All Forum Posts by: Dav Pohote

Quote from @Jacob Sherman:

30% down on the purchase . We'll provide 100% of construction upto 65% ARV . No income no doc

Say 550k purchase and 200k remodel. 

What numbers am I looking at for monthly payments - Do I refinance to a standard commercial after the 6 month remodel? And is that refinanced commercial based on the 750k total put in? 

Quote from @Alex Hunt:

Commercial loans are much more lenient than conventional and a lot less red tape. 
DSCR loans for rent ready properties. Fix n flip loans for value add, then sell or refinance into DSCR.
Happy to connect on fix n flips or DSCR! 

For a fix n flip, if your purchase price is 500k and 200k is the remodel, what is your monthly payment on the 6 months of rehab? When it's tenant occupied and time to refinance, would the commercial loan be based on the 700k total?

Quote from @Michael Braswell:

Apply for a hard money loan that allows you to purchase, rehab, and resell or rent the property. The interest rate and cost is higher than conventional loans but the requirements are less and the closing process is faster.  The loan will be in your business name and won't be reported to credit agencies, which is huge. No W-2s, pay stubs, or tax returns are required. 90% of underwriting is based on the property not the borrower.   Reply if you want more info on a hard money loan.

 Would love it.

how easy is it to refinance to a conventional loan after 6 months ?

do the lenders include the renovation cost in the loan principle amount? 

Quote from @Brandon Beardt:

Quote from @Account Closed:

I’ve read countless times that residential lenders will only loan on properties in good conditions. How do investors get loans on value add deals? Are commercial loans more lenient? 

Hi Shivani, from a lender's standpoint, most investors that look for value add deals gear towards bridge/fix and flip type loan programs. These programs are different from conventional/residential loans in that they give the investors the capital they need to help with the purchase and the rehab of the property. Once the renovation is done, they look into long term financing based on the new appraised value of the property, allowing them to recapitalize most if not all the money they put into the deal. Then they REPEAT the process. It's the BRRRR strategy at it's finest.

 Who is in charge of appraising the property? 

if I pay $500k for a property that needs $300k in remodelling, does the fix and flip cover interest on the $800k amount even though it was bought for $500k?

Once the remodel is done and tenants are living on site, what do lenders look for when refinancing to a 15 yr loan? The rent roll? Or the total cost amount listed on the fix and flip? 

thank you! 

Quote from @Andrew Zamboroski:

Quote from @Gilberto Ramirez III:

I am looking into purchasing a single family home ,and converting it into a duplex ,and a 2 car garage into a ADU what type of loan is recommended ?

 It sounds like a good case for a fix and flip loan (assuming you will not reside there). The interest only payments and rehab funds would allow you to convert the property as desired. Be sure to check local zoning and such to make sure your project is feasible. Also, ensure you check comps to make sure you will get your money out of it. I have seen instances where clients convert to a two unit and the property is worth less than if they did a higher end rehab of a single family.

best of luck!

 What are the general terms and rates on a fix and flip loan? After the renovation , what is the easiest way to refinance to a standard 15 year? I'm assuming it becomes interesting to banks when you have people living on site and paying rent, correct? 

Was actually denied for a commercial because it's stripped to the studs and deemed uninhabitable. 

I've heard anything over 4 units is commercial but you can still get residential loans on 8 unit or less properties. 

Is it possible to get a fix and flip loan for the duration of the remodel, 4-6 months, then refinance to dscr or some kind of residential loan in the 7% range on a 15 yr? I have cash on hand and no issues paying 25% down. 

I was also planning on paying cash for remodel but fix and flip supposedly includes this in their package? 

I don't want to get into a loan paying double digit interest. How easy is it to refinance in 6 months once people are able to live there, we have rent roll etc? And are there non commercial options available? 

thank you to anyone who can provide assistance. 

Quote from @Carrie Copenhaver:

I started with a subject to flip.  I found the property on craigslist so that should give you an indication of how long ago that was .. 2006 - about the age of my profile picture : hahahaha

At the time I had a total of $15,000 cash. We took the house over, finished renovations & turned that into $25,000. Next house was a probate that took 6 months to close : used bank financing and turned that $25,000 to $43,000 ... next we flipped a short sale. Turned that $43,000 into $110,000 : took us about year & a half ... after that we began scaling. Now we flip 20-25 houses per year : I don't want to do anymore than that. We use some of our own cash, a ton of private money, some bank financing, HELOC & direct lenders like Kiavi, RCN Capital. We use our cash for buy & holds & have a portfolio of 32 doors : a few multi family, one corporate rental, 2 short term rentals & the rest are SFH's

The financing you have for buy and holds are standard 15 or 30 yr mortgages? 

compared to the creative , higher interest ones for flips I assume. 

Quote from @Joshua Davidson:

Hi @Dav Pohote,

As far as difficulty, it shouldn't be too bad seeing as you would be more than 6 months into your loan. What you need to consider is the costs to refinance possibly outweighing the benefit of the lowered interest rate, depending on the time you plan to hold the property. For example, if it costs you $8,000 to refinance and you only hold the property another 2 years, you lose out on $2,000. I worked with a local bank that had extremely low costs to refinance so it was well worth it for us, but some bigger banks may catch you off guard. 

Best of luck and let me know if I can be of any assistance!

 Thank you -- didn't know there would be costs to refinance.

I have worked with Chase in the past so haven't checked with smaller banks. 

I am wary of regional banks after the issue last year where quite a few had to be bailed out in order for people to withdraw their funds. But KRE (etf for regionals) seems to have stabilized and if it's just a loan I guess I'll ask around to see what their refinance costs are. 

Quote from @Account Closed:

Refinancing in Q1 2025 could totally be a smart move if the rates drop. When banks check your refi eligibility, they eyeball your credit score, income, and the property's value. Yeah, lots might jump on the bandwagon, but it's not a guaranteed flood. Your diligence in maintaining good credit will play a big role. If you find your dream property now, keep an eye on the rates and be ready to pounce if they dip. Refi hustle might be real, but it's doable with the right prep.

I have found a good property (for rental income) but obviously the inflated price with high rates makes it an OK deal instead of a great one. Im much more comfortable with 15 year mortgages closer to 5% or under (not going to dream about the 2-3% rates  pre pandemic). But the premise is to put down an offer in say March, at these high rates, with the assumption that next year I will refinance with interest rates a 1% pt down. 

Is it that straightforward?

Today the Fed said they would debate having 3 rate cuts this year, which can add up to .75-1 basis point. 

On the 15 yr fixed mortgage's I use, that comes out to about $250/month in interest payments, or $3,000/year. 

My question is if I see a property I really like now, how easy would it be to refinance in Q1 2025? What does the bank look at? I've never refinanced but hear alot about it. Wouldn't everyone who got in at higher rates do the same thing when rates go down and overflood the banks with work?