All Forum Posts by: Clayton Silva

@Jerome Nunez I typically categorize repairs into 3 categories, 1) must repair ASAP (these are safety hazards or major issues or anything that would make the property uninhabitable for the time being.  Anything in that category I will go back to the seller and renegotiate price or terms.  I also give a copy of the report to the listing agent because now they are legally obligated to disclose any of those issues to future buyers as well in the chance they want to try to back out with me.  Category 2 is likely to be fixed in near future/minor repairs (these are cosmetic repairs or things that will have a short remaining lifespan (i.e. a water heater with 3 years of useful life or less etc).  These I will budget into my capex for the next couple of years until I can repair/replace them.  I factor these into my purchase and see if the deal still makes sense.  Then category 3 is mere suggestions.  Inspectors have to find every little thing wrong with the house for liability purposes and a lot of it is normal wear and tear of a property.  As long as it won't result in bigger issues down the road I tend to ignore most of those ones. 

Quote from @Rick Albert:

Hey @Clayton Silva, thank you for your patience on the response. I didn't see the notification.

Right now I'm in Los Angeles, Nashville, and Birmingham. Goal is to buy 1-3 more properties this year (not 100% sure where). 

I'm not opposed to a card that requires an LLC as I might be setting one up anyways because of DSCR loans, liability etc. My big thing is I want to stay organized so having a different card for investment properties makes sense to me.

That is exactly what I do. I have LLC's by market where the properties are located and then separate business cards for each LLC plus a separate checking and a separate savings account per LLC. It has been pretty easy to stay on top of my finances that way.

I was also asking about markets you are in because we offer the best DSCR loans out there.

Hey Jonathan, short answer: depends.  For any conventional lending like Fannie/Freddie etc., the answer is a hard no.  You absolutely cannot.  For some commercial lending you can.  If you were looking to refer clients to a lender that was doing 1-4 unit residential standard lending, they would be legally prohibited from paying a referral in that case (as in your example, that would not work). 

But if you had your lending license and say your brokerage worked with a commercial bank on a commercial loan and you sent the client in and you gathered the documents and did a lot of the processing, you could, potentially receive a referral fee from them as they are not beholden to the same lending regulations as conventional lenders.

The problem with these arises when it comes time to refinance a lot of banks/lenders will try to cut you out and market directly to your client down the road.

@Rabekah Siatunuu in SD, I would expect to pay a portion of the mortgage yourself. The goal is to own the asset for less than the cost of rent. If you currently pay 2500/month in rent, the goal ought to be to pay less than that in your portion of the mortgage. (Example mortgage of $4000/month but tenants pay 2500. In this example you pay 1500 but that's less than 2500 you'd be paying in rent plus you own the house + appreciation+ tax write off for interest expense). House hacking is the best way to get started in CA.

@Alex North we do have some DSCR lenders that can do 85% LTV. However, starting with 30k, you may want to consider either a partner or a rental arbitrage to increase savings. 30k will get you into a good rental with good furniture! If you can rent a place for 2-3k/month and make 6-7k/month it wouldn't take long to save up for a bigger down payment.

Quote from @Emil Kostov:

Quote from @Clayton Silva:

Hey Emil,

This looks like a pretty standard DSCR, it looks like you are paying what is called borrower paid compensation (instead of the lender paying the mortgage broker). That is pretty common practice with DSCR lenders as some do not allow for lender paid compensation. (See the $4,510 charge for origination).

Is this for a long term rental or a short term rental?

Is this the initial loan estimate or the final one? 

STR, initial pre-final.

I would have said the rate is a little high, but the STR and the fact that it is a low loan amount and high LTV is probably on par. To me it all looks pretty standard.

Would definitely need a lot more context to answer this.

Estimated FICO?

CLTV requested?

Primary or Investment?

Approximate value of home, and current balance on primary mortgage?

Hey Emil,

This looks like a pretty standard DSCR, it looks like you are paying what is called borrower paid compensation (instead of the lender paying the mortgage broker). That is pretty common practice with DSCR lenders as some do not allow for lender paid compensation. (See the $4,510 charge for origination).

Is this for a long term rental or a short term rental?

Is this the initial loan estimate or the final one? 

Quote from @Wayne Brooks:

@Rick Albert @Clayton Silva To be clear….Assuming a loan means that the buyer actually applies to the current lender to qualify for the loan, if the lender agrees, the buyer substituted for the original borrower, with the original borrower being totally released.

What you are referring to is buying Subject To the th existing loan, where the seller remains liable….a Very risky deal for the seller and generally only done by someone either desperate and/or ignorant of the risks.

So I have heard this, but I'm not sure this is always the case.  Reason I say that is, I have seen a lot veterans get screwed on this because they no longer have a VA entitlement if they let their VA loan be assumed.  

Hey Rick,

While I have little to no experience with assuming someone's loan it is definitely a risk for the seller.  Typically assumption of the loan means the buyer is just paying the loan on behalf of the seller + a down payment (equity buyout) to get the seller to hand over the property.  

The risks to the seller: 

- missed payment = credit damage

- buyer owns property on title so hard for seller to come back for restitution

- buyer doesn't refi/sell in the agreed upon timeframe causing the seller to have an issue qualifying for other loans (after 12 months of someone else paying the new lender will not count the mortgage against the seller)

A qualified real estate attorney is a definite must in this scenario especially for the seller.  I think it is also common to keep the seller on title still.