All Forum Posts by: Micah Grant

@Micah Grant Lenders won't allow you to use borrowed funds for downpayment on a DSCR loan unless it is from another equity member and/or co-signer on the loan or gift funds. Additionally, the funds have to be seasoned in your/giftor's account for 60 days to be able to used for downpayment

As for paying the (private?) lender back from the higher-than-anticipated financed amount, that all depends on the appraisal. DSCR loans depend highly on the market rent determined by the appraiser on the 1007 form and generally, that is what limits leverage on such loans. If the numbers support, you might be able to get a higher amount than anticipated

Private money lenders are debt partners and care about the return on their money (their cash-on-cash return, if you may). Their rate charged depends on your relationship with them (highly important), the deal itself, and the timeframe for which the funds are expected to be borrowed. Expect to pay anywhere from 10-20% depending on what terms you're looking for 

That ratio won't be the problem that you run into, the problem will be needing private funds for the DP. Not sure how far off you are from being able to carry that on your own, but you could always get the equity out of your first two rental properties and put that towards the downpayment.

What if it is not a DSCR loan? What if you are using a traditional commercial loan and using the PML for the down payment? Will this fly? Thanks!

@Micah Grant  NO GO on loan for purchase with Another Loan.  Get more people involved in your deal or look at your retirement account or sell something.

 I do have a lender who will take a 2nd lien position but that still has you at 20% of your team's $ in the deal and on their 2nd position its is a $500,000 Min.

He is very open to the idea, and likes the "easy" transfer of payment". However, he is 1.) worried about his lender having an issue, and 2.) the loan continuing to show as debt to him as he tries to move into other investments. 

I've not used title or an attorney to close a sub2 house other than to order an indepth O&E title report during my DD.   First American would do them for $150 and it was usually well worth it, especially if it has turned over multiple times and there was an investor, death, dissolution or anomaly discovered in your ownership chain research.  

You could hire an attorney to draft the deed or look online and model it after the ones you see in recorded docs in the county of the property.   Use your title report to fill in the details. 

What does your investor partner or mentor or whatever say as to all this?