All Forum Posts by: Nghi Le

We are a smaller private lender and only in a handful of states, but we've done several 100%+ financing (where we finance the entire purchase, closing costs, front the rehab, and include interest reserves), but our LTVs (based on as-is value, not ARV) are lower than most national hard money lenders. Typically this only makes sense if the borrower is walking into a lot of upfront equity, has rental properties with equity that they are willing to cross-collateralize (we don't mind taking a 2nd lien behind stable 30-yr mortgages), or in conjunction with other private money or seller financing in junior lien positions.

We're not competitive if the borrower is just buying something off the MLS and doesn't have any other properties to cross; we'd be 25-30% down instead of the 10-15% down that you see everywhere nowadays. We cater more to the creative financing crowd.

Sorry for the late reply; I'm not on BP too often. If you want me to give you a quote, I'd need to know the address, 1st lien details (type of loan, balance, interest rate), credit score, income/DTI details, and target LTV (can go up to 80% CLTV on the 4plex). I'd compare the blended rate with how much you could get with a refinance otherwise and tell you whether it's a better idea to go with a full refinance or the HELOC route.

Feel free to PM me if you don't want to share this information on the public forum.

Hi Taylor,

I'm not on BP very often anymore, so please feel free to email or call me.  BP doesn't let us post emails or phone numbers on forums, but I just sent you a connection request so we can exchange contact info.

This is possible. Please give me some additional details and I can tell you whether or not it'll make sense. The interest rate on a HELOC is usually higher than a normal 1st lien mortgage, but I am seeing some cases where HELOCs are in the 6's and 7's (where credit score is high and LTV is 65% or lower), which make them pretty comparable. And of course, you don't pay interest on the money until you use it, so you do end up saving a lot of interest that way.

Just saw someone in TX get a $500k 2nd lien HELOC with rates in the 6's. Rates have really come down in the past month! But it all really depends on LTV, credit score, and a handful of other factors. If you're maxing it out at 80% LTV on an investment property, you can probably expect something in the 9's or 10's.

I've only done 80% CLTV HELOANs (not HELOCs) on investment properties, but that's not an interest-only loan and usually rates are in the 10's at that high of a leverage. I've only seen investment HELOCs go up to 70% CLTV.

What are you using the funds for? If it's down payment towards another property, then a HELOAN is usually better suited than a HELOC. I only recommend using a HELOC for scenarios where you'd be able to pay it back within a year.

Alternatively, you can just buy another investment property with lower down payment, which is a better interest rate than anything you'll get on a 2nd lien HELOC/HELOAN. You can buy deals at at 15% down (if it's turnkey) or lower if you're using hard money (for a BRRRR-type scenario).

I assume you have low-interest 1st lien mortgages on those properties that you don't want to pay off. If you can qualify for it, get a HELOC or HELOAN on those properties.

Or find a creative private/hard money lender that can tap into that equity in 2nd lien position or to cross-collateralize them with the purchase of the new property and use that equity towards your cash to close so you can buy that next deal without much cash out of pocket.  This only works on flips and BRRRRs, otherwise you won't be able to pay off that much debt unless you have other sources of income coming in.

This is what I did on my last deal in TX. I had two properties in WA state that had 3% mortgages in 1st lien position, but was sitting at about 50% LTV on them. I purchased a 3-property portfolio in San Antonio (13 units) for $465k from a wholesaler and got a loan on them for $510k because the lender also cross-collateralized my WA properties (without paying off the 1st lien) and used that to cover all of my cash to close. I ended up getting about $20k back at closing (on a purchase) and used that to start my renovations on the vacant units.

Most DSCR lenders will disqualify lease options. Find the ones that can do it, and it also helps if you have separate contracts for the lease and the option. If you structure your lease option correctly, it'll actually benefit your DSCR loan.

I have a lease-option tenant buyer that's currently in a 10-year lease option with me. Knowing that I had a 3-year prepayment penalty, I structured the lease option so that if the option is executed within 3 years, then the tenant buyer pays that fee for me. He was fine with it because I gave him a 10-year term. If you are only doing a 1-2 year lease option, then I'd recommend you just buy down the prepayment penalty to 1-year and just eat it if the borrower executes early. These days, I'm only doing 1-yr prepay DSCR loans anyway because I expect rates to go down to where I'd want to refinance within 2 years.

The other thing I did was beef up the monthly rent so that I could better qualify for the DSCR loan (but you need to use a lender that uses actual rents instead of market rents). Market rent was about $3,300 at the time, but we agreed to a $5,000/month rent that includes $1,000 rent credit (which was stated on the option contract, not the lease contract). This helped me get the max LTV on a high balance loan. It's also a good strategy for the current market since things are hard to cashflow these days with the high interest rates.

Looking for 1-2 tickets.  Please DM if you have available.

@Account Closed

Try to do a conventional refinance (or a HELOC) at the low LTV with a different lender and see if you can get an appraisal waiver for it. Then the C5 condition wouldn't be a problem because they don't see the inside of it.

Otherwise, just get a hard money loan. You can either just get a large chunk of money upfront (easier on your life since you don't have to deal with draws) or with a holdback (which saves you some money since you're only charged interest when you use it). This seems like a pretty simple loan scenario and any HML should be able to do it with ease.

Since you already have a recent appraisal, the lender can use that and close on it in about a week. Rates should be in the 7's or low 8's since LTV is going to be low enough. Process is much easier than a Fannie/Freddie loan, and you can probably escape from having a hard pull done too, depending on the lender you go with.