All Forum Posts by: Josh Edwards

I'm looking for a little beginner advice. I've tried searching some, but haven't found much in this area. My wife and I are trying to cash out some of our home's equity for investment purposes. We both have 780+ credit scores and based on an old appraisal from a couple of years ago look to be at about 50% LTV in our current mortgage (although we are contemplating paying for our own appraisal to see if the value has increased further). The issue we have ran in to is we live in a de-titled, permanently affixed manufactured home on a few acres. I've tried working with a mortgage broker, but the best he could do since it was a manufactured home was a cash out refinance for 60% LTV and almost double my current interest rate. So not a lot of cash out for a lot more money long term. The interest rate didn't surprise me, but the low LTV did. My questions are:

1. Are there any banks/institutions that are more friendly to manufactured homes than 60% LTV?

2. Is a cash out refinance the best product in this situation? I was thinking a home equity loan might be better, but again I'm still looking for a lender.

I appreciate any help here.

Hey JD,

Before I answer your question I will preface it by saying manufactured homes will always come with lots of "it depends" type of answers. Like is the manufactured home pre-1976? Moved twice before put on permeant foundation? Single wide? What is the acreage being used for (farm land?) How many acres? Depending on these answers will dictate what options you have. Most mortgage professionals don't know all the options available for manufactured homes, so just because someone tells you 60% LTV is the highest they can go on a cash out refi that doesn't mean that is actually your only option. I used to own a farm with a manufactured home on it so know a lot of the ins and outs of where to go for financing these. If you want me to help point you in the right direction let me know- I just sent you a PM.

1. Generally local Credit Unions will have some portfolio options that are more friendly to manufactured homes. There are some national lenders that have options for manufactured but usually the Credit Unions have better rates/fees so that's where I recommend starting.

2. This is going to depend on several factors so can't give a clear answer without more information. What is your current interest rate? How much are you looking to cash out and where will it be invested (expected return vs difference in interest rate)? Home equity products are even more limited for manufactured homes (doesn't mean it's not possible but there will be high rates/fees), so it's hard to say what is best

0 Votes

Quote from @Devin A Hanley:

Hello. I am reaching out to the community to get some opinions on the 2 options that I currently have for a multi-family that I am under contract for. It is worth noting that in both of these scenarios I will be managing the day to day operations of this property and my partner would be relatively uninvolved. And I am planning on holding onto this property for a long time.

Option 1: I have someone who is willing to partner for this property. They will put up the 25% down payment and for that they will take on 40% ownership of the property. Meaning that they will take 40% of the profits every month as well as 40% of the profits if we decide to sell. I will be responsible for servicing the loan which I will do from the rents we collect. With this we would have a loan set at 6% for the first 5 years, then it will change to what ever the 5 year treasury is, plus 2.75 points. With this deal I should cash flow $1100-$1300 per month.

Option 2: I have an offer for a 30 year loan with zero down payment. The payments would be interest only at a 5% rate. At the end of the loan I would then need to give them the full payment for what the loan was for. If I were to do this I would not have a partner. There is also no penalty for paying this off early. Because this loan gives a lower monthly rate and I would be the only one collecting it my cash flow monthly would be closer to $3000.

With option 2, I will be paying about $200k more in interest over the life of the loan. And, I will profit less at the sale of this property because I will have not paid down the principal. BUT, I will make over twice as much while owning it, and at the time of sale I will be able to keep 100% of the profits rather than paying out 40% of them. This is in an area where appreciation will be slow, but I am sure there will still be some over the next 2 to 3 decades.

And, just in case it helps, the purchase price of this property is $485k. In option 1 the loan would be for $363.5K. And in option 2 it would be for the full $485k.

I am curious what your opinions on this may be. I am leaning towards option 2, with the idea that I would be able to re-coup much of the extra $200k I pay in interest at the sale of the property. And that the extra $2000 per month will have a more dramatic impact for my family. But, I may be missing something here....I'm just not sure what that is?

