All Forum Posts by: Jerel Davis

@Benjamin Hurwitz I spoke to a few lenders who agreed it was a thin deal and I let it go.

@Geordy Rostad

Thank you I’ll do some shopping around

@Geordy Rostad

I'll shop around there's a couple other lenders I have in mind like JetLending and Tidal Loans HML and a couple people I have in mind to help me post the 20k but asking coworkers is the last thing I want to do.

Do you know if this reserves situation is common with HML?

Just a little rant:

My hard money lender says I have enough to make a deal work with the money I have to bring to closing. I can afford the holding costs.. but they won’t approve it because they want to see I have an extra 15% of purchase price in cash as reserves.

I’ve got enough money to buy, to repair, to hold, but not enough liquid funds as “cushion”. This is frustrating..

They asked me to go find another 20k for reserves and show a proof of funds so they have more piece of mind. They even explained I might not need the extra 20k for the house but they’d like to see I can find it.

I get that they want to mitigate risks. I’m so stressed that I have to find a way to post 20k in my account on such short notice.

I’ve never been at this level of “pay to play” before and it’s exciting, frustrating, and terrifying. If this offer I already submitted gets accepted, I’ve got 15 days to make all this work and close.

There are lots of people that use a HELOC for downpayment, to buy with cash, or to finance rehabs. Generally though they make sure that the investment property is able to payoff the HELOC when it's refinanced.

For HELOC i believe its ((ARV)-(Loan Payoff))*80% for the spreadsheet formula

ROI = (Current Value of Investment - Cost of Investment) / Cost of Investment

You can get a Discover card with decent rates and cashback as a student.  They're very lenient.  Also set up some small monthly bills like netflix or your gym membership to charge the card and set an automatic payment so you don't have to deal with interest.  When you get raises report it to discover card and they'll increase your line of credit without a credit check and lower your total credit usage (if they need to do a credit check they'll send you a request for authorization and you can just decline and withdraw your app for an increase).  Pay on time for several months and your credit score will spike.  Negotiate with discover for a lower interest rate after 6 months and they may drop it for you.  You can ask for a lower interest rate every 6 months.  Ask a financially savvy family member to add you as an authorized user on their credit card that has low utilization and that will also boost your credit score.  I boosted my wife's credit by 25 points without even activating the card they gave her.

@Karl McGarvey that’s what I’m trying to figure out.  I know it’s not worth the amount they listed when comps from my realtor is at 162,000.

^^ this response was in my drafts somehow..

Man I apologize if you were following this thread but I’ve learned so much since I posted this..  this house was listed way over what it’s actually worth to be considered a deal so I made a low ball offer (not really knowing what I was doing), they rejected it, and I moved on.  I would’ve had no money to budget for repairs and the lender wouldn’t have allowed me to buy it ‘as is’ anyways.  Offering 167 wouldn’t have made a difference anyway if 162 was the # my realtor got from comps of similar homes so I don’t know what i was thinking!  Now that I’ve gotten better this post is embarrassing and my numbers were all over the place.  Seriously all these number i got make no sense and I’m sorry.

Didn’t mean to desert the thread.

Background: I'm financing my first deal (first home in general) and rehabing with a HML. The hard money will finance 75% of ARV with a 6 month term. The idea is to either make it a rental property and cashout/heloc to buy an owner occupied second property or refinance into an owner occupied conventional loan and buy a second property as a rental. In other words, I'll live in the first property or the second. I WILL NOT LIVE IN IT UNTIL ITS BEEN REFINANCED.

Is there a seasoning period to refinance out of hard money to a conventional owner occupied loan? If that's the case, do I need to renegotiate a longer term? I understand it's usually 6-12mo for NOO refinancing.

I'm trying to understand my "exit" strategy options in case my wife gets tired of me.

I really like what @Chris Hopper said. Don’t rely on appreciation because it’s speculative. Appreciation is just a bonus if it does happen and if values drop or go stagnant you better be prepared.