All Forum Posts by: Connor Hibbs

I am not local to Cleveland or Columbus, but a few things that should be considered for all BRRRR's are as follows:

1. Does the project fit your budget? You want to make sure that on the rehab side that you aren't stretching your reserves too thin. There's no guarantee that your budget will stay the same in the end as it did in the beginning or that the quoted price will be the final cost of the work. Building in a contingency to your budget can help mitigate getting in over your head.

2. What is the renter situation in the area? How much competition will your property have to find tenants and how will your proposed property compare. If the area doesn't support the rents that you're expecting or need to get, then it may not be the project for you. On the flip side, if there is a small supply of housing and high demand then you've found a great spot.

3. Vet your tenants thoroughly before giving them the lease. Lean on your real estate agent to help you if you're out of town but set some guidelines for what qualifies your tenant outside of pets/no pets. These will be the people not just living in your property but maintaining it to a degree. Rent numbers are important, but finding a tenant who will care for your property, identify serious issues such as flooding or molding, and maintaining the quality of the work you put in while you aren't there is also important.

@Dan Hedges If you just purchase your property in cash and are looking to rehab it then you should go with a delayed purchase to get some of your funds back and have your rehab budget covered. I would be happy to help you with this and also am able to cover you on the DSCR side as well for when rehab is completed, and the property is rented out.

 You're very welcome!

I agree with Nicholas. A house hack (purchase and live in 1 unit of a multifamily while renting the other unit[s] to cover the mortgage) is the easiest way to get started as you'll get used to the process and can use an FHA loan to have a minimal downpayment. From there I'd recommend the BRRRR Strategy to get started. to learn more about BRRRR's you can check out the BRRRR section in the Forums.

The main things that will distinguish Cash-out DSCR loans from each other are the pricing factors in their guidelines.

1. MAX LTV's offered and what may lower LTV. Some lenders require a 1.2 DSCR for max LTV and some require a 1.0. Some will cut LTV if the property is going to be an Air BnB/ STR and some lenders don't mind.

2. How to lower your rates. Most offer rate buydowns, but how impactful are the buydowns. Does lowering your loan size lower your rate? Other than FICO, which is universal in the space for rates (outside of lenders who don't use credit), what other factors can you use to lower your rate.

3. Points vs. Fees. Some lenders are much more expensive than others and boast a lower rate due to that. An example would be if Lender A charges 0 points and has par pricing of 7.2, but Lender B charges an automatic 1.5 points for all loans but claims a par pricing of 7. Some lenders may sell that they don't charge points but have several points worth of fees to make up for it.

3. Prepayment Penalty Period. Longer/ Higher Prepayment Penalty Period tend to yield lower interest rates, but if you want to refi in a few years because you think rates will go down then you'll be better off avoiding the penalty and going with a lower PPP.

 I'll shoot you a PM and we can exchange contacts so I can get some information to get you a rough quote.

If the only issue for qualifying is your DTI then I would recommend going with a DSCR. As long as you've got the cash to close, a decent FICO Score, and the property is cash flowing then you shouldn't have an issue getting a loan like this.

I'd be happy to get you some rough quotes for a DSCR if you have a property in mind already.

Great investment, that's a great find!

Hi Sharon,

There are several options for borrowers with poor credit to still get financing, the lenders will just be looking closer at some other factors such as the borrower's experience and their liquidity. Another factor is also why their credit is low. High Credit card utilization is better than a abundance of missed payments or recent bankruptcies. If you have a scenario that you'd like to get funded I'd be happy to see how I can help.

Creative financing tends to be slightly more expensive than traditional but is completed a lot quicker and has many more work arounds as well as being more flexible. 

For investment properties you should be using private/hard money lenders, but if it's a primary or you have a long window of time to secure the financing then traditional may be the way.

Overall, it should be easier to get approved via creative financing though as there are options and workarounds for nearly every scenario (they just may cost more the more creative you need to get).