All Forum Posts by: Garrett Pettit

Quote from @Stephanie P.:

Quote from @Garrett Pettit:

I need advice. If I were to take out a private money loan for a high performing short term rental triplex, of which I'd live in the poor studio unit and rent out the other multi bedroom units, and then decide to refinance to a lower interest bank loan within a year or two, what are some risks and problems I should be aware of? Do bank refinances consider short term rental income? How does this affect taxes? Pros and cons? I've never done this before so I'd really appreciate some advice.

 It's an owner occupied property, so RESPA rules apply.  

 Thanks for the insight, could you elaborate on how RESPA might come into play with the circumstances I described?

Quote from @Nicholas L.:

@Garrett Pettit

you don't "take out a private money loan" the way you go apply for a mortgage - private money is money from a real live human person in your network.

and no one should loan you 100% of something - that's risky for both them and you.

and... you wouldn't "decide to refinance" - the whole point of private money is that it's short term.  so you'd need to have all of this worked out in advance.

i didn't look at your profile or any of your other posts, but can you house hack instead?

hope this helps...

 House hacking is precisely what I'm trying to do, just in a more expensive area. But I'm $100k short on fha/conventional loaning, and sellers refuse to give me any leeway, so I need to get creative, even if it means eating a higher interest rate for a year or two before refinancing into something normal, or so the hope goes.

Quote from @Randy Rodenhouse:

One risk is that you are not able to refinance it and you're stuck with the higher payment and higher interest rate of a private money loan. Yes a bank refinance will look at the rental income.

 Thanks for the advice. It's my understanding that it is perfectly doable to refinance from private to a bank mortgage. In what circumstances would this not be possible? And to mitigate that risk, would you recommend stipulating in the contract that I could refinance at any time?

If I get a primary residence for myself to live in, what would you say are the best ways to scale a portfolio with little money down, in addition to the usual advice of house hacking every year? 

And if an investment property defaults, can creditors come after the separate primary residence in any way?

Quote from @Chris Seveney:

@Garrett Pettit

If it’s a gift you have to give back it’s a loan not a gift

Not trying to argue semantics here. I'm asking about usage of funds: if a gift fund is provided, used to qualify, and then ultimately returned to the original giver, I seek to know the pros, cons, and potential risks associated from any here who might have insight to share.

I need advice. If I were to take out a private money loan for a high performing short term rental triplex, of which I'd live in the poor studio unit and rent out the other multi bedroom units, and then decide to refinance to a lower interest bank loan within a year or two, what are some risks and problems I should be aware of? Do bank refinances consider short term rental income? How does this affect taxes? Pros and cons? I've never done this before so I'd really appreciate some advice.

If I receive gift funds (call it $25,000) that I use to qualify for an FHA loan, of which I purchase a primary residence with, but those same funds are NOT used in the actual property and just continue to sit in reserve, is there any issue in the eyes of the lender, bank, FHA, IRS, etc, if the gift funds are given back to the original giver after the property has already been purchased with the loan that that money allowed me to qualify for, and exchanged Title?

Quote from @Rick Albert:

Keep in mind buying multifamily properties have a higher conventional loan limit. For example it might be $1M for a house, but $1.4M for a duplex.

It could also be they are putting the 20% down to avoid the issue. Maybe they are scaling so they sold their first place to get this one (or did a cash out refi/HELOC for the down payment).

What I've also seen in Los Angeles is parents help with the down payment. 

 Do you not have to deal with loan limits if you put 20% down?

Quote from @Chris Davidson:

@Garrett Pettit if you are looking at SMF rents will be added to your DTI to help with qualification. If you can't qualify with that I would look at stepping down a level and getting something you can afford and get the entire deal to yourself. Partnerships get messy when one wants out and the other doesn't and can't buy the partner out.

Also look at creative deals, but you will likely need more capital for that if you are focused on SMF. However sometimes a base hit is better than no hit at all.

 It is an option, but it would put me in worse parts of town that my ambition refuses to let me accept. I need to break into these higher price points. What is your opinion on hard money loans from family members to make whole the difference between purchase price and a lower qualifying loan amount?

Quote from @Charles Carillo:

@Garrett Pettit

When possible, I would avoid partnering with someone. In certain deals like large apartment complexes or commercial properties, it is usually required; however, if you don't need to, I would avoid it. Are you able to purchase a smaller (less expensive) property by yourself? If you are able to cover closing costs and the down payment; you really just need to put together the funds for repairs, and the reserve.

 It is an option, but it would put me in worse parts of town that my ambition refuses to let me accept. I need to break into these higher price points. What is your opinion on hard money loans from family members to make whole the difference between purchase price and a lower qualifying loan amount?