All Forum Posts by: Devin Peterson

Trying to understand how this step is beneficial with current rates. I understand that refinancing can lower payments if you can get a better rate, or extend the life of the loan, but arent you adding more to your loan in closing costs and if you are taking equity out, potentially increasing the monthly payment?

Hi everyone!
I’m currently under contract on my first commercial property in Tennessee—3 duplexes on the same lot—and I’ve run into a snag. One of the duplexes has some foundation issues, and one of its units needs subfloor repairs/new flooring due to moisture damage. The total cost to fix these issues and encapsulate the crawlspace is $20–25K. The other five units are currently rented at market rates.

I'm using a DSCR loan, and my lender requires the property manager to confirm there's no deferred maintenance before closing. The PM is willing to sign off—but only after these repairs are completed.

Here's the issue: the sellers claim they don't have the funds to cover the repairs. My lender is recommending I use a hard money rehab loan to complete the work, then refinance into the DSCR loan afterward. But with over $15K in added fees, closing costs, and higher interest, it seems excessive for just $20–25K in repairs.

The seller offered to let me pay for the repairs upfront and credit me back at closing. I’m hesitant because I don’t know what protection I’d have if something derails the closing and I’m left out of pocket.

Has anyone dealt with a similar situation? I’m looking for creative ways to make this work without going the hard money route—and ideally while protecting myself if the deal falls through. Any advice or suggestions would be greatly appreciated!

Thanks in advance!

We've been real estate investors very part time for about 15 years. Currently have 3 long term rentals with a commercial loan not in an LLC.

About 5 yrs ago we bought land. The plan was to sell our existing house, move into one of our rentals, use all the cash to build and then use the equity to invest in real estate again. 

Fast forward about 4.5 yrs and we’re living in the new build. Value conservatively $1.5M and we owe $200k on the land at 5%. We were aiming for a $900k equity line but finally got a local bank up to $750k. It would be a line of credit with a check book where you only draw when a deal comes up and pay on just that amount. That would allow us to pay cash for a property, rehab it and then get financing on it while paying back the equity line. 

But now we’re running into debt to income issues. This same bank approved our land loan with approx $9k gross per month, a $2,500 house payment and $3500 rental payment. Now income is around $13k gross per month, $2000 land payment, $1000 van payment (that we will pay off with cash when equity line is open), and $3400 rental payment. They have this at almost 80% debt to income…I assume with taxes and insurance but counting no rental income. 

Is there another avenue we should be looking at the use our equity? 

Our first plan is to convert space over our 4 car garage (approx 1200 sq ft) to an Airbnb space on our farm for about $80k which would generate $40k+ a year at 50% occupancy. We’re also working on a VW bus to Airbnb conversion and we have a 40x24 space in our barn plumbed and framed for a 3 bed/2 bath barndo Airbnb. 

Do anyone know lenders that do dscr refi loans that's under a 100k 

Hey Devin, we do STR DSCR loans using either AirDNA income projections OR actual income if you have a 12 month history for the property. Happy to run your scenario if you want to shoot me the details. Good luck with this!

Are there any 5% rates for multifamily 5-10 units?  I am looking at a deal that will only make sense with such a 5% rate for a 25 year term and 25% down.  I do not want to put more down.

Thank you

Transferring it after the fact is a false sense of security which is only protected because no one ever gets sued because they have insurance. A LLC must be arms length and separate from the person. Unless you are in teh business of buying homes in your names, keeping them in your name and giving them away to others, (hey add me to the list, better yet can you transfer the property to me)?

I know that sounds ridiculous, but thats how ajudge will see it, you gave your LLC a free home - do you give others free homes. Probably not, so the LLC is just an extension of you and not seperate.

Note not an attorney but watched a lot of Matlock and Peoples Court as a kid.

@Devin Peterson

Looking to purchase single family home as investment property and have the protections of an LLC as it will be used for STR.