All Forum Posts by: Braydin Mehnert

@Lauren Jansen Congratulations on the transition. I know way too many unhappy people, that never try anything new because of their current "success", so I applaud the switch. 

I would definitely second what @Kayla Givens said about the meetups. I went to two this week, and they are always a good time. It's fun to be around like minded people. I am a lender with David Greene's mortgage company and would be happy to be a phone a friend if you ever have any questions from this side I things. I have had my real estate license since I was 18, and its all I have ever done, so be prepared for a one sided view that this is the best industry ever! 

Good Luck! 

@Anthony Phillips That seems to have been a common theme with local banks lately. I have really liked my local banks when I have a unique deal, but when it can be done with a conventional, DSCR, OR standard commercial deal I have found they are just too slow. Some of the fiscal tightening that is going on in the market is making them very selective in terms of the loans, properties, and borrowers they take on. My suggestion would be a mortgage broker or bigger institution that has a set of guidelines that are a bit more defined. That way someone can give you a quick yes or no.

@Erick De casas Unfortunately, @Dave Skow is correct. Gift funds are going to be the best and easiest way, otherwise you will need a non-occupant co borrower. However, this non-occupant co borrower has to be a "family member" 

• Child, parent, or grandparent
• Step-parent or step-grandparent
• Foster parent or foster grandparent
• Spouse
• Domestic partner
• Adopted child
• Foster child
• Brother, step-brother
• Sister, step-sister
• Aunt or uncle
• Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law

If neither of those work, another option, is have an investor that is willing to invest in you and your ability to find good deals. Provide you with funds 60 days before closing. Then by the time closing rolls around those funds would be considered seasoned and you could use them without having to source their origin. 

Quote from @Charles Schmidt:

Quote from @Andrew Postell:

@Charles Schmidt I need to provide some clarification here if you don't mind.

Your initial loan TYPE is critical to this equation.  Meaning, a traditional Fannie/Freddie loan will hold the ENTIRE payment against your DTI. The mortgage will be on your credit. Even if you have a co-signor (your partner maybe?) the entire payment is held against both of you. 100% of that payment is shown on anyone that signed on the loan. So if you are splitting profits on your partnership, but have a debt in your personal name, that will show that you are taking a loss. This is NOT the right way to structure debt with a partnership.

When you are getting debt (mortgage) for your partnership you need to have it be a commercial/portfolio style loan.  A loan that is made TO the partnership.  One that is not held against you personally.  The property is held in the partnership name, the debt is in the partnership name, the expenses, etc.  This way even if you are splitting the profits, it doesn't matter.  Nothing is held against you personally.  Commercial style loans do have a slightly higher rate/costs but it's still the right method to use here.  You don't want to jeopardize any other loans that you may need later due to this one.

The next time you get a mortgage will also be important to how this is viewed.  So let's say you went with the Fannie/Freddie route anyway - maybe you make lots of money and it doesn't matter.  If you were to get another property with a commercial loan - that commercial loan doesn't care (at least, it shouldn't care) about your personal debts.  The commercial style lenders we want to work with should base their decision on the property itself.  There's plenty of lenders that don't even care about your income - just the income of the property.  So even if you didn't do it correct on the first one, a commercial loan will still work out on the next one.

However, if you were to go get another Fannie/Freddie style loan....on your own primary home for example....then it will care about that first loan.  Go that commercial route and that way there's no risk to you.

I hope all of that makes sense but feel free to post about anything else if you need.  Thanks!

I really appreciate the detailed answer, that helped a lot! We are actually prequalified for a DSCR loan and plan on forming an LLC that will own the property. Since we will be personally guaranteeing the LLC though, I was told that the debt will still be reported on my personal DTI. This is turning out to be a more fuzzy subject than I thought, it's tough to get a definite answer from most people I've talked to up to this point.

Any other insight on that piece specifically would be great, but I'm also going to reach out to my loan officer and see what his thoughts are. Thanks again for the help!

You are correct. If the DSCR loan is personally guaranteed, then it is supposed to show on your credit report. What we are finding with NewFi and a few others, especially if it is in a LLC, is that it never actually ends up reporting to credit. If its something where it is important that it does not report to credit, or is non-recourse, I would suggest Finance of America. 

Quote from @Angie Castro:

If you are going to live in one of the units I'm guessing you are doing an FHA loan? Fha loans allow up to 4 units and conventional loans only up to two units. We either of those the lender will not count the rental income but depending on the type of loan (fha you have to be in it for two years) You could move out and then use the rental income. At that point you can get another loan for your primary home.

This is not true. Conventional will allow up to 4 units (see matrix), and in both cases you get 75% of gross rents for any non-occupied unit. 

Typically the HML and PML would like to see 85% Loan to Cost (LTC) and have you finish the project at 75% ARV. If you have the ability to post your scope of work and your ARV, I think that would help.

I agree, the rate is in line with the market. Also, to have the ability to lock for that long without having to pay any upfront lock cost is big. A lot of lenders have started to charge for longer lock periods up front.

Hey James, 

Conventional cash-out refinances are capped at 80% on primary residences, so you would have to go the HELOC route. This is actually better because your loan balance is relatively high compared to the available equity, and in those situations it typically makes more sense to do a HELOC. Better to have 175K ish at 3.25% fixed and 25K ish on a variable HELOC at maybe 6%, than 200K at 6% fixed. If you had the same loan balance and the house was worth 500k, I would suggest the cash out refinance.

Local banks and credit unions are the best place for HELOCs right now. 

Hi Ihor, 

The lender will use a form 1025 that is provided by the appraiser for your upcoming purchase. Within that appraisal the appraiser will determine the fair market rents for all units. The lender will assume that you will occupy the one with the lowest rent, and give you credit for 75% of the gross monthly rent for the remaining unit(s).

Happy to show an example from a recent transaction if needed! 

@Linda Vu Nguyen in most States the tax lien takes a first position over other liens. For example a mortgage would get superseded by your tax liens. Because of this if it gets to the point of you being able to foreclose with your tax lien if there are other liens they will likely pay you off. Said another way, unless the property has no other liens it is unlikely they will let you take it for such a small cost.