All Forum Posts by: Kerry Boyle

"Good debt income ratio." Different type of loan. Anytime someone starts calculating DTI, rates are dropped (but it is also that fewer people will qualify). You definitely have a winner though.

Thanks for the description for how you do private lenders! I didn't realize you were only using them in a second or unsecured position.

As for our draws we give you the money, then you let us know when the work is done.

i.e. If you have a 4-draw schedule that is for 65k in rehab you would have this set-up with us:

$10,000/$25,000/$25,000/$5,000

$10,000 is a credit on your HUD (as long as it plus our base loan doesn't exceed 100% purchase price). You complete the work and order an inspection, same as other lenders. If it passes, then we give you the next $25,000. When you complete that work, you get the next $25,000. The only draw that is payed similar to other lenders (in arrears) is the last. You get that one when all the work is complete. So you complete the work, then you get reimbursed for the last $5,000.

There are short-term (2-5 years are the max) interest-only loans by hard-money lenders that have a balloon payment at the end of term. These typically are higher rate and easier to get to fund.

There are also amortized 15-30 year loans that are based on DSCR, LTV, and credit. These are commonly referred to as rental loans. Also easy on documentation (much easier than DTI & other income-based loans), the interest rates are better than the above short-term loans, but not as good as conventional loans (that require DTI and income etc).

Most cash-outs aren't greater than 80% of the value of the property.

Estimates:
HML Loan - 8-14% interest only, short term loans, limited documentation.

Rental Loan - 5-9% amortized, 30 year (some options for 15yr), a bit more documentation.

Local Credit Unions and banks - 4-8% amortized, 30 year (some options for 15yr), documentation varies but typically requires some debt-to-income.

Conventional Loans - 4-6.5% amortized, 30 year with options for 15, documentation heavy.

Email me a copy of your term sheet with your Hard Money Lender and I will respond with ours.

Aggressive LTVs, low rates, rehab draws are advanced, easier application. Where will we beat your current lender? 

Applicant must have 600+ credit.

Applicant must have clean background check.

To close in an LLC/Inc only.

We are a direct lender. 

Residential Investment Lending at its best.

We finance fix and flips, cash-outs, refinances and make it all easy for you!

Requirements:

Applicant must have 600+ credit

Applicant must have clean background check

To close in an LLC/Inc only

Guarantor/applicant must be at least 1% member of entity

Must be U.S. Citizen

Yes! You do need some money to close! At minimum, closing costs and first 3 payments*

If you are doing rehab, you need a licensed and insured general contractor.

You must make money on your flip - we will vet the project and feel confident you are making at least 25% of the repaired value on a sale, prior to sales costs.

Why are we great?

Excellent service - it matters to us.

We advance your rehab draws. That means you get the money prior to completing your work!

Quotes are free. Term-sheets are free. I don't need your social security number to give you an idea of what your loan will look like!

Our processor will coordinate with title, your homeowner's insurance agent, and your general contractor to ensure we have what we need to close your loan.

You don't need to call a robo-call queue to get us. Most loan officers have a direct line and work outside normal business hours.

What do we need for a quote

Estimated credit score - be accurate, your loan estimates depend on it!

Experience - If you (or any members of your entity) have owned and sold properties in the past three years give yourself a point. Likewise any rental properties that cash-flow also give you a point. Add them up and let me know the number!

Purchases - Purchase price, rehab cost (if applicable); After-Repaired Value.

Refinances/Cash-out - As-is Value, rehab cost and After-Repaired Value (if applicable), and any debt owed on the property; Also, what is the term you want? 6-months through 30 years**.

Entity name (you can say "none" yet if you don't have one!)

*Refinances/cash-outs (with or without rehab) typically don't require cash-to-close.?

**30 year programs require more information - please email me if you are interested.

We work with beginners, brokers, and professionals. 

Shoot me an email with any questions!

[email protected]

This is a great post, particularly the last paragraph. 

I work for a national lender and the appraisal is a big factor - I rely on you to know your values will hit and vet them with the appraisal. I think every lender has seen his/her share of bad appraisals - when we just don't agree, but they still end up being limiting factors.

