All Forum Posts by: Matthew Crivelli

Non-QM 30Y fixed DSCR loans. Honestly the rates are completive with what banks are offering, the closings are faster, no tax returns, employment checks, or DTI constraints to worry about. In many cases, a hard credit pull isn't even required. The only downsides are prepayment penalties come into play and closing costs are generally higher. In my opinion, the pros of DSCR loans heavily out way the cons.

Non-QM DSCR loans will allow you to refinance the property at the newly appraised value after 90 days from the original purchase IF you took a loan for the initial acquisition. IF you bought the property with cash, you typically have to wait 6 months from the original purchase date. The few lenders that offer no seasoning, they typically make you pay for it in high rates / fees. Typically it's better to let it season.

On the FHA side, they want you to wait 12 months.

Quote from @Alex Cifelli:

I have been wholesaling real estate for the last 8 years, along with a few flips completed. I am looking to take advantage of the 203k loan in order to purchase a flip for my primary residence. I am looking at off-market deals, but they all need a very quick close and do not accept 203k, (cash or hard money only). Should I be shopping on market for an eligible property? For the record, I am not opposed, I am just new to this and do not know where I should begin my hunt for discounted properties accepting 203k loans. 

You will need to find a seller who is willing to wait on your conventional or FHA lender to fully underwrite the loan. These 203k loans can take 60-90 days to close, so many hoops to jump through. Wholesalers typically don't have the time or patience to deal with this. It also puts you in a tough spot because you are essentially competing with wholesaler to get the property under contract in the first place and they can offer the seller a quick hassle free close. 

I would suggest you work with a real estate broker and try to find a property that is off market.

Quote from @Charles Becoat:

Hello I have a client who needs to do a purchase and rehab loan on a four unit property in New Orleans. FICO is 700+ purchase price is 80K and the rehab budget is 100K. ARV is around 300K. The client has experience with renovating one other property, has other properties they rent and is also a property manager.

Hi Charles, it's possible to get a deal like this financed. Terms are not going to be super aggressive due to the fact that the rehab amount is larger than the purchase price though. We would be happy to take a look. 

Typically Sec 8 / HUD pay slightly above the market average. You are likely right in line with market rent for the area. You can look on Zillow at other houses for rent, you could also contact a RE agent and ask them for an opinion.

If you have the ability to pay cash for the flooring it would be the cheapest option. No sense in paying 9% interest by using equity unless you have to do so.  

Screen your potential tenants. Run credit and background checks, actually call the listed referrals, and ask for bank statements. As long as you take these precautions, you should be OK. Section 8 may seem like a home run but I've seen houses destroyed in a years time, I would steer clear. 

Typically lenders will use the total rent being collect or the market rent given on your appraisal, which ever is lower. I know of at least two big players in the lending space who have begun asking for a higher rate if you had in a sec 8 / HAP leases. (Could be more than just two) So just be aware, you can use the sec 8 income to help with qualifying for a DSCR loan but you could very well end up with a higher rate.

I would go to the local real estate investor group and ask other RE investors who they have worked with and who to stay away from. Without a good referral it's kind of a crap shoot with GC's. 

Hi Pat, you should be OK with a good tenant screening process. I would stay away from section 8, pull credit and background, and call referrals, and look at pay stubs for everyone who applies. Getting non paying tenants out of your house in RI can be a lengthy process so you have to choose wisely.