All Forum Posts by: Sean Dezoysa

Hello, I am in need of a short seasoning DSCR lender who requires maybe two to three months to do 75% or better Loan to value. As we significantly improve our properties but for the current situation we're able to get it ready with minimal to no rehab, I understand this is Non ideal for DSCR lending purposes

If tenant/buyer is responsible for all repairs will DSCR lenders reduce my repair expense item? Or do they usually have some minimum they'll adhere to regardless?

Also, how do DSCR lenders feel about shorter terms? Ideally my tenant exercises in 12 to 18 months. I know oftentimes they don't.

After considering passive investing for tax benefits, I decided that I may as well just sell some of my (150k or less) properties on a land contract. At the lower price points they don't fuss about no conveyance of title until payoff. 

Say the average all in cost is 50k for an 80k sale. Most of the time I have no mortgage, and no mortgage interest deduction. But I have the cash flow and depreciation. 

Can anyone think of a more efficent way to "buy" mortgage interest deductions and depreciation benefits?

Quiet title is often needed to fix title chain. Takes 4 - 7 months or more, slowing things down dramatically. Do you guys have any ideas for dealing with this with retail buyers? I doubt banks will allow forgoing title insurance.

I currently use HMLs. 

- Plastiq.com will apparently shut down your account if you charge your own CC against your merchant account (major TOS violation). 

- With goldmoney.com to buy gold and then resell for cash there is a 5% loss on each transaction, making HML loans look cheaper.

All in all it looks like biz credit cards are ill suited to fix and flips especially when the purchase is from a government tax sale that requires a cashier's check. Or has anyone found another good option? Cash advances also seem to lose (GPT 4 comparison below)

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Cash Advance

Upfront Fee: 4% of $50,000 = $2,000

APR: Let's assume 25%

Total Cost: $2,000 (Upfront Fee) + $8,320 (Interest) = $10,320
Hard Money Loan

Upfront Costs: $4,000

Interest Rate: 12% per annum
Total Cost: $4,000 (Upfront Costs) + $4,000 (Interest) = $8,000

In this scenario, the hard money loan is cheaper by $2,320 over an 8-month term.

Deals can move quick, is it okay or even standard to apply at many HMLs at once? And if you get multiple approvals take the best option and decline the others? I understand many HMLs have an application fee so I think it would be okay but wanted to check

What I thought prior: "An HML will fund about 65% LT ARV + repairs" for a fix and flip

What I'm finding
- There are some HMLs that do the above ("100% financing" as they call it) but they tend to charge 3-4 points instead of ~2
- Most HMLs seem to have an additional criteria "Loan to Cost." So if the purchase price is 65k then you need to come up with maybe 10-15% yourself, plus closing costs, or have private money.

Are these the typical terms you guys are working with too?

Does anyone prefer the "100% financing" HMLs even if they tend to charge more points?

Here's what I (think I) know:
- Wrap mortgages include the terms of the original mortgage in them
- They are designed to "wrap around" the existing mortgage terms, and add some new ones
- Investors often use them to arbitrage payments between underlying mortgage and what is owed to them

Here's what I don't get
- A wrap is consider a junior lien yet is not considered a 2nd. It is considered a first, even though the "original first" (the underlying lien) is not paid off.

Why is that?

Saw this posted earlier:

Quote from @Jason Hirko:

@Keenon A Trevor
Most HMLs won't do loans under $50k as you mentioned... HOWEVER since
you have multiple sub $50k properties, many HMLs will bundle them into
the same loan. They get a reasonable sized loan and you get your
properties financed. Try asking a few local lenders about that.

I have two properties I'm looking to flip, both under $50k, but together closer to $80k. I wanted to ask how one loan on two properties would work. Do I need to have the COE dates adjusted to the same day? If not how much of a gap between COE dates becomes an issue when bundling a loan over two different properties?

The strategy:

1. Buy a house at around 70-75% ARV - repairs. light rehabs, nothing more than 25k.

2. Primary funding source is an HML. To cover any shortfall: PMLs, down payment from homestead buyer, and partialing a 2nd lien taken out post COE (of transaction 1).

3. Resell the house on owner financing, as is condition for 110% ARV - materials cost. During resale a 1st (wrapping the HML lien) and 2nd are created.

4. Sell the 1st to wipe out the HML and other bridge financing. Hold onto the 2nd.

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On my "things to find out list" are the following:

1. Will a low appraisal of the property cause note buyers to pass on my note? 

2. Will HMLs shy away from bridge financing a property for 1-2 months based on an investor planning a resale in as-is condition, owner financed, reselling a note to cash out the HML lien?

3. What discount does a lack of seasoning demand in the market (on a 1st)?