All Forum Posts by: Andres Garcia

This seems like a Down Payment Assistance like grant...

We would have to figure out the terms of the Habitat grant. 

I havent done any Habitat Loans but form most DPA Programs in Florida if the refinance the mortgage or sell the house they have to pay back the grant.

But they all work different. 

Some are forgivable at a rate of 20% per year and after 5 years they dont have to worry...

Others take 15 or 20 years before it becomes 100% forgivable.

Some are not forgivable at all...

With this deal I would be less concerned with equity that exists and more concerned with the amount of that equity can the "Moderate To Low Income" of a Habitat Homeowner support in loan format.

I am almost certain that its possible but your going to want to know the terms of the DPA/ Grant so you're aware of the actual cost and you have to see what the DTI looks like to see if it will fit what theyre looking for.

PennyMac will definitely not allow this.

They do conforming loans, conforming loans cannot be in an LLC.

You would need to refinance into a NON QM Loan.

I would consider a DSCR Loan depending on the LTV and your DTI.

With a low LTV a DSCR Loan can price out the same or less than a conventional loan.

You then calculate how many years worth of tax savings it would take in order to recoup closing costs to see if it's worth doing it.

Feel free to reach out I can give you a quote in minutes with no credit pull.

PrivateMoney.com is a lead generation service.

They turn around and sell your infomation to guys like me for around 100 bucks a lead.

"Hard Money is for suckers" is copywriting designed for you to want to get in touch and put in a loan request so they can sell your info to me and I can hopefully close your deal.

In my marketing, I often use "Hard Money" as a blanket term for Real Estate Investors because its a widely know term, thought its rarely understood.

There is good and bad to all things, including Hard Money vs Private Investor...

It seems like you're giving up half your profit.

I would think its worth paying a a bit of a higher rate and being able to keep 100% of the profit on some of your deals.

I am happy to discuss further.

We no issues closing in an LLC, as a matter of fact most of my lenders will prefer it (assuming it is not your primary residence)

Assuming it is not your primary residence, the easiest way to do this deal would be through a DSCR Loans.

A DSCR Loan will use current rents or market rents if the property is vacant and personal tax return from you would NOT be required.

It also referred to as a No Ratio Loan because your personal Debt To Income is not important.

What is important is that the property can pay for itself.

If we keep the LTV Low the rate for this loan can be better than a conventional loan.

If you ARE Living in the property and you want to keep it... it would mostly depend on how motivated you are and how willing you'd be to "postpone gratification"

The best bet is still a DSCR Loan.. which means you moving and renting the property out.

We can bring in Asset Based Financing that can help with cash down (if you need it) or to pay cash for another property for you to reside in.

Once you're moved out we can do the DSCR Loan at a 70% - 80% LTV or we can calculate a comfortable cash flow number.

For example, max cash out that will give you $500 cashflow after a full PITI payment.

Let's discuss more!

This is going to be a very tough scenario, I suggest you stop putting money into this deal until you get things sorted on the financing side.

I would also be very careful with and sketical about any offers for 100% financing... it will not happen, they are lying 99.99999999999999% of the time.

The only realistic way would be for you to find a private investor to come up with the down payment for the mortgage but a down payment will be needed.

90% LTC is theoretically possible through a flip loan but in order to reach that level you would need to have a lot of completed projects under your belt over 2 years.

20% is possible but with 25% you would have a lot more options.

That is part of the issue with this transaction...

The other issue is with HOW MANY loans you are seeking...

This is not 1 loan because this is not 1 deal...

You need 3 loans because you are doing 3 separate transactions at the same time with the same seller.

Blanket loans do exist but they are not widely available.

Each folio number is a separate deal...

I went through this same exact thing on an 8 unit property that was NOT an 8 unit property it was TWO -  4 unit properties.

I am a correspondent lender with over 100 sources of capital... EVERY SINGLE source of capital I have told me that I had to treat it as seperate transactions.

It's worth mentioning because closing costs...

I would need more info on the make up of the 3 Lots, which lot has what? and what are the potential before/after values of each of the 3 properties and I may be able to provide direction on one or all 3 deals.

I have personally not worked on any of these but it does not seem to be anything too crazy.

It's an FHA Loan that can be combined with other FHA products like a 203k.

I am a Loan Officer for "Correspondent Lender" so I can operate under the rules of over 100 lenders...

I would be able to place this in a few hours with 1 email...

We would just have to make sure all the boxes are checked...

Energy Efficient Improvements Must Be Cost-Effective

The financed portion of an Energy Package must be cost-effective. Improvements are cost-effective when the cost of making them is equal to or less than the money saved on energy from those improvements.

