All Forum Posts by: George Knetzger

@George Knetzger You have to ask your particular lender what the options are for buy downs. 

When you know specially what it will cost, you then calculate how many months the savings will cost to pay off your up front cost. 

Once you know how many months it will take to repay your up front cost, you can then consider how long you plan to own the property and decide if the cost is worth it.

@George Knetzger Yes, lenders will always have some minimum note rate even if you max out the buy down option. For example, right now as of 7/24 there is really nobody on the secondary market buying 30 year fixed DSCR loans below 6.25% floor so even if the par rate were 6.75% you'd only be able to buy down a maximum of a 0.5%. (I'm assuming that you're referring to a similar product with a 8.125% par rate.) To figure out whether or not a rate buy down is worth it for you take the cost of the buy down and divide by the amount of money you'd be saving every month. That will give you the number of months it takes to break even on the cost of the buy down. Divide by 12 for the # of years.

@George Knetzger Yes, lenders will always have some minimum note rate even if you max out the buy down option. For example, right now as of 7/24 there is really nobody on the secondary market buying 30 year fixed DSCR loans below 6.25% floor so even if the par rate were 6.75% you'd only be able to buy down a maximum of a 0.5%. (I'm assuming that you're referring to a similar product with a 8.125% par rate.) To figure out whether or not a rate buy down is worth it for you take the cost of the buy down and divide by the amount of money you'd be saving every month. That will give you the number of months it takes to break even on the cost of the buy down. Divide by 12 for the # of years.

I have heard about Allen Capital and am currently considering them for a deal. I am a little hesitant as you are as well. I would never wire them any money and would work through an escrow/title company that I would pick. That said, they have not said or done anything that is different from other private lenders. Someone referred them on a Facebook forum. I found their terms very appealing. 5% loans on a 25 year term, 10% down and 2 points closing.