All Forum Posts by: Connor Hibbs

Hi @Ron Kim,

You may be better off going with a bridge or rehab loan to do some minor renovations, then refinance after the rehab has been completed and you've got new tenants in there. There aren't many options for property values below 100k, and most of the ones that are available will have much higher interest rates and fees. 

Another option would be along the line of what Erik said earlier with using a cash-out refinance on another property to pay for this one although I think leveraging your money through a rehab would be better for keeping your equity available for other opportunities.

Hi Jennifer,

You should be looking at 80% of purchase on this one and a rate somewhere in the higher 7's (assuming you go for the min downpayment). I'd be happy to get you some rough terms on this one to compare if you'd like.

Hi Matt,

You won't likely find a lender who can do 0% down payment options until you've built up a significant amount of experience with that particular lender. Most commonly you'll find 25% down on your first, 20% on your second, then you can get into the 10% or lower range once you've got more than 3 done in the last 3-years.

If you'd like some rough pricing ideas on what your scenario would look like, I'd be happy to help.

Hi @Jose Mejia,

Some things to keep in mind when moving forward with your cash-out refi are as follows:

1. How well does your property cash flow? Most lenders may limit your max loan size if you do not hit a certain cash flow thresh hold. Typically, they will refer to this as the DSCR (Debt Service Coverage Ratio) of the property. It's going to be your [Gross Income] divided by [Fixed Expenses]. The fixed expenses include Principal, Interest, Taxes, Insurance, and Association fees if in an HOA.

2. Your Credit Score and LTV (Loan To Value) matter for your interest rates and loan size. Higher Credit Scores allow you to get larger loan sizes or higher LTV options. By having a higher credit score or lowering your LTV you can reduce your interest rate and help to increase your DSCR.

3. If you are looking to refinance the rate and aren't concerned with taking additional equity out on your property, then you should use a rate/term refinance. These traditionally have lower rates than cash-out refinances and will only cover your existing loan amount + closing costs, so you'll need an existing mortgage for this type of loan.

4. If you're interested in pulling equity out of the property, then you'll want a cash-out refinance. Typically, you can get up to 80 or 75% of the as-is value as long as the property cash flows, and you have a decent FICO Score. For 5+ unit properties or commercial it is not as high.

5. Keep in mind the Prepayment Penalty Period (PPP) on your loan. This is a penalty window where selling or refinancing out of the loan would cost you 1,2,3,4, or 5% of the amount you owe on the property as a penalty fee. You can adjust them and shorter PPP's tend to have higher rates than long PPP's so keep these in line with you strategy with the property whether you want to hold long-term or refinance in a few years.

If you're still looking for financing I'd be happy to help.

 maybe the prices were reduced on unlivable properties due to back taxes being part of the deal for the purchase. Basically, lowering the sale price as long as the buyer pays all the owed taxes as well. This is at least my best guess.

It could be that the property wasn't built yet and it was a land purchase then the buyer bult the home. $5,000 is still pretty cheap for land though unless the land was bought long ago.

Hi @Helena Goyvaerts,

Investing in the US from a different country is fairly similar to investing as a US citizen, but there are a few differences and a few things to keep in mind.

1. Loan To Value (LTV) will be lower than it would be as a US citizen. For long-term loans the loan is usually based off your credit score and the property's cash flow for investment properties. Without having a credit score you can expect to have a 10% reduction on the LTV or loan amount towards a purchase or refinance. Purchase and rehab properties will have a similar reduction, but as long as you have experience within the US, you should still be able to get some pretty good terms. Rates shouldn't be impacted here.

2. You'll need a US LLC and a US based bank account with the US dollar as currency in it. Most lenders will also typically require reserves which would also need to be in US dollars in this case.

3. Be prepared to answer how you will monitor the property. not everyone asks and not everyone will press hard on this, but it's good to be prepared, especially for rehab properties.

4. This isn't a lending requirement but have some boots on the ground other than just the construction company. It never hurts to have an additional set of eyes to look after your property. I'm sure that your contractor will be great, but it never hurts to get some unbiased eyes on the work being done.

If you need help finding financing, I'd be happy to help you find something, regardless...

Happy Investing!

Hi Slaven,

If you're looking for a DSCR loan then this should not be an issue to get for you. If you're looking for a bridge loan or purchase and rehab loan then this is not available. Short term loans are meant for a quick transaction or renovations that will then be refinanced or the property sold. The short term loans come with higher rates because they are typically interest only payments and not meant to be held on to for long. They're to "bridge" the gap from a purchase or refinance into a more long-term solution.

Commercial rooming house in CT! It’s 13 units. Single room occ.

Who can finance it for my client?

Address: 906 Judson Pl, Stratford, CT
Purchase date: 10/16/24
Purchase price: 715,000
Amount Owed: 564,000
Value: 750,000
Unit Count: 13 - see card: https://gis.vgsi.com/stratfordct/Parcel.aspx?Pid=9146
Current Rents (each unit): 11,800
Market Rents (each unit): 13,000
Annual taxes: 10,676
Annual insurance cost: 7500 est
FICO score: Bor 1: 695, Bor 2: 670
Number of purchases in the last 3 years: 10+

The agent's compensation is negotiable and 6% may be more common if that includes the buyer's and seller's agent, but if the 6% only covers the selling agent, then that's a greed reach especially considering it's a 2m+ sale price. Is whatever they are going to do worth 120k?