All Forum Posts by: Joel O.

My blue collar W2 is quite a bit less than $100k a year so not a high income earner. I have 10 conventional loans in my name. Each cash flow well so the debit and income are in balance. It can be done but you need to work harder on getting good deals.

After an exhaustive search I finally found two lenders that offer 1st position HELOC's on investment property. Trying to decide which one I should go with. In a nut shell it's 208K at in my opinion is a decently attractive rate for NOO, or take a 2% higher rate to have access to an additional 50K. If you know of any lenders that do HELOC's on investment property in Georgia I'd certainly welcome a recommendation.

Lender #1

65% LTV ( Prime -.17) = 7.33% Variable APR with loan limit of $208,000

$65 annual fee starting in year two 

No closing costs, Max termination fee $300 within 3 years

Lender #2

70.00% LTV (Prime + 1.25%) = 8.75% Variable APR with a Limit of $224,000
75.00% LTV (Prime + 1.50%) = 9.00% Variable APR with a Limit of $240,000
78.13% LTV (Prime + 1.625%) = 9.125% Variable APR with a Limit of $250,000
80.00% LTV (Prime + 1.75%) = 9.25% Variable APR with a Limit of $256,000

$100 annual fee starting in year two

No closing costs, need to repay closing costs if closed within 2 years 

@Joel O. try to quit claim out of your personal name into an LLC if your conventional loan allows it, saves on refi costs if the lender allows it. In my experience, conventional lenders usually do not but asking is free.

DSCR rates will be higher than your conventional loan but some, not all, DSCR lenders do not report to credit so your DTI would better for your next conventional loan.

@Joel O. this has been said above but Ill reiterate that using DSCR loans allow you to buy more properties without affecting your DTI. DSCR loans can close in your personal name or LLC.

A DSCR loan, aka lite doc or business purpose loans, uses the rents you receive on the property and divided by the new loan PITI to receive a ratio. Simple math would be a PITI of 1,000 and rents of 1500. That would be a debt service cover ratio of 1.5. Basically, this property cash flows. FICO, experience, and LTV are also factors but this is the basis of the loan. No need for tax returns, Verification of Employment, or income. I have been through this loan as an investor myself and originate these loans all the time.

If you got a new job good luck on getting a loan if your plans are to buy real estate with conventional lending you really need all of your T’s crossed and i’s dotted it’s up to you but if your planning to scale you will eventually need to start creative financing it’s the fastest and I would say the easiest and cheapest way to get in on deals faster 

@Joel O.
For example, if you bought a $200K SFR that carried a mortgage of $1000/month (PITI), AND you rented it for $1200/month. That is not gonna cut it. It should be rented about $1600 to $2000/month or even more. At the higher rent, that property will not affect your DTI and you can go get another. Work backwards and you will figure when to pull the trigger.

The above is a an actual example, not just scenario. I have done it with 11 SFRs (one was my primary) at one time and even refinanced them all at once at the same bank.

Also to the point of lenders, shop around. Small community banks can be a blessing. The above example was with a local credit union. Of the 11 loans (ranging between 5.1% to 6.75%), 1 was with EastWest Bank, 3 with Wells Fargo, 1 with Nationwide Lending, and the rest with the credit union. I refinanced all with the credit union when rates dropped to about 2.75%. That created even better DTI for more purchases.

But I got rid of them all immediately after.. that's another story...

Most people who can carry 10 loans and still stay below the DTI threshold are high wage earners.

It's also a tough balancing act for self-employed individuals: You want to minimize your reported income and maximize your business expenses for tax purposes; But you want to maximize your income and minimize your expenses for DTI/Lending purposes. You can't have your cake and eat it to, and sometimes you have to be strategic about how you structure your income taxes and pay down other debt in order to qualify for financing at the right times.

@Joel O. Below are some contacts from my archives that may be able to help or at least refer you to someone:

[Name] Ducket Design Group, East Point Architect

[Mobile] (404) 592-4539

[Name] Randall, East Point, Architect

[Mobile] (770) 356-7752