All Forum Posts by: Jacqueline Wright

It sounds like you're in a good position to take advantage of the equity in your investment property and the potential for lower interest rates. For a cash-out refi in Cambridge, MA, you may want to look into local lenders, credit unions, or regional banks, as they often have better knowledge of the local market and can offer competitive terms. Consider reaching out to lenders that specialize in investment properties and can move quickly to capitalize on the current market conditions. Be sure to compare terms, fees, and interest rates to maximize your cash-out strategy and help fund your next property purchase.

Since you're looking for a commercial lender for a cash-out refi on a 23-unit apartment with a pending occupancy, you might want to target lenders that specialize in bridge loans, portfolio loans, or those experienced with Section 8 housing agreements. Even though your property isn't fully occupied yet, your strong ARV ($1.6M) and expected rental income make it appealing. Lenders comfortable with DSCR-based underwriting should be a good fit, as your 1.73 DSCR at full occupancy shows the property's income potential. To meet your timeline, prioritize lenders with fast closing options and flexibility for properties in transition.

It's great that you're exploring private equity as an alternative to traditional lending due to your religious considerations. Your proposed structure where the partner provides 2/3 of the capital and you split profits 50/50 could work, but you may want to refine it. A 30-35% ROI over 4 months sounds appealing, but it's important to make sure it's realistic and sustainable based on the rental's performance. To attract a long-term partner, emphasize the mutual benefits and build trust through transparency in the deal structure, profit expectations, and exit strategy. It may also be useful to consult with an expert to ensure the terms align with both parties' goals.

It sounds like you have a solid strategy in place for scaling up your portfolio quickly with seller financing and focusing on properties that cash flow immediately. For your "BRRRR in Bulk" approach, you might want to explore lenders that specialize in portfolio or DSCR (Debt Service Coverage Ratio) loans, as they are often more flexible with complex financing structures like seller 2nd notes. Private lenders or bridge lenders may also be a good fit, as they tend to offer more creative solutions compared to traditional banks. Be sure to clarify the lender's stance on total CLTV (Combined Loan to Value) at 100%, as not all will accept this structure.

For long-term rental (LTR) investors, an ideal private loan would offer competitive interest rates, reasonable fees, and flexibility on terms such as prepayment penalties. A loan-to-value (LTV) ratio around 70-80% with a straightforward approval process would be appealing. Investors also appreciate lenders who understand the nuances of rental properties and provide fast, reliable service without unnecessary red tape. Flexibility on loan duration and amortization would also be key for long-term holds.

Many lenders have specific guidelines regarding late payments, but some may still work with you if you've made up missed payments and have shown consistent recent payment behavior. It's a good idea to look for lenders that specialize in more flexible terms, such as portfolio lenders or private money lenders. You might also want to consider a credit repair strategy to strengthen your application. Be sure to check with each lender about their specific policies on late payments within the past year.

It might be better to explore financing options for the purchase, such as a hard money loan or private lender, and use your cash for the rehab. This way, you keep liquidity for the necessary repairs and can leverage the property’s equity for additional funding if needed. Consider getting an appraisal to understand the home's current value and equity to guide your decision.

Property Management Agreement: Another option could be entering into a property management agreement where the corporation is responsible for managing and paying all expenses, including the mortgage. This would show that the corporation is handling the financial obligations of the property, even though the title remains in your name.

When doing a "Subject To" deal in Texas, here are some key things to watch out for:

1. **Due-on-Sale Clause**: The existing lender could call the loan due when the property transfers ownership, though this isn’t common if payments are made on time.

2. **Insurance Issues**: Ensure the property insurance policy is updated to reflect the change in ownership to protect both parties in case of damage.

3. **Seller’s Financial Stability**: Verify the seller’s current financial standing, as any liens or judgments could complicate the deal.

4. **Title Search**: Conduct a thorough title search to ensure there are no hidden liens or encumbrances on the property.

5. **Trust Documentation**: Some investors use a land trust to hold the property in a Subject To deal, which can protect privacy and minimize the lender’s focus on ownership transfer.

6. **Clear Agreement**: Draft a detailed agreement with the seller that outlines all terms, including responsibility for future payments and maintenance. It’s wise to involve an experienced attorney.

7. **Exit Strategy**: Make sure you have a solid plan to refinance or sell the property before the loan term ends or in case the lender enforces the due-on-sale clause.

Being diligent with these aspects will help avoid potential pitfalls in your first Subject To deal.

It's common for DSCR lenders to require additional documents like Social Security records and tax transcripts, even after providing proof of funds and your mortgage statement. While DSCR loans usually focus on property income, some lenders still verify your personal financials for added security. Every lender has different requirements, and this can vary based on their underwriting policies. If you're concerned, it's a good idea to clarify with your lender or shop around for one with more lenient requirements.