All Forum Posts by: Jonathan Taylor

@Javaras Thomas this will be tough as most lenders wont leverage a mid reno project. Do you have any other assets to leverage and you can explore cross collateral to finish the project? Put a first or second position on another property to pull the cash out to close this project, then do a full cash out refi on the completed 6 unit. 

Just a thought

@Angela Varner I work with several lenders who offer STR specific refinances and purchases. What is your scenario? Happy to answer you questions.

@Andy Chen This sounds like a big project but there isnt a way to do a full cash out loan and simultaneously leaving the low rate first note in place. Its either or. Do you live on this property or is it under an investment property loan?

Additionally, adding 4 ADUs does not make this a commercial property unless your lot is ZONED commercial. If it is zoned Residential, this is considered a residential asset with additional ADUs. That sounds off but I have dealt with this issue in CA since the ADU laws came to fruition.

A close ended registered second position would be a good idea, CLTV vary by lender but you can put another note on the property to pull cash out to reimburse for construction costs, but CLTV and rates will vary by lender. That way, you can payoff the second as soon as you can while leaving your first note in place. Not ideal but doable.

@Marita Jojo Banks are being conservative on lending in this market as you are finding out. Non Qm or non bank financing offers more favorable underwriting when dealing with investment property owner (no tax returns/income verification/DTI needed) but with higher rates, terms are the same if not better than banks (30 yr fixed vs traditional commercial structure).

Ultimately it comes down to your goals. If you are looking to pull max cash out while remaining cash flow positive, then pricing out portfolio or individual loans is an option. But if you could answer what you goal is, I can better help with options on tapping into the equity. 

@Matthew K. I understand now. The issues brought up about the property isnt habitable will be an issue as the appraiser will need to view the inside of the property. Do you have any other real estate you can take a first or second position loan on to cover the 540K reno? Putting a note, even hard money, on an uninhabitable asset will be a challenge. 

@Byron Paille lenders wont need to draw up the contract, its more about structuring the loan correctly on submission. An RPA can be structured for the purchase and any lender/broker who knows how to handle these loans are fine but I support what @Alex Bekeza stated and if you do a cost benefit of the cost of selling one of the properties in the blanket loan early, vs the costs of multiple transactions, it might surprise you its not that big of a difference. 

@Matthew K. finally hard work and persistence paid off. Nice work. The numbers are close from what you have access to and what your costs are. 415+125 is 540. If you have access to 500k (300 HELOC, 200 investment margin loan) and if you have access to the another 40, I would suggest to stay on course and don't meddle with additional financing, if I am understanding your scenario correctly.

One note though is lenders are not as willing for do 80 LTV cash outs on loans above 1 mil. Run numbers at 70, maybe 75 (if it debt covers) to be realistic with your exit strategy.

@Annette Barnett From loans that are strictly based on DSCR (no other documents required) to the commercial loans backed by the US Government, they each use some variety of debt service calculation. I have seen lenders advertise DSCR loans in the low 6s but the reality is its probably a governement loan that incorporates a DS calc.

Rate is relative to risk, the less documents (tax returns, PFS, SREO, bank statements, income, etc) the higher the rate ie risk, the more documentation, the lower the risk and in turn, rate. We all want to believe there is a secret lair of low rates and high leverage hiding in the market somewhere but its not true. If thats being advertised, its probably too good to be accurate.  

@Mahari McTier can you elaborate on the deal? What did you mean the seller requires cash? As in the seller wants to close in hard money and fast or your client, the buyer, needs gap funding or cross collateralized loan to come to the purchase table with cash to close?

I have options but need further info to best answer your questions. 

@Tola O. HELOCs use DTI/tax returns to qualify for so Im not aware of any lender who would structure an open ended Credit line without proof of ability to repay.