All Forum Posts by: David Lambert

Sharing the listing will make it easier for everyone to help you.

By reading many many posts identical to this though, I can tell you it is almost ALWAYS the dang price.

Also, depending on the market, a furnished LTR can often be more difficult to place a tenant in. Most people already have their own furnishings.

Good Luck!

I dont know of any lender doing second position HELOCs either. I would love to know if anyone is doing it because I could surely send people thier way. With rates where they are, I get a lot of calls from people wanting to pull equity out of thier property but not wanting to let go of the lower interest rate debt already on the property. 

Quote from @Matthew Graves:

Quote from @Dave Skow:

@Matthew Graves- thanks   ...very unlikely to find a lender that will do one " blanket " mortgage on multiple properties in different states ....also most lenders will likely not be interested in wrapping land in with sfr  properties ...if you locate some options - it will likely be  quite pricey  

 I'm finding that out after speaking to a few lenders. Thanks for the input!

Generally speaking going the portfolio route will not be more expensive. The entire purpose of this type of lending is too save money when compared to running single asset transactions for the properties. Origination costs and underwriting fees can be substantially less.

Regarding release provisions(atleast with the loans I see), there are no fees but you do need to pay additional funds towards the remaining principal. For example, you have a five property portfolio loan with 100k owed on each property. If you want to release a single property you payoff the 100k owed plus an additional 20k that is spread across the remaining properties. Now you have a 4 property portfolio loan with 95k owed on each property. 

Being in diffrent states can sometimes be an issue. The lender will need to be licensed in each state. For DSCR lending, NC and PA are pretty simple so most National lenders should be fine with these propertes. Total loan amount is also an immportant factor when qualifying a portfolio loan. Feel free to reach out directly if you have any questions.

Quote from @Andrew Nesbitt:

 So would my best course of action maybe to buy 4 or 5 $50k SFHs with owner financing and then get some kind of blanket loan to refinance later on down the road?

Typically in a portfolio loan each property needs to qualify individually. It is difficult to just group together several lower value properties to get around mimum property value requirements.

Properties in this price range usually have amazing cash flow and that makes them very attractive. However, securing practical long term financing is virtually impossible. This means that cash buyers are the only real market for them so they tend to not appreciate well. 

Is this a 30 year fixed rate DSCR loan? What is the LTV?

Quote from @Tanner Johnson:

Quote from @David Lambert:

When lenders use the term "Rural" it can be very frustrating for a borrower because the term is rarely clearly defined. It can also mean different things to different lenders. Even if the property is centered in a city with a population of 30k it may be considered rural due to other factors. Underwriters will look at the population density of the surrounding area. They will also see how far away it is from a large metropolitan area. 

Underwriters want to see that the property is in an area that will support the valuation of the property with numerous comps so they can have confidence in the appraisal. They also want to see that there will be a thriving rental market to support the property and that it is in an area with growth in case you need to sell the property.

Providing a location for your property will help us understand the issue better. Also, how does the property cashflow? How much in reserves do you have? How many properties do you have in your portfolio? Are any of those properties in this area? All of this information would be important for an underwriter when considering a rural property. 

 It's in midwest Kansas, pretty far from any metropolitan areas, but the city has seen amazing growth in the last decade and I looked and population is around 29-30,000. The property is a brand new construction that I own outright and the rental market in this city is very strong as of now there is quite the shortage. The Dscr ratio is no problem, the only thing holding it back is the rural designation. It seems that the criteria they are using ( the consumer financial protection Breau) designates entire counties as "under served or rural". 

 There could be other factors but from the information provided we can often get a deal like this done. Would probably reduce leverage from 70% to 65%. If you want to discuss specifics feel feel to send me a PM. I can pull up the property and give you an idea of what we could offer. 

When lenders use the term "Rural" it can be very frustrating for a borrower because the term is rarely clearly defined. It can also mean different things to different lenders. Even if the property is centered in a city with a population of 30k it may be considered rural due to other factors. Underwriters will look at the population density of the surrounding area. They will also see how far away it is from a large metropolitan area. 

Underwriters want to see that the property is in an area that will support the valuation of the property with numerous comps so they can have confidence in the appraisal. They also want to see that there will be a thriving rental market to support the property and that it is in an area with growth in case you need to sell the property.

Providing a location for your property will help us understand the issue better. Also, how does the property cashflow? How much in reserves do you have? How many properties do you have in your portfolio? Are any of those properties in this area? All of this information would be important for an underwriter when considering a rural property. 

So the tenants have been using the parking space without additional charge for the entire length of the lease up to this point? There is also no mention in the lease of parking fees? You are also moving to evict them? My first though would be that you can not unilaterally change a contract once it is in place. I would also be concerned that this would appear to be retaliatory when viewed by a judge that is involved with the eviction proceedings.

If you buy them through your LLC using a DSCR loan then the debt will NOT show on your credit report. This means it wont count against you if you go for a DTI loan later. However, you are still the personal guarantor on the loan. This means that if you default on the loan then it will show on your credit report.

You will most likely have issues securing financing for properties in the price range you are looking at. Most DSCR lenders have minimum loan amount/purchase price requirements. I know the amazing cash flow of these properties combined with the minimal out of pocket cash needed to acquire makes them very attractive. However, there can be a lot of issues beneath the surface and there is a reason that lenders find them very risky. There was a great post on here recently that outlined a lot of the problems these properties can cause for an inexperienced investor: https://www.biggerpockets.com/...