I appreciate any insights or opinions that any of you may have. Thank you!

Hey @Devin A Hanley
I would go with option 2 and put any additional cash flow (~$2,000/month) into a savings account where you can keep it until you have accumulated enough to refinance into a loan that will paydown principle and interest. You will need around 25% of the value saved to refi, and at saving $2,000/month that will take you about 5 years.

I'm assuming this is a private loan? It's rare to have an opportunity to purchase an investment property with no money down and no partner, so I would say don't miss an opportunity to leverage other people money!

1 Vote

Quote from @Ernesto Garcia:

Ben,

A DSCR for an STR can definitely be done. The caveat for this is that we would have to use the market rents instead of the Airbnb/VRBO income. Assuming the market rents hold up a minimum of a 1.1 DSCR and strong FICO cashing out is feasible.

There are some lenders that will allow for income from Airbnb/VRBO to be used in debt calculation instead of market rents. Generally you need 12 month history of STR income verified by 3rd party (Airbnb, VRBO, property management company, etc.), but some will allow for qualifying off AirDNA data (higher down payment/rates)

1 Vote

New Orleans, Louisiana

Quote from @Alex Ballesteros:

I am currently looking to purchase my first investment property & looking to do renovations & convert a 2 car detached garage into an ADU, and i have been researching what the best financing options would be & I came across the Homestyle Loan and wanted to know if any of you had experiences using this loan? If so, what are the pros & cons? Or if you simply have any information on this type of loan it would be a great help.

Hey @Alex, Homestyle loans can be a great option for your first investment property. There can be a few more hoops to jump through than more investment specific loans, but it's generally going to be your cheapest option. Cons are usually that you need a licensed contractor to do the work and you can't do it yourself- which usually is part of peoples plan to save money on the rehab. As mentioned above, pros are going to be lower down payment than most other "fix and flip" investor loans and better interest rates

1 Vote

Hey Brady,

A 12 month Bank Statement program would be great for your situation. It will come with a larger down payment requirement (usually 10%), but can qualify you off of the deposits into your bank account rather than tax returns. If you have any questions feel free to reach out!

3 Votes

Upstate New York, New York

Hey Zach just sent you a PM!

0 Votes

Hey @Nicoló Tossici,

Generally speaking the factors you mentioned shouldn't stop you from qualifying for a DSCR, but it will narrow down your options of what Non-QM lenders will do it, and there will likely be a pricing/rate hit.

0 Votes

Saint Louis, Missouri

Hey @Albert Johnson,

Carini's answer above is correct- get the HELOC first and then let whatever lender you're working with know that you will be using HELOC funds for down payment. Nothing wrong with doing this, if done responsibly it can be a great way to leverage your equity and keep your capital working for you.

Most debt service loans are going to require at least 20% down, which for your scenario ($200k purchase, $20k HELOC) means that you will need at least an additional $10k to bring to closing.

Hope this helps!

0 Votes

Hey @Noah William Jorgensen,

The problem with a portfolio loan likely will be that one house is your primary- many portfolio loans are non-owner-occupied only. You could probably find someone who will do it but you LTV % will likely be really low.

I might have an idea for you though. Just sent you a PM

0 Votes

Houston, Texas

Hey @Lorri McIntyre,

Finance of America Commercial allows foreigners and their rates are generally very competitive. I just sent you a PM!

0 Votes

Tampa, Florida

All Forum Posts by: Josh Edwards

Josh Edwards has started 1 posts and replied 15 times.

Post: Manufactured Home Equity

Post: Looking for your opinion on my loan options

Post: A question about cash out refi on first STR

Post: Homestyle Loan to Rehab First Investment Property

Post: How to get pre-approved while being 100% commission based.

Post: West Coast Mortgage Brokers

Post: Having trouble to qualify for a DSCR loan

Post: Need help using HELOC to buy investment property

Post: Bought house next to my primary. Can I refi both as a duplex?

Post: Canadian looking for funding