All Forum Posts by: Brandon Beardt

Quote from @DeShawna Travillion:

I'm having a terrible time trying to find a hard money lender who's minimum Loan amount is less than 100k! Does this exist? Does anyone have any recommendations? I'm in Louisiana.

 Hi DeShawna,

Yes, there are HMLs whose minimum loan amount is less than $100K. There aren't a lot of them, but they exist! Typically, I see these lenders require the minimum property value to be between $75K-$100K and minimum loan amounts of around $60K.

Quote from @Amanda D Phillips:

Hi! 

I'm shopping for lenders who can accommodate closing in my LLC's name for a long term rental I have in Greenville NC. I've renovated the property but need to get out of the HML and into a long term loan. Any suggestions?

I've talked with Angel Oak but not sure where else to try.

Thanks!

Hi Amanda,

You're definitely in the right place! Out of curiosity, when did you take on the HML?

Quote from @Alex Staats:

Hello ! My Fiancé and I are wanting to buy our dream home. I was approved for 180k & want to offer on an 125k property , but they wrote “cash only” on the Zillow listing.

I am working on trying to speak to the listing agent to be able to have a conversation if possible , but I want to know if I can offer that 180k conventional/FHA loan . Is that something I can do ?

Thanks in advance !

 Hi Alex,

No, you won't be able to offer the full $180K as an "all cash-offer" to the seller. Keep in mind that lenders will usually lend on either the lower of the actual sales price or appraised value of the property. If you're under contract at $180K but the value comes back at $125K, the loan will be based off the $125K value and you'll have to make up the difference at closing if you want the property. Doesn't sound like it's in your best interest. Like the others have said, there's a reason for the sellers are asking for all cash-offers. Maybe there's something wrong with the property or maybe the sellers just want a quick close. Who knows, but you should find out. Best of luck finding your dream home!

Quote from @Colby Zeller:

Ive been reading a-lot about lending and how to get approved for the loan you want, I recently came across a section about how creating a LLC will turn residential lenders away from you. I was planning to create a LLC when the time came to buy my first property but now Im having second thoughts. Has anyone out there created a LLC and ran into trouble when it came to lending ?

 Hi Colby,

With conventional financing, most if not all conventional lenders will not allow you to close in a LLC, especially if it's for a primary residence. You would have to close in your own name. If you're trying to close in an entity for say, investment properties, alternative financing and business purpose loans will allow you to close in a LLC.

Quote from @Amy Zuniga:

Do you guys all have your rental properties in your own name? I can't BRRR my properties, as no one will refinance a home owned by an LLC. How are you guys doing it?

 Many investors will use alternative financing options (Commercial, Non-QM, private money, etc) in order to purchase or refinance properties in their entities. Conventional financing, which I'm assuming you looked for first, doesn't allow closing in entities.

Quote from @Stevenson Alexis:

Hello, I am currently looking at doing a cash out refi on a rental property that I inherited. I recently renovated the property and put about 15k into remodeling bathrooms, floors, paint, etc. This property has no mortgage so the goal here is to leverage the equity to be in a strong position to purchase 1-2 investment properties in the near future (2023). I was recently offered 10.5% rate at 70% LTV. Right now I am cash flowing $1700 a month after HOA/Insurance expenses. After reviewing the loan details I am looking at an estimated monthly payment of $1797 a month. This will leave me about -$100 cash flow a month. Because of my current DTI situation I asked my mortgage broker to look for a DSCR product.

1. I know today's mortgage rates are at about 6.5%. Are the interest rates on DSCR loans typically 3-4% higher than current market rates for conventional?

2. This was just the first offer and I haven't responded to the mortgage broker's email yet but I feel as though I am being taken advantage of.  Also I was thinking that having more of a cushion at least ($300-$400) cash flow can help me with unexpected cap X and other issues that may come up.  Am I being unreasonable to think that this rate is ridiculously to high even with todays rates?

3. Any reccomendations, I was thinking maybe a HELOC but I hear that getting a HELOC on an investment property is much more difficult than a cash out refi. Any suggestions/advice would be much appreciated.

-Rookie Investor.

 Hi Stevenson,

I wouldn't necessarily say DSCR rates are 3-4% higher than conventional rates. It usually just depends on the different deal specific loan level pricing adjustments (LTV, FICO, etc), which can be different for each lender.

Quote from @Brandon Roundtree:

How do you qualify for a DSCR loan before purchasing the investment property?

 Hi Brandon,

Nice name! Seeing if you qualify for a DSCR loan is a pretty straight forward and easy process if you're working with someone knowledgeable in the space. As long as your able to provide proof of funds for closing (down payment + estimated closing costs + reserves, etc) you can get a good idea of the price range you're able to qualify for. Getting qualified for DSCR can sometimes feel tedious because EVERY property is different, and some will qualify while others don't. It's very important to run the numbers and be conservative so you don't run into any problems later on. You have to estimate what the market rents are (and hope they come back near that number haha), what the insurance will be, as well as the taxes. Usually working with a local RE agent helps out with this. The principal and interest payments can be calculated on the spot.

If you're looking to purchase with DSCR, I always recommend running the property and numbers by your broker and getting a pre-approval for that specific property so that you get a better idea of what number to hit. To answer your other questions - it won't matter if it's your first investment property. Most lenders will require you to have previous home ownership, such as your primary residence, others won't. Yes, DSCR has higher rates than conventional financing because there's less due diligence on the underwriting side. They offset the risk of not looking at/verifying your personal income documents by increasing the rate & other factors.

Best of Luck!

Quote from @John Anderson:

Hello,

I am looking to do a refi on an investment property in Cleveland, OH for a BRRR property. If anyone has any recommendations on lenders I would greatly appreciate it.

Hi John,
What sort of financing are you looking for with the refinance? Conventional or alterative? There are many different lenders here that can assist you with this. Knowing what financing you're looking for will help respondents point you in the right direction. Best of luck!

Quote from @N Wilson:

We are new investors, just starting out.  We were pre approved for a commercial loan, but should we try for conventional? Or something else?  We paid off the conventional loan on our primary residence a few years ago, and we have no experience with alternate financing options.  The property we are purchasing is a  3 unit residential house in Maine.

Deciding between a commercial or conventional loan sort of depends on your risk tolerance what you can expect with the process. What was the reason you originally sought after a commercial loan? Are you having DTI qualification issues? Are you trying to avoid having the loan report on your credit? I recommend comparing the rate and terms of the commercial loan to conventional financing, apples to apples so you can get a better idea of the difference between the two. Commercial will be more expensive, but if you prefer the benefits of going with alternative financing over conventional, then that's up to you to decide. Best of luck!

Quote from @Tyler Livingstone:

My wife and I are Canadian. We own a USA based LLC for real estate investing. I have been speaking with lenders regarding cash out refis. Most are coming in at 60 to 65LTV for Foreign Nationals. With the high DSCR loan interest rates we're finding it hard to get decent returns when your leaving that much money in a deal.

 Hi Tyler,

I personally have never seen 80% LTV cash out refi's available for foreign nationals. In fact, I think 80% LTV for a cash-out DSCR transaction in general is rare to find now a days. Even with having a US based LLC, most of these programs (I'm assuming DSCR since you mentioned it) will require a personal guarantee and the lender will see that you and your wife are in fact foreign nationals, and decrease the LTV accordingly. One sort of solution I see for you wanting a higher LTV threshold is to potentially add a US citizen to the LLC (friend, family member, or business partner perhaps if they have US Citizenship) and have them as the personal guarantor on the loan. Not sure if that option fits your game plan but just something that came to my mind when reading your post. Best of luck!