All Forum Posts by: Brian Cauldwell

Hi @Matthew Kaufman!

Doesn't seem too far off. I just quoted a duplex this morning at 6.73%. 

Hi @Tony Fahd!

In my experience, financing commercial properties has always been harder than financing residential properties. We have lenders for a 6-unit where the process is pretty similar to a 1-4 unit residential property. With any lender though, the DSCR requirement is probably higher, some lenders start asking for tax returns, in place rents becomes more important, current occupancy, and other factors that a residential property does not have to worry about.

There should be long-term solutions/financing for this property. The $78k value per unit and total value of $780,000 are well over many lenders' minimum requirements. 

One thing to consider is that many lenders like to see 12 months of operating history. For the rehab loan, I would look at options longer than a 12-month loan. A 24-month loan would be preferred so you can build up the last 12 months of cash flow for the property. 

Quote from @Kieran Dowling:

Thank you @Brian Cauldwell. Do you think that some of those comps will be useful due to them being sold in a mt lookout and not in the east end? that is where i'm having the  most trouble since they are in the same zip code but to different part of the zipcode

The only one that I see that is on the same side is 3143 Riverside Dr. I think an appraiser would have to go a little farther out due to not enough duplexes being sold right by it. 

You can always make your offer contingent upon financing, that way you have a little more flexibility if the appraisal comes in low. 

Hi @Kieran Dowling

Looking at comps for the property it depends on bed/bath count, square footage, and type. To get the after-repair value an appraiser is going to be looking for properties that are as similar to this property as possible. Typically they will want to use properties sold in the last 6 months and as close to the property as possible. They will also want to use duplexes as comps as well. 

From what I can see there are 3 duplexes sold in the last 6 months within a mile from the property. The prices range from $323,000 to $398,000.

Hi @Sarah Mariscal!

For splitting the quadplex into duplexes you will need to talk to the city to see if that is possible. I have clients who split duplexes into two townhouses all the time. But it is up to the city to split the lot. 

For commercial rehab loans, they are doable however this kind of rehab loan is tough to do. It is closer to new construction than to a basic rehab project. 

Two things to consider, does splitting the lot in two lots increase the property's value, and do higher interest rates on a multifamily property (5+ units) negatively impact your cash flow? Typically 5+ units have at least a 1% higher interest rate than 1-4 units, if not more depending on the property and you as a borrower.  

Hi @Victoria Carlton!

For your rental properties, you would want them to be financed under an entity, such as an LLC. This way it does not impact your credit, DTI, etc.

Hi @Daniel M.!

Why not find a lender who can close under an LLC to begin with? DSCR lender should be able to finance this property as long as the property cash flows and it can close under an LLC. They can go up to 80% LTV assuming the property cash flows and interest rates are around 8%. A 75% LTV option and 70% LTV option would probably be pretty close rate-wise at what you are already looking at as well.

Hi @Nathan Hurley!

Unfortunately, a DSCR loan will not be an option. For DSCR they will not do a loan for owner-occupied.

Your best option would most likely be conventional financing or a private loan. 

Hey @Aden Brust!

Seller financing is an option and may be a good option if you can find the right people. 

The other option would be a DSCR loan. They do not look at DTI. If you go that route be sure to tell them your age. Some lenders will not lend to people under the age of 21. With the DSCR loan you could cash out refinance the property you already own, 75% of what it is worth, and then use the money to help buy the next property.

Not as familiar with house hacking, but seller financing or financing through a local bank would be the best option. With current income, it may be hard to go through a local bank.