All Forum Posts by: Matt Powell

Hi all,

This question has been lingering in my mind for some time, so time to ask! If I'm out "driving for dollars", trying to spot potentially distressed properties, and I see one that I think could be distressed, how do I dig deeper on that property specifically?

I could always check Zillow to see if it's in foreclosure, but what are some other ways? I'm pretty sure it's public information that a homeowner is behind on their payments, right? I'm willing to pull records from courthouses, call people and places, etc.

The marketing lists you buy from places like yellowletters.com must be getting their information from somewhere. What if I wanted to use their process for just a single property?

Thanks!

Hey Andy. Be sure to check out the BWI Meetup, which is one of the largest REIA's in the area. I'm happy to help you out with some of your more basic newbie questions about financing and techniques to get your first deal. I'm always looking for investors, so if you think you'd like to work with someone for your first deal or two, let me know.

So if I'm understanding you correctly, if I have a private lender contract with my parents that obligates me to repay the debt, that would NOT count as a gift?

Also, not sure what you mean by "you cannot get a second mortgage as the down payment to purchase an investment property". Can you explain that a little more?

Hi all,

I'd like my first deal to be a buy-and-hold property. I'd considered using the BRRR strategy (buy, rehab, rent, cash-out refinance to 30-year fixed) with a portfolio lender, or have more recently been researching the HomeStyle product from Fannie Mae that rolls rehab costs of up to 50% ARV into a conventional mortgage. My question applies to both scenarios.

I'd hoped to use a private lender (my parents) for the down payment and closing costs. But I recently learned that Fannie Mae doesn't allow "gifts" to be used for down payment, closing costs, etc, on an investment property. Likewise, I've heard portfolio lenders frown upon this.

So what qualifies as a gift? I fully expect to have a legally binding contract with my parents that obligates me to repay the loan in full, with specific terms. Does that count as a gift with Fannie Mae? Would a portfolio lender generally allow a private lender to provide down payment and closing costs on one of their loans? Does it matter that the private lender is my parents?

Thanks, much appreciated. Link to Fannie's "gifts" page linked below.

https://www.fanniemae.com/content/guide/selling/b3...

Upen, can you expand on the private lender scenario you mentioned above? Do you mean buy it outright with cash from a HML or private lender, or do you mean use them for a loan?

@Ryan Gillette What about portfolio lenders? They have their own underwriting criteria, so are they open to private loans for down payment? Or would they accept a hard money loan?

@Ryan Gillette So if I wanted to use private money for the down payment on a Fannie/Freddie loan, what are my options? Put the private lender on the loan?

Does this apply to just the more strict underwriting rules for loans 5-10, or for the first 4 as well?

What is "a second"?

Thanks @Russell Brazil. I just found this article, which is explaining lots about conventional mortgages for investments. The OP explains that Fannie Mae has separate underwriting criteria for your first 4 ("DU Pure") and for the remaining 5 through 10 ("Multiple Financed Properties"). According to the post, some lenders only participate in the DU Pure program (first 4), while others participate in the Multiple Finances Properties program, which will get you the remaining 6. I guess it varies lender to lender.

https://www.biggerpockets.com/forums/49/topics/184876-the-ultimate-guide-to-using-conventional-mortgages-to-expand-your-portfolio

Hi all,

Had my first conversation with a portfolio lender, and thought I'd share how the conversation went and what their products look like. I'll hit the high notes of the conversation, then afterward I have a few questions. I welcome any additional thoughts folks have...

2 products, their conventional loan and what he called a "mod/rehab investor loan":

• Conventional: 80% LTV, 4.75%, 30 year fixed
  • Non-portfolio; sold to Fannie/Freddie
    
  • Recommended this to me for my first 3 deals because I haven't met my max of 4 Fannie/Freddie loans (I have 1 for my primary residence)
  • When I pointed out that conventional doesn't include rehab costs, he said I should be buying properties with "minimal rehab" when starting out. He said stay away from hard money if I can.
  • Rehab costs that I provide out-of-pocket are put into escrow, held by the bank, and paid to the contractors only when certain milestones are hit and the work is completed to the bank's satisfaction
• Mod/rehab investor loan: 60% LTV, 1 year ARM, 4.75%, 2 points, 700 credit score
  • Portfolio: held in-house and not sold to Fannie/Freddie
  • He did NOT need to see deal analysis to make a lending decision; only wanted the address so he could personally do a drive-by and look it up on his own
  • Said he would be using tax assessment valuation to determine market value, which struck me as incorrect
  • Rehab costs are loaned by them, are put into escrow, and paid to the contractors only when certain milestones are hit and the work is completed to the bank's satisfaction

So, now a few questions, if I may:

• His advice to use conventional mortgages for my first 3 deals makes sense because the terms are better. Is there any reason I should not do this?
• I have a private lender lined up for down payment support on my first deal. If I use a conventional loan on a house that's livable, but could use some updating (paint and carpet), will a hard money lender loan me just the money for the rehab? Or is, say, $15k not enough for it to be worth their while?
• Are the bank's escrow policies, for both conventional and portfolio loans, normal? Particularly the conventional, because I would expect the bank to not care about rehab with conventional loans. Maybe it's just a courtesy? It's not unwelcomed (I could use the oversight), but it struck me as strange...
• How are those terms on the mod/rehab loan?
• Shouldn't he want to see the deal analysis for the mod/rehab loan?

Again, first call with a portfolio lender, so I'd love a sanity check on how it went before I call the next one. I promise not to post one of these for every phone call. =)

Thanks!