehab, and holding are all sunk costs. 1100/mo doesn't look bad on a 100k investment, but that's all cash or a high interest loan (hard money). With the refinance, I'm essentially "purchasing" a 145k property that only rents for 1200, and that's not a stellar deal. Thus, I shouldn't "purchase" it, but rather sell for a 50k profit (less selling/closing costs). Again, I know all the rules are just guidelines, I'm just looking for some feedback on how I'm thinking it through. Thanks for the help!!

Hey Everybody!  I'm new to commercial property and normally on the tenant side of things.  I'm in the process of opening a lodging business and the project costs (mostly property and buildout) have exceeded my capacity for borrowing.  I'd like to find a capital partner that's on board with my plan and will essentially buy the property and lease it to me.  They'd provide 90% of the down payment and guarantee the loan.  I know what works from the tenant's point of view, but does this make sense from the commercial investing side?  The deal would look something like this from the capital partner's perspective:

Project Costs: $1MM  ($250k down payment)

Net Operating Income:  $80k

Annual Debt Service:  $50k

Cash Flow after Debt Service:  $30k

Cash on Cash Return:  12%

Return on Project Costs:  8%