All Forum Posts by: Dennis Muno

Hello Joe,
So the 3.5% down the other mortgage broker spoke to you about was the FHA loan which requires a 3.5% down minimum and can be used for 1-4 units. FHA loans are a good way to start. Keep in mind, you can only have one FHA loan on a property at a time. Even better for FHA is that FHA loans are lenient and you could go up to a 55% debt-to-income ratio if you choose to proceed. Conventional loans are not as forgiving with the max DTI being 50% and no more. Perhaps the 10% was for conventional??

 Hello Falz,

It shouldn't be hard to refinance your hard money into a longer term loan program like a 30yr fixed DSCR loan. Of course, as long as the property is rehabbed well and the refinance LTV covers the hard money balance owed. Also, your credit matter to an extent as well as if the property will cashflow(some lenders use the market rent) or if there are already tenants in the property with signed lease contracts. So as long as the LTV with respect to the ARV can cover the payoff you should be fine.

 Hello victor,

Applying for a HELOC during the mortgage process will absolutely affect your mortgage process. You could be denied or may have to write a letter of explanation and be convincing to the mortgage lenders. During the mortgage process please do not use any credit, apply for other loans or you could be denied. Even though your credit is pulled at the start of the application it is checked again by lenders before the loan is scheduled for closing.

I suggest you do one loan before the other.

So Home equity or HELOCs loans(different but similar) depend on the equity amount in the property.

Equity= home market value- liens on property.

For home equity there are usually credit requirements and then of course you need reasonable equity in the property. You'll go through the process with a lender to apply and once you qualify, and the loan is approved, your equity amount should be given to you in a deposit.

Then you'll need to go find a good property, run your comps and make sure the property will cashflow. Decide if you'll just buy or buy and rehab. Once you settle on the property, you get a purchase contract and get a lender to qualify you and then help you finance the property. You'll need downpayment + closings costs. If you qualify and you have the money for downpayment and closings costs, you should be good to buy the rental property

 Hello Anthony,

Comparing SATX to other parts of the nation, home prices will usually be cheaper than other places in the nation although still higher than from 2years ago. For cashout refis on investment properties, the amount usually goes from 70-75%, in few cases, 80% LTV.

So, you could do a DSCR cash out refi on the Colorado Springs properties. That should give you enough money for downpayment and closing costs for buying your home in SATX.

 If the lender is in first position and the seller is in second position(agrees to it), you may have some options. However if you have some money in the deal it will be even better for you and your chances of finding this type of financing

 Hello Dan,

So it depends. Your loan pricing options depend on things like your debt to income, your FICO, downpayment amount, loan amount and then well, the type of loan program(FHA/Conventional/). At par= no lender credits and no buy down points. Below par= you pay points to get a lower rate. Usually you can't buy rate down more than 2pts. Above par= you take a higher than par rate with a higher monthly payment but you get some lender credits towards closing costs.

So it's a combination of your financials + the lender's pricing as of the day. Loan pricing changes numerous times a day. I have had pricing options bad in the morning and then good in the afternoon so it could be the pricing as of when you get the options from the client.

Also, how much are you putting down? It's likely with a lower downpayment, you may not have conventional par pricing options. If you want no buydown point options, obviously it depends on your financials(FICO, DTI, downpayment amount, zipcode, etc) but you should contact other lenders for their loan pricing. You may or may not have at par pricing. Also ask a broker for if they do borrower paid compensation loan option for your loan. That will increase your chances of seeing pricing with at par options(still nothing guaranteed). Keep in mind: even if you see pricing you like, unlike you apply with that lender and the lender locks your rate, rates change multiple times every day

Quote from @Jim Shelton:

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $2,350,000
Cash invested: $100,000

71 Units across four buildings. Value add opportunity. Seeking assistance with commercial property insurance and raising capital for the down payment.

What made you interested in investing in this type of deal?

Purchase is 33k per unit, with value add opportunities and room to raise rents.

How did you find this deal and how did you negotiate it?

PM selling it to me.

How did you finance this deal?

Still in the works!

How did you add value to the deal?

Cap Ex increases, adding exterior appeal and raising rents.

What was the outcome?

TBD!

Lessons learned? Challenges?

Challenge: 72% occupied upon purchase and to make the numbers work it needs more tenants.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Frontier PM in Saint Louis!

 Looks like you're on to something big on this deal. Congrats!

 Hello Jimmy!

So by FHA guidelines you can't have two FHAs at the same time unless there is a very rare reason. However, nothing stops you from also getting an FHA in addition to a conventional loan like you do. So an FHA is possible for you as long as you don't have another FHA(and you qualify according to the FHA guidelines).

Giving that you both have other properties that are in your personal names(not LLCs) I am guessing your DTIs (debt-to-income)may have risen a bit. Given you both are co-borrowing, that should dull the DTI effect for you both since both you brothers will be considered in total for an application, assets, and DTI. Either way, FHAs are a little more flexible with DTIs than conventional(conventional max is 50% and no more). I believe for an FHA you could go up to 55% DTI. FHA is also more forgiving of lower credit scores although it depends on the lender sometimes too. So you should be able to do an FHA but check with a lender what your DTI is and if there is anything that could be a hindrance for you for an FHA loan application. Ask your lender to comb through the FHA purchase guidelines too for confirmation.

 Hello Kyle,

I would recommend for a commercial loan you talk to a couple of banks/lenders and compare their rates, terms and options before you settle on one. Your local bank may be good but you never know who has the best financing option until you compare financing options.

Also from your post you said you are looking for a SFH rental.If yes and true, why a commercial loan then to buy the SFH rental?