All Forum Posts by: Michael Glist

Is he on the contract to purchase the property?

Is the corporation that you are using to purchase the home the new partnership that your partner is on?

Do you have sufficient funds to get the rehab done without him funding it?

Those would be the only reasons I would see as to why the lender would require him on the loan is if they see another buyer on the contract, a partner on the corporation or that you cannot get the flip done without his money so they are wanting him as part of the loan since he his funds are needed to get eh job done and/or has equitable interest. 

@Nick Causa doing a refi and paying closing costs again would be a lot less expensive than flipping it over to a HML. With a refi especially a 203k refi not only are their fees capped at a certain amount buy you would be able to get the funds needed to reno the units and can roll the closing costs and fees into the loan. With a HML you will get the reno funds but fees are likely double if not more than an FHA refi and they cannot be rolled into the loan and well the obvious as you mentioned you cannot live there anymore.

Having to roll costs into the loan or take a slightly higher rate to get a lender credit to cover costs is the less expensive option. I would say run the numbers on how much it will cost to refi including the higher payment and how much more in rent you will get and see how long it will take you to get your money back on the new adjusted rental income and if it breaks even before you plan on selling then it is worth it in my opinion. 

If credit is bad to the point that a lender will not lend to them their options are go the wholesale route and use the money earned to repair/fix their credit or JV with someone who does qualify and again use funds earned to repair/fix credit until they get to the point where they can get funded on their own.

There are a few banks that should be able to help you as long as there is enough equity in the property as they will typically want to see 20% or more in equity in the property. You also want to make sure that if you are dealing with a bank or mortgage broker that you are talking to someone that knows how to do self employed loans, they are not the same as pulling a total from a W2 and not everyone knows how to calculate income and what all can be added back in to help your AGI. 

Yes because you will be on the 2nd contract of the double close. They will close the deal with the seller then they will become the seller and need to have a contract with you to sell it to you for the second closing. So you should not have a problem getting funded.

Running numbers at worst case is the best way to make a BRRRR happen. If you run the numbers correctly no only can you buy the home using private/hard money and your 20% down but a lot of lenders will also finance the rehab. So once you rehab it then you will need to find a renter and then you can either seek out conventional financing, a short term hard money rental loan or long term hard money rental loan.

Going conventional will be cheaper but the thing people forget about is that conventional lender want to either qualify you based on your debts including the rental property which is difficult or want you to have at least 2 years experience with rental properties before they will use the rental income as qualifying income to help offset the new mortgage payment. So if initially you do not qualify for a conventional loan I would say go with a short term 2-3 year hard money rental loan and then refinance to conventional once you have the 2 years tax returns of rental income a conventional lender will require. 

As mentioned the laws and regulations regarding lending to a consumer a different then lending to a business. If owner occupied they will have to be licensed by the NMLS and each state they lend in and follow all the rules set out to provide government backed loans. Is there a particular reason as to why you are looking at Hard money lenders as opposed to refinancing with a bank?

Welcome, the rental market is great here in Colorado especially if you are downtown or near one of the bases. 

There are lenders that will do NON QM (non traditional) stuff however they typically want 25% down. 

Also not sure what bank(s) you have talked to but I know that not all lenders are good at evaluating self employed income. Most see the adjusted gross income and just think they have to use that but there are things you can add back into your income that were written off to help increase your usable income. Also depending on how much you are able to use I do not see why you would not be able to buy a home using FHA 203k (since you are wanting to do rehab work). Because if your wife holds most of the debt adding your income even though smaller due to write-offs should help offset some of that debt.

I would recommend talking to another lender or even a few here in the Denver area to make sure you are not being told no by someone who may not know exactly how to make self employed income work.

I would say look into a HML or Private lender. Most of them also have a minimum loan amount however as a bundle deal them getting 11 properties not just 1 I am sure someone would be open to doing something short term 2-3 years on a deal like this.