All Forum Posts by: Alex Chin

Hey Adam,

Have you looked into an asset-based rental loan? If the property is a 1-4 unit, even if it's vacant (although it's better if it's fully leased), lenders can put together loans up to 80% of purchase. Interest rates are actually down into the low-4s if you're ok paying higher points, for a 30-yr fixed.

The big concern with these loans is making sure the DSCR of the property hits a certain number, 1.2 is pretty typical, although there are some lenders who can go lower for a correspondingly higher interest rate. Credit/background checks are also going to be a matter of strong concern, and an asset-based loan usually can't accommodate anything that would be owner-occupied.

Let me know if this is something you'd want to look into more, happy to chat!

Hello Vu,

Regarding your refinances, have you considered using an asset-based non-conventional lender? While interest rates are going to be higher, you'll also have a much simplified underwriting process that focuses on the property cash-flow rather than personal or business income. Generally, you'll see interest rates in the mid-5s for a 75% LTV cash-out with no seasoning.
I'll message you to follow up.

Hi Madeline,

Echoing what some others have said, you may want to consider an asset-based non-conventional lender. While interest rates will definitely be higher, underwriting terms would be a lot more flexible than what a bank/credit union can offer. Generally speaking, what I've seen recently has been something along the following for a 30-yr fixed - Loan Amt: 75% LTV for cash-out, interest rate: mid-5s and can pay additional points to buy-down to mid-4s.

I'll message you to follow up.

Hi @James Lauer,

Yes, there are a number of non-conventional lenders out there who can offer a 30-yr fixed. I'll message you in just a moment, but you can generally leverage up to 75% LTV for a cash-out with no seasoning required. Interest rates in the mid-5s with ability to buydown to the mid-4s.

Hi @Anthony Zotto

If this is going to be a straight up investment property, there are lenders out there who don't care about personal income, DTI, or tax returns. Non-conventional long-term lenders will generally have rates starting in the mid-5s for a 30-yr fixed with ability to buydown to the mid-4s usually. More expensive than a bank/credit union, but also more flexible.

I'll message you for a follow up.

HI Geoffrey.

You are correct, there are a number of lenders out there who can offer long-term financing to LLCs. Generally you can refinance up to 75% of the appraised value for a cash-out, no seasoning period. Interest rates are typically in the mid-5s unless you pay points to buy down the rate. I'll direct message you in just a moment.

Regarding closing a refi in their personal name then transferring to an LLC: yes, that isn't unusual. The risk here is that this does give the bank the right to call the loan immediately. I haven't ever heard of a bank doing this, but the fact that you are now putting yourself at the mercy of your lender isn't a very comfortable position to be in.

Good morning @Haley Helland!

Quick rundown on hard money pricing for a new investor in the Tri-Cities area. As @Ben Stoodley mentioned, lenders strongly favor experience and it may be a great benefit to seek out a partner (looking for someone with 5+ completed flips or BRRRRs is ideal) for your first few in order to build up a track record. Although it will reduce your profits, it is my recommended avenue of attack. Keep in mind that experience is typically denoted by properties you or your entity has held title to:

Loan Amount: 75-80% of purchase+renovation, with additional cap of 65-70% of ARV, whichever is lower.
Interest: 9.5-11% - as mentioned, this typically gets better and can get down into the mid-8s depending on experience/deal
Points: 2-3pts
Fees: varies, $500-$2,500 - always ask about what standard fees are charged. Also keep in mind that rushed closings (i.e. - less than 5 business days) will sometimes incur an additional fee
Term: 6-12 months

Cheers!

Hi William,

As an alternative to traditional lending, have you looked into asset-based loans? Interest rates are definitely going to be higher than conventional (although pre-COVID-19 they were competitive and looks like it's trending that way again), but as long as the cash-flow is really strong, and you can have someone with solid credit guarantee the loan, you should be able to get a 30-yr fixed on a 1-4 unit property at around 70% LTV for cash-out, 75% LTV for purchase or rate-term (although again, we're seeing strong pressure to move these percentages up about 5%, but this is where most are currently).

I can send you a PM, would be happy to answer any questions you have. Cheers!

Hello Minh,

What John Farley above said is correct. For non-conventional lenders, right now 70% of appraised value is the limit for cash-out, although we are starting to see signs that that may push a bit higher in coming months. On a rate-term or purchase loan, you can get financing at 75-80% LTV.

For both loan types, interest is generally in the 6s with the actual rate heavily influenced by LTV, and it will usually need to be rented and cash-flowing at at least a 1.2 DSCR, as well as being held in an LLC or similar entity.

Hello Robert, 

If your client is ok with putting down 25% on the property, there are non-conventional long-term financing options available, albeit at higher interest rates than what banks/credit unions can offer. The advantage here would be ability to lend based on the asset, rather than the borrower. DTI, tax returns, and W2s don't even enter into the picture.

I'll send you a message in a moment to follow up. Cheers!