All Forum Posts by: Nicholas Burch

I guess it all depends on what type of 'value add' there is with the repairs. 

If its similar to other off-market deals that I see, the ARV could really come more into play with just the 'actual' value is of the property vs. what you are getting it for. If that is the case, the I could see where utilizing a bridge, or even a 'stabilized' bridge to just purchase it, wait ~3 months for seasoning (potentially taking a hit on monthly cash flow), and then do a 75% of the "new" value which would help your JV partner and get it cash flowing.

Does that make sense? If not, feel free to reach out and I would be happy to try to explain it on the phone!

@Nicholas Burch So are you hoping to utilize a BRRRR strategy with it, or hoping to start renting it out immediately? We're seeing rates that are starting to trickle down into the 7% range on a 30 year fixed, so its becoming more likely with the right combination of FICO/Location/Cash flow.

It being a duplex can actually help (looks better on a DSCR)

Quote from @Nicholas Burch:

Quote from @Erik Estrada:

Quote from @Nicholas Burch:

Are the following terms achievable in our current market conditions? Looking for a bridge loan.

This looks to be achievable on a commercial full doc loan, however not at 90% LTV. You are looking at 65-70 max, and the property must be stabilized.

You can expect 90% LTC on a fix and flip loan for 1-4 units. The rate however is 10.00-13% and term is 36 months max. You may be able to extend 6 months afterwards but be expected to pay some points...

 lol, thats what I thought. Great deal in a appreciation market, just cant afford the negative cash flow until it is sold or refinanced. This is a duplex btw.

Not crazy by any means, just seems to be a combination of a bridge and a DSCR loan.

Typically your true bridge products will be anywhere from 6 months to 2 years Interest-Only (which you indicate) with a balloon at the end of it. You'll see some increased leverage with these types of loans (85-100% based on Experience and FICO)

But your DSCR products are going to look at that cash flow for 30 years, either on a fixed rate with some kind of prepayment penalty or maybe interest only for 5-10 years into a shorter amortization schedule. Those tend to be capped at either 65-80% leverage (80% for most purchases; 75% on most cash out refinances).

What type of deal is this? Do you already own the property and are looking to cash out or trying to purchase?

Quote from @Nicholas Burch:

Are the following terms achievable in our current market conditions? Looking for a bridge loan.

This looks to be achievable on a commercial full doc loan, however not at 90% LTV. You are looking at 65-70 max, and the property must be stabilized.

You can expect 90% LTC on a fix and flip loan for 1-4 units. The rate however is 10.00-13% and term is 36 months max. You may be able to extend 6 months afterwards but be expected to pay some points...

Creating an LLC requires only a few weeks and can be done online. The most common reasons for buying a shelf company is to achieve some specific objective, other than simply "formation". As you mentioned, one of these reasons may be the companies credit history. It is perfectly legal and oftentimes advantageous, to acquire a corporation for it's credit history and has no impact or restrictions based on your own personal credit.

https://corporationstoday.com/

I hope that helps. 

Cheers,

@Nicholas Burch

In that situation the fund is probably using insurance company money that their cost of borrowing is 4-6% so they may lend and make 2% but that is very different from a $50M or $100M fund.

With a fund also remember their is money made from the loans but they also have significant expenses so you can’t just say what’s a loan look like you need to understand the fund structure, cost of capital and expense ratio