All Forum Posts by: Neil Sinha

So glad you found a reason to keep going.  Seeing you as a statistic would be a tragedy.  Hope to hear and see more of your success.

@Tom Pearsall - Have you read up on the topic of "Subject To" transactions?  If you attempt to buy the property but leave the old owner on the mortgage, that's called purchasing the property "Subject To" the existing financing.  It can potentially lead to a deal, but the lender has the option (but not requirement) to ask for all the remaining amount on the loan due from the original owner immediately after you take the title to the house.  If that owner can't pay, the lender can foreclose.  People do make these deals work where the old owner signs over their equity and forfeit it and the lender leaves things alone as the mortgage starts getting paid on time, but it can be tricky / risky.

I think if his lease is all the way through August, the fact he's notifying you now he's leaving duty doesn't excuse him from paying the last month.  It's more a question how fast can you execute move-out processing to help him out and aid your turnover.  Here's an article on lease termination for servicemembers:

http://www.military.com/benefits/military-legal-ma...

It would extend his obligation to the end of next month, which is when his lease would be up, anyway.  Others can correct me if I'm off...

@Joe Splitrock something important to note, your primary residence might count in the nine for when you hit the cap or when the breakpoints in 2%/4%/6% hit, but it doesn't count in the total principal to apply that percentage to.  So, in your example, if your own personal home is one of the nine acquired before you apply for mortgage ten, the reserves would be $48K + $4800 = $52,800.

@Lane Forhetz, @Joe Splitrock

I'd heard the six months each, also, so I wanted to go check.  See the below link:

https://www.fanniemae.com/content/guide/selling/b3...

So, it seems the 10 limit includes your primary residence, but the reserves requirement is:

6 months PITIA on the property in question + 6% of the unpaid principal balance on all other investment properties and vacation homes.  The open balance on your primary residence doesn't count against your reserves requirement, but it does factor into the # of allowed open properties.

@Jennifer Slaughter this is what I've seen on Fannie Mae Delayed Financing Exception:

The new loan amount can be no more than the actual documented amount of the borrower's initial investment in purchasing the property plus the financing of closing costs, prepaid fees, and points on the new mortgage loan (subject to the maximum LTV, CLTV, and HCLTV ratios for the cash-out transaction based on the current appraised value).

If your lender is refinancing both purchase and rehab, do you know if that's a portfolio loan they keep in house?  Because if it's being resold to Fannie, I don't see how the above paragraph doesn't prevent them from lending your rehab costs back.

@Jennifer Slaughter - With the delayed financing, your loan amount is limited to the purchase price and closing costs which were paid all cash, correct?  So how do you pay for the rehab costs and is that expense frozen in the property?

@Lane Forhetz what I didn't know is that rate/term allows for a second appraisal value sooner than six months.  My understanding is that in order to get a lender to agree that there is a new market value (since a purchase tends to establish the property at whatever value the two parties agreed on) you needed the seasoning to show the market has "reset" the value to a new intrinsic worth relative to comparables.  Again, I'm just a new guy trying to read and research, but looking at Fannie/Freddie info I didn't see where it spelled out that rate/term shortened that close-to-close seasoning requirement.

@Lane Forhetz

What I've been trying to learn is how to get a lender to refinance at an LTV that pegs at ARV. Seems most conventional lenders would peg the property value at your acquisition price as the value to finance against unless there is 6-12 months seasoning. So to get the 84K as your 75% cash out in only six weeks of rehab, how do you find a lender that agrees that the appraisal has that much extra equity based on market conditions and the work you've put in since you took title. That's the mystery I am trying to solve and how to screen smaller lenders to identify those who will underwrite at those values instead of at Fannie/Freddie guidelines or with even more conservative overlays.

I'm a newbie that's been studying BRRRR and wondering the same thing about DF: if the property needs rehab, how do you recoup those costs without freezing capital into the home equity. This whole thread has been of great interest for me to see how others move at a faster than six month pace to beat the seasoning window. Seems the key is to find deals at a high enough discount to eat the HML acquisition costs for six months and then finance out so you are cycling through the initial purchase and rehab with little to no out of pocket. But that makes the types of properties and sellers this strategy works with even smaller than if you have the capital to front some costs. Still trying to learn and understand, though.