All Forum Posts by: Joseph Coleman

@Anup Jung Karki

Pace Morby may have some resources on this. I have never heard of hard money lenders doing anything related to sub2.

@Jad Rahouly
Hey Jad,
Thanks for you question. You will never regret reaching out to investors and learning about what they do. There are many different paths. The most important thing to do at your age (in my humble opinion) is to take action and try many different things. You just need some momentum and you get that by getting started. I would take whatever opportunities you come across. Jump on them and give your very best.

I say that with one caveat. Overtime, you need to decide if you want to be an investor or make money from the transaction like an agent, flipper, etc. They can both work and you can do both at the same time but they should not be confused. 

@Kelly Williams There are many lenders that can do various types of DSCR loans. The lenders above described some great pros and cons. I would make sure you understand how the lender estimates rents (some can use AirDNA and others only use comparable long term rents). You can find many DSCR lenders on BP's Lender Finder and read reviews. Easy Street is one of the few that does STR's. DSCR loans for STRs based on Airdna data is very hard to find.

@Ryan Sun A loan officer is going to be the best person to advise on the mechanics of how to accomplish your goal.

When lenders sell and purchase loans on the open markets they do (in theory) have options to get you a higher interest rate loan with lender credits. 

I have never heard of selling points. Also, on a side note "points" just means percentage points. It may or may not be for a rate "buy down" 

What you are referring to are lender credits. Read about them here. 

But to answer your question, 
"Would it be advisable to sell the points, receive closing credits, and subsequently refinance when the rates drop?"

This is essentially another way of asking if you should you place a bet that rates will decrease. I would take your money to Vegas for better odds. 

@Matthew Lindsey
This is somewhat unique to have LLCs renting from an LLC. I would take statements from lenders that they know this will not be a problem with a grain of salt. A lender needs more information to know if they can do this.

For example, if there is any sort of affiliation between the lessee LLC and LLC that owns the property, that is obviously going to raise red flags. I would just be careful through out the whole process and make sure your lender really understands the guidelines that they are underwriting to so that you don't have surprises down the road. 

@Ben Miller
You have a big advantage being able to use a VA loan!

For learning about VA loans I would speak directly with a lender that has experience with VA loans. Some investors share incorrect or misleading anecdotal information about loans, which just confuses borrowers. Also, Julien is right, a VA loan may or may not be the right loan product for you. A good lender will be able to walk you through options. VA loans have many unique characteristics like entitlement so you need an expert. BiggerPockets has a lender finder tool where you can can search for Georgia lenders that do VA loans. 

I would also check out local Real Estate meet ups to meet people who can teach you the local knowledge. It's amazing what you can learn from speaking with locals that you could never learn through a Google search. 

@Alfredo Alfaro did you find what you were looking for?  

Even if the lender is willing to do 100% financing, I would be extremely careful of this approach because the only way a lender will finance a property at 100% is if the reward is worth the risk. More risk requires more reward for the lender. The risk of default goes up dramatically when a borrower doesn't put any skin in the game. So your fees need to be so much higher that you would probably be better off taking money from an equity investor. 

On the other extreme paying for everything in 100% cash will really limit your growth but 100% financing is just too far to the other extreme. Unless you are in an extremely unique situation like if you were to be purchasing a property at a 50% discount and you have a trust fund setup to start paying out prior to when your payments start coming due. 

I would recommend speaking with your Lender and CPA every couple of months to plan for your next property because your taxes and qualifying for a loan go hand in hand. On an STR you may be able to file with a schedule C or schedule E. How you file and when you file will have an impact on your ability to qualify for your next loan loan. Ideally, your lender should have experience in RE investing and a breadth of different loan products they can offer to you. It will be a lot easier if your lender can act as a coach for how to best use debt as a tool to scale your portfolio.

BiggerPocket's Find An Agent search in the tool bar up top : ) I work for BP so I am biased but I did find my agent in Colorado using this tool and my agent was a major help in finding my STR legal property in a great STR market in CO.