All Forum Posts by: Kevin Woodard

How much principal are you looking? It’s easy enough to get your P&I for 30 v 40. 

The gist is you’ll have a lower payment but pay for a decade longer. You’re also paying toward interest which is going to the bank and not towards the asset. The secondary effect of that being you cannot redeploy towards an additional asset. Run the numbers to determine which course of action is most appropriate to take moving forward. 

Howzit! Welcome aboard and good on you for doing the tough thing and jumping in! 

It could qualify for mixed use depending on the square footage ratio. Do you know the breakdown?

What's the rehab budget? What is the ARV? What is the exit strategy?

The origination fee should be paid at closing. You will receive funding for acquisition at closing. You will bring the cash to cover the difference (the down payment) and the closing costs (origination, third party fees, etc.). 

There is typically a hold back (covers the rehab costs) which will be disbursed to you when you submit a draw request. 

You could continue to get loans with banks but you will pay a higher price that will be close to what you’d see on the commercial side. 

DSCR loans are nice in that they aren't reported to the bureaus, can have multiple loans in process to close at or around the same time, and are not looking at your personal financials.

@Ricky R. A concept I've learned, from someone much smarter than me, and like to employ is expectation management. Going into these deals, what are you expecting to bring to the table? Very early on in the lending process the lender should have said, "this is what you need to bring to close that goes towards the acquisition and this is what you'll pay in fees." If they didn't do that, I would say they failed to manage your expectations. 

Moving forward, it sounds like you have to suitcase your deals utilizing a pitch deck of sorts this is informing your capital partner that you have the deal ready to go (financing, rehab, timelines, exit strategies, etc) and you are just looking for funding in terms of reserves, cash to close, and capital for the rehab to be reimbursed. I would start looking in your immediate network, there are a lot of folks out there with capital they don't know how to deploy.

What's your exit strategy with this deal? The ARV will be determined at valuation. I don't necessarily think a high loan to ARV is necessarily in favor of a new investor. It slims out the investors margin for profit.

Are you by chance in the Navy or just coincidence? I have a few friends that got into the rental market and rent to young ensigns and lieutenants in flight school over the bridge in Milton. Perdido Key still has my heart!

5+% is not bad. What is the loan amount, leverage, and DSCR with that particular deal? I see pretty drastic shifts in the rate depending on those three factors.