All Forum Posts by: Louis Jeffries

@Nate Bartlett

You are right with all things being equal. The assignment is cheaper for you but if you are trying to get more than the assignment fee and or you don't want the buyer to know how much you are making or thy will not do the deal, you do the double close or transactional funding.

Double closings are illegal in Illinois.

Very simple answer why no one will do them in Illinois. That is why there is transactional funding that can get deals done for 2%

In the past and through the pandemic STRs were the hottest investment. almost every property was a good deal. No so now. Like any other investment you must know your market and buy right. In some markets people were paying above market value because the believed the return would justify it. That never made sense to me.

My advice as a lender who has financed hundreds of STR properties.

1) Invest in a good and stable market that the local laws are not restrictive of STRs

2) Make sure your numbers make sense, Evaluate the property as a long term rental with a gross profit of 25% or more. If you are in a good market for STRs you will be successful

3) Get prequalified long term rates are not 10% for DSCR loans, they may be 7% to 8% in todays market.

4) Consider BRRRR

Hi Dustin,

BRRRR is a real estate investment strategy that typically requires a hard money loan to purchase the property with funds to rehab it. Once it is rehabbed and rented you would refinance using a DSCR loan that has no ownership seasoning restrictions. It is best to work with a lender who understands what is a good investment for BRRRR. Even though you may qualify for a loan does not mean it is a good investment.

Therefore you are not just seeking a loan, you are seeking a partner that looks out for your best interest who understands the importance of your success and building a long term relationship. 

The key to the BRRRR method is to build a portfolio and that should entail building a relationship with a trusted finance advisor/partner. Just like you build relationship with a contractor, attorney or realtor. You want a funding partner who understands your goals and can advise you while providing the best funding options for your goals.

Hi Eric,

The mistake you are making is seeking hard money funding from conventional lenders. When they tell you FHA is you option they are talking about buying a home to live in that needs rehab. They do not offer funding for real estate investors looking to purchase and rehab the property for investment purposes. If you do not own a home and would not mind moving into the home until it is renovated then FHA is a great option with lower down payment interest rates and closing costs. This is called house hacking. To be legal, you must live in the house otherwise it is fraud.

You want to seek a hard money lender, get prequalified and pursue your real estate investment goals. Just understand rates and terms do not compare to financing owner occupied properties. The down payment is higher, the rates and closing costs are higher. And for the lender the risks are much higher.

There are financing programs for 100% purchase rehab loans that you can use the BRRRRR investment strategy. Though they may require no down payment you must have money for reserves, to make payments and contingency. Additionally, the loan to value on these programs are lower for new investors. This is a great option if find a very good deal.

All the markets you listed have lower property values and you will find lenders have minimum loan amounts and minimum property values. 

Finally, and most importantly, get pre approved before you search for property. know what you qualify for and how much you need to be successful.

Good luck

Hi Shanor

we may have an option for you depending on credit score, experience and assets.

Check us our www.rehablender.net

@Zach Stiegler as @Jay Hurst posted the Fannie Mae down payment requirements they are progressively higher for a reason. Simply multiple units are a greater risk of default. As such if you are looking a 2-4 units for their income potential Consider FHA even at the slightly higher rate. This is a great way to start house hacking or even building a rental portfolio if that is your goal.

Hi Ryan, 

Are you looking to finance rehab projects or rental projects or pay cash for properties? Are you looking for partners, properties or funding?

@Rick LaFleur

There is no mandatory requirement, but it is best for tax purposes and future loans if you need them. Co-mingling business money and personal money is never a good financial strategy. Even if you do not co-mingle funds have a personal account for a business gives that impression. So finally, LLCs are not only good for business and taxes, but it gives you a level of legal protection. Simple example if someone falls on your property and sues you if it is an LLC the liability is limited to your company (generally) but with no LLC all of your personal assets are up for grabs.