1. Cost Effective Test for Existing Homes

Improvements to existing homes are cost-effective when they pay for themselves over their expected life span with energy dollars saved. Worded differently, the money saved in energy bills because of an improvement, must add up to the same are greater amount than the cost of making the improvement.

A qualified home energy assessment will determine whether the improvements are cost effective.

The assessment evaluates the home’s energy efficiency, and conducts analysis to asses the potential savings for a variety of improvements.

1. Cost Effective Test for Newly Constructed Homes

For newly constructed homes, the improvements are cost effective when they exceed the standards set by the most recent International Energy Conservation Code (IECC) that has been adopted by HUD for new construction properties. A qualified home energy assessment will determine which improvements exceed the IECC standards.

Home Energy Assessment

The Borrower must obtain a home energy assessment. The purpose of the energy assessment is to identify opportunities for improving the energy efficiency of the home and their cost-effectiveness.

The assessment must be conducted by a qualified energy rater, assessor, or auditor using whole-home assessment standards, protocols and procedures. Qualified home energy raters/assessors must be trained and certified as one of the following:

• Building Performance Institute Building Analyst Professional
• Building Performance Institute Home Energy Professional Energy Auditor
• Residential Energy Services Network Home Energy Rater; or
• energy rater, assessor or auditor who meets local or state jurisdictional requirements for conducting residential energy audits or assessments, including training, certification, licensure, and insurance requirements.

How Much of an Energy Package can Be Financed?

The maximum amount of the energy package that can be added to the borrower's regular FHA loan amount is the lesser of:

· A cost-effective improvements to be made (energy package) based on the home energy assessment; or

· the lesser of 5 percent of:

• the Adjusted Value;
• 115 percent of the median area price of a Single Family dwelling; or
• 150 percent of the national conforming mortgage limit.

An FHA-approved lender can access FHA's EEM Calculator to determine the dollar maximum amount that a borrower can finance for energy improvements.

The best rate is, more than likely, the one that the property currently has.

Helocs and Second Mortgages can go up to a 95% CLTV and though it will have a higher rate than a full refi, its worth comparing the average blended rate vs a full refi at todays rates.

I wouldnt be the one to help you in Illinois but I can put you in touch with someone else within my company.

I think your best bet is to go with a Correspondent Lender like we are because we can get you multiple offers to ensure you get the best rates and terms available for your scenario.

The best lender is going to depend on the qualifications of the borrower, the property and tenant type as well as some of the specifics of the lending scenario.

For the Borrower:

1. Credit Score
2. Reserves
3. Experience

For the Property:
1. How much income is being produced
2. Is there any Business Owner Occupied Element or is a cash flow investment
3. Asset Sub Types: What are the uses mixed? Do you have a Bodega With apartments on top?

For the Scenario:
What is the LTV?
Cash Out or Rate and Term?

With that information I can tell you EXACTLY who the best lender is because it will be one that accepts you as the borrower, the property type, the purpose for the loan while give you the most aggresive rates and terms.

Feel free to reach out to discuss.

In the industry this is most commonly known as a "Fix and Flip" Loan.

We are correspondents with dozens of lenders who offer this type of loan.

Most commonly, the loan will cap out at 75% of the ARV (But Investors do need cash, this is not a 100% financed transaction)

75% has to include the purchase price and the rahab amount requested.

The terms can vary greatly.

The two most important areas that will impact the terms the most is 1. Experience 2. Credit.

That's not to say that an investor HAS to be experienced and credit scores can be as low as 500... but the more experience and the better the credit the better terms as far as cash down and the overall cost of the loan.

The absolute minimum cash down that you will find in the industry is 7.5%... I would be surprised if borrowers could meet the experience criteria, its terms that are real and available but reserved for elite rehabbers with a lot of completed projects.

Typically, 15% - 35% of the purchase price (or total project cost depending on the lender) will have to be brought to the table by investor in order to close.

Once the loan is closed it works like a construction loan. As work gets done, draws are requested, work is confirmed, draw is sent out... until it gets done.

The exit will be the sale of the property or a refi if its going to be a rental.

I'd be happy to discuss these in more depth.

I get multiple quotes on these to ensure the most adventagous terms for borrowers.

How much is the association Fee?

What is avialability of potential investments that would NOT have an HOA fee?

What is the avilability of Multi Family Invesment Properties?

Not enough information to have a strong opinion but I would be trying to get out from HOA's.

I would stay you start talking to some Real Estate Pro's in a few markets to see if there are any interesting opportunities.

Do the cash out refu once you have a solid plan in place... but if it cashflows, keep it.