All Forum Posts by: Kirill Bensonoff

Interest-only loans are generally suited to investors or buyers who are in a good financial position and who only plan on owning the home for a few years. These loans work well for buyers who are disciplined enough to make payments toward the principal amount of the loan during the interest-only payment stage. For first-time investors who don’t plan on owning the property for a long time, this could be a good option, depending on the investing strategy.

Pros:

• Lower monthly payment during the interest-only payment stage
• Helps increase your cash flow every month
• Rates may be lower as they are adjustable

Cons:

• You are only building equity in the property once you start paying off the principal amount
• The interest-only payments are temporary and your monthly installments will go up eventually
• A lump sum payment will be required at the end of the loan which can be difficult to do
  
  Hope this helps! 

Hi Jake

1. An LLC is a popular choice for real estate investors because it offers personal liability protection, tax benefits, and a good structure for real estate partnerships. The first step to forming an LLC is deciding which state you'll be operating in. You can apply easily online and forming your LLC in that state. It's a good idea to create an operating agreement for this, as well as get an EIN.

2. Getting financing for a property owned under an LLC is easier than you may think. It is possible to get conventional loans under an LLC, however it's more difficult and it can be reflected on your credit report, even though the loan is under the business. Hard money loans and private lenders offer a much easier way to get funding under an LLC, without the same requirements as conventional loans. Bear in mind that a personal guarantee is still required in most cases.

3. Doing a house flip through an LLC is very similar to doing it in your individual capacity. The difference is the financing, and the fact that the business name will appear as the property owner.

Regards

Hi Akash

Fixed-rate mortgages typically require a 20-25% down payment at least, with a 680 qualifying credit score for a one-unit investment property. You’ll be paying higher interest on an investment loan, due to the higher risk associated with these loans.

You'll need to make sure your Debt To Income (DTI) ratio shows that you can pay off the loan. To work out your total DTI, divide your totally monthly debts by your gross monthly income. The DTI requirements for each lender will be different, but it's advisable to have a DTI under 50% at least, although under 35% is optimal.

Your credit score should be at least 680, but this depends on the deposit you’re putting down and the lender’s requirements. If you need to increase your score, you can make sure to keep your credit utilization at 30% or less of your available credit. It’s also important to make all your payments on time and take your time to build up your credit score.

Many lenders will want to see that you have cash reserves to support yourself for at least 6 months without rental income from the property.

For those who are struggling to get conventional loans, hard money loans are a good option for investment property purchases. They require a lower credit score, are based on the real estate deal itself and have less stringent lending criteria. 

Regards
Kirill Bensonoff 

Hi Ross

Aside from conventional loans there are a variety of alternative funding solutions such as hard money loans, crowdfunding, portfolio loans, local or community banks and private money loans. Each lender will have their own criteria but here are some tips for getting funding as an LLC…

Lenders will often require these documents:

• Employer ID number (EIN)
• Your LLC's operating agreement (the most important part is the list of owners and their percentage of ownership)
• Income documentation for the business which would include bank account information
• Information on any rental properties you may already have
• The personal income, debt, and credit information on each member of the LLC

When you're getting funding under an LLC, bear in mind that personal guarantees or credit checks will also be required. So, it's advisable to get your credit score to 680 or above and keep your personal finances in good standing.

Make sure that you have enough cash not only for the down payment, but also to cover the costs of closing, origination fees, property taxes, insurance and so on. It’s also a good idea to build up your cash reserves, as lenders may ask for evidence of cash reserves to tide you over for 6 months or more. Aside from this, you may need to cover other costs like property repairs, maintenance and so on.

Regards
Kirill Bensonoff

Is it possible to make an offer on a property without a buyers agent or broker? Does anyone know the details of this, like if I wanted to make an offer and I don't have an agent, but the seller does. Who would hold the deposit? Any experience shares would be appreciated.

Hi, I am new to house flipping, wanted to learn about where people look for new deals? Do you work with agents? Off market? Any help is appreciated.

We currently pay investors 8-11%

We are a fairly small hard money lender in CT, using mostly personal and a few investors money now. We are looking to raise additional money for our fund ($1 to $2m) and thinking about where to look - does anyone know if small/community banks are a fit for something like this? Can anyone share experience?