All Forum Posts by: Marty Johnston

I bet this is in the top 5 most sought after financing products out there! I've been looking for a good source who will do these on a larger geographic level for years, but so far only luck I see in most cases are local banks or credit unions. I've found Credit Unions in particular to offer strong HELOC offerings. They're out there, just start dialing all the Banks and Credit Unions in the area and start asking! Some will have commercial departments, some won't. If they don't, that doesn't necessarily mean they don't have HELOCs on investment props - just gotta ask!

Good luck!

 Jay, Can you tell us a little more about the portfolio so we can better help you? As in:

1. How many properties make up the portfolio?
2. What's the minimum LTV you need to make the deal work? (down payment + closing costs + 3-6 months reserves)
3. Are these properties all stabilized? Have deferred maintenance?

Thank you!

Max,

Common issue! I have a lender I work with who lends in cook county with no minimum experience required, and no minimum loan amount. No credit check and no appraisal (they do in house valuation). Sending you a DM to see if this is a fit.

 Ahh yes a common issue. In the past I've run this past our Underwriters to see if we were able to divvy up the liabilities and had no success with typical investors (Fannie, Freddie Conv) and have always had to hit all of them up. An underwriter response to me once (FWIW - Discretion here too), was if 2 of the three borrower's lost income, the 3rd would still be on the hook for making 100% of the payment, and similarly for any given month, one of those individuals may need to possibly make 100% of the payment. Fannie and Freddie often look at most conservative approaches (Fannie / DU seems to currently be more lax than Freddie on credit issues, but that changes from time to time too).

In this case, I'd suggest either a local portfolio lender (think Credit Unions), and if none available I'd look at a DSCR loan and this becomes a non-issue entirely right away. You don't necessarily need STR history to qualify.

Good luck!

@Alon A. I agree with the others and may suggest shopping it around, even working with a broker you should be able to obtain similar or lower fees and certainly better on the rate assuming there's nothing crazy for the property (doesn't sound like it is) and you don't have recent BKs, foreclosures, etc that would prohibit you from better pricing. 

On the Refi - that's the easy part! Once rehab is done you can refinance and pull out up to 100% of the purchase price and rehab budget, not to exceed 75% of the new appraised value (ARV) in as little as 30 days from when you acquired it (if you did happen to complete it earlier than your timeline). To use your numbers for example, it would be the LESSER of the purchase price + Rehab ($355,000) and 75% the ARV ($450,000 x 0.75 = $337,500) soon as you complete the reno. No lease required yet and we could use appraisers 1007 market rent analysis.

Some lenders will cap you up to 80% of INITIAL cost, which would limit your loan amount to $284,000 ($355,000 Purchase + Rehab x 0.8). This is more common, just have to connect with the right lender!

Feel free to DM me if you'd like to chat more on that. 👍

@Katelyn Borup I highly recommend Elisa Ruer (info below). I've used her personally on a few occassions, one in which she assisted me with a transaction in FL as well as here in WI. She so happens to be licensed in WI and FL and was a perfect fit for our needs. Plus she's just wonderful to work with. Tell her Marty sent you! 👍

Elisa M. Ruer
Attorney at Law
Praktess LLC
Telephone: 262.269.9140
Email: [email protected]
OFFICE LOCATION: 200 S. Executive Drive, Suite 101, Brookfield, WI 53005
MAILING ADDRESS: P.O. Box 546, Brookfield, WI 53008-0546

@Vadim F. yes it is! If there ARV is more than 65% of the total loan amount, you could get a rehab loan for financing. Although loan amounts this small are going to be very limited to hard money lenders. Expect up to 15% on the rate and 5+ pts to the lender (you often run into minimum fees for example in this price point). This assumes you're looking at this as an investment property. If you are lookign to occupy the property as a primary, then you'd need to look at the conventional (Fannie HomeStlye Reno loan for example) or FHA (203k loan for example).

As for the takeout, again so long as the ARV is strong enough to support it, you have credit and income to qualify (if you go the Conventional DTI route as opposed to DSCR), you should be able to refinance into a long-term loan no problem.

Feel free to DM me if you'd like to chat more on this!

@matt 

@Matt Cohen Happy to help as well! I'm working on a few other commercial loans in PA and have a number of DSCR options we could discuss from 30-yr - 40-yr fixed, interest only options, ARMs, etc depending on your goal and debt service for the property. I'll send you a DM!

Hey John, on these it sounds like this is all turnkey properties, is that right? I do offer gap funding for investors, but it generally only pencils out well for short term capital with rehabbers (both BRRRR or flippers) and developers as they can continue to re-cycle the capital into the next deals, but it eats away pretty quickly on rental properties for cashflow.

If any of these are BRRRR deals or something that would cashflow on unsecured debt at 5-7 years fully amortizing terms, it might be a fit. Otherwise I'l defer to the rest of the forum for JV / Equity and/or other lower cost financing options here.

 Niraj,
Most lenders will simply consider this a 3-unit residential property and you should be ok! A few unknowns to navigate still but I've come across this a number of times and its usually not an issue. We'd also want to confirm zoning is appropriate. DM me if you'd like to chat more on this!