All Forum Posts by: Josh Engelhart

An FHA loan should be more flexible with your debt to income ratio and will allow you the lowest possible down payment on multi family property. (2 - 4 units) If you are still running into a wall after that I would look at either seller financing as mentioned above or find a deal so good that friends and family want in on it.

Your contract should specify a closing date. If they cannot close by that date you can actually keep the earnest money and look for a new buyer. If it is something that is going to resolve itself quickly and it was a good offer it may be worth waiting.

If the contract specifies a loan approval contingency date and they are not able to produce a formal loan approval from a lender by that date the contract should also be null and void. In that scenario the buyer can likely keep their earnest money.

Borrow all of the money from him. Buy a broken ugly house at a low price. Fix it (with his money.) Sell or refinance all of his money or more back out.

He would benefit from either you paying him interest or some of the profit from the sale or refinance.

@Richard Leyba tejada About 4 months of looking around. I wasn't even thinking duplex at the time, but couldn't pass this deal up.

If/ once you have a strong 2 year history on the books you can look at longer term fixed rate commercial loan options if your loan size is high enough. Rates don't really have much room to go down and the Fed has announced they are going to raise rates the next few times they meet.

Whatever they agree to is fair. That being said I would never do that, it's a huge risk on their end. If your deal is amazing and you had a great track record I might change my mind for a 50/50 split. If it's a marginal deal and you have little to no experience you should probably just fix your credit.

The money also has to come from their funds sourced from their asset statements over the last 60 days in order to get approved by the lender.

@Quoc Tran If the property is going to be out of the portfolio within 5 years you probably want to skip refinancing entirely entirely. Your $6,000 cost to save $157 per month has a 38 month payback. If you are out of that property in less than 3 years you are going to lose money on the refi. Even if you keep it the full 5 years the savings are marginal and refinancing is a pain in the butt.

Your other option would be to take an even higher rate than what Amerisave is quoting right now that will have premium pricing. I max out at 2.5 points back. Meaning on your $435k loan if you take the highest rate available you could get a credit back of up to $10,875. This would cover any and all lender fees, title, appraisal, etc. There would be no loan cost or increase in loan size, but with the higher rate your monthly savings would decrease or go away completely.

Quicken is never going to be your cheapest option. People suggest local banks and credit unions due to their flexibility, but they aren't usually the cheapest either. I would do a search on bankrate.com and call the lenders who look the cheapest. When shopping mortgage lenders all you need to compare is your interest rate and the lender fees which are listed in box a on your loan estimate.

All of your other closing costs come from third parties. On refinances the lender normally steers you to their preferred title company, but you can pick your own.

If you are going to keep the loan for a long time a lower rate with higher fees can be worthwhile. If you may sell or refinance again in the next few years you are better off taking a higher rate with no lender fees.

Most bank money is government backed which is why it has so many rules behind it. You need a lender who is playing with their own money and own rules.

A 2 year business history is a standard ask of most lenders. Do you have a history of flips or an existing rental portfolio? A hard money lender or hungry local bank will probably be willing to work with you if you have some type of background even if it isn't two years with this particular LLC.

When I called around to hard money lenders I found one willing to offer a $1MM line of credit. It was at 9% and I would have had to pay 4 points on the money borrowed. The deal I was looking had a margin similar to what you are looking at and I decided the financing costs were too high relative to the risk and potential return.

The less qualifications, history, collateral, etc. you bring to the table the higher your financing costs are going to be. On the lender's end, why would they lend you money at 5% with no financing fees when they could lend that same money on a much safer 20% down payment fully operational house.

Looking at your potential example deal: $150,000 sale price. 6% fees to realtors and maybe another 2% in closing costs. This leaves you with $138,000 coming your way closing. If you're buying at $100,000 and putting $30,000 into it you have $8,000 left over for profit, financing charges, holding costs, etc. That would be pretty thin if you have high financing costs or anything unforeseen comes up during the project.

Long story short, you can find the financing you are looking for if you make enough phone calls. If you have a lean deal the financing is going to cost too much. If you are buying low enough and selling high enough the cost of your financing doesn't matter.

Top tier credit on a $200k or more 30 year fixed residential loan will put you around 5%. Very small or commercial loans are going to be worse on either your rate or loan terms.