Ultimately, having a local and a national lender at the ready is best practice. National lenders may provide better rates/LTVs, but local will have the flexibility that you will definitely need if you plan on doing multiple deals a year.

**Edit: I just had to come back and say that not all national lenders are slamming numbers behind a desk. A lot of our LOs have personally met their repeat clients, flying out to their area. Nearly every LO in my company would work a Sunday if it meant getting another closed loan.

@Veronique Moore

1. Yes, 12% is 1%/month; so this is based on a $160,000 loan amount. This loan amount is probably higher than you would get as a beginner.

2. This means you are getting 88% of purchase. This is probably higher than you would get as a beginner.

3. I think I did 3 pts on a $148,500 loan amount. Lenders also typically have some origination fee - usually $700-$1000.

4. Homeowner's Insurance - I only estimated 1500. Like all insurance it is highly variable. Cheapest I have seen for loan amounts between 100k-200k was about 500, but I think 1000 is typical in this range. You would need to speak to a homeowners insurance agent for a quote. All lenders require HOI.

5. I was purely speculating on any deed/transfer taxes. Usually you get the exact cost once you get a title company to provide a preliminary HUD. I think VA is relatively cheap, so I may be spot on with my estimate.

6. Lender's require lender title insurance - this is a cost paid by the buyer. Again, I am only estimating here, the title company would provide this figure on a preliminary HUD if you provide them the estimated loan amount.

7. Not sure where that number comes from. 12 months x $1,600 payment (as you said in #1) is $19,200. Most lenders require you to show you have the money to cover down payment, closing costs, and at least 3 months in interest reserves, but not all lenders require it.

**Note**  I am not giving you a quote here. I'm just giving very rough estimates. Please reach out directly to a lender to see exactly what their quote looks like. 

9%, at least for us, is only reserved for experienced investors. I think most lenders value experience higher than anything else. I believe it is a common theme that when a lender advertises 9-12%, 9% is for the highest qualified applicants and 12% is for the people who are just above the minimums to lend on (i.e. beginners with low credit).

Usually, the lenders that go down below 10% are national hard-money lenders and will not allow the borrower to put less than 10% of the total cost into the property. That would cap your loan at $148,500. Meaning your down payment would be $16,500, closing costs estimated at $10,000 (4500 lender, 1500 HOI, 500 taxes, and 3500 title). Holding cost would be $13,365 over the year (9% on a $148,500). ***IF YOU GET RENTERS IN at MONTH 6, you are effectively cutting this whole number down. Your cash flow is actually significantly higher in the HML's 9% loan than your 6% amortized rental loan (over 10 years which is very aggressive).

When you refinance, lets assume about the same closing costs (except taxes and HOI, since HOI will probably be escrowed and built into your payment). So you owe $148,500 to your HML, then typical rental loans allow you to build in closing costs as long as your LTV hits their numbers. So new loan is $148,500+$4,500+$3,500 = $156,500.

$1,737/month on a $3,000 rent sounds really great to me, I don't think you want to jump out because of the 50% rule with those numbers.

Your main concern is getting the project done fast and getting renters in there. Then you just have to use the HML to bridge the gap until you can refinance and start the slow equity grind with PITI payments.

How do you get your draws? I feel like my company is on the fore-front with draw disbursements, so I want to know if a company is doing something more innovative.

Also, I have always been curious Nghi, when you use private lenders are they creating a mortgage or is this unsecured? Do you pay any fees at all or do they incur any "loan creation" costs?

It seems to me that I should not pay the hard money lender $1.8k/month for 12 months, but perhaps that's what I will have to do

I recommend paying your HML :), don't want to go into default. *Joking, I know what you meant.

HML fix & rent of $165,000 @ 15% over a year - Monthly payments are $2,062.50. These are not amortized... i.e. you don't pay principal. Your closing costs are too low and you are self-financing the repairs in the report. Based on the report, your loan is only $140,000 and at 15% you are paying $1,750/mo.

Rental loan of $165,000 @ 6% amortized over 10 years - Monthly payments are $1,832 before taxes and insurance. Don't forget there are closing costs again when you refinance!