All Forum Posts by: Patrick Roberts

This is conventional? Yeah, you definitely need to get another quote. This would be reasonable for a DSCR with a short PPP and FICO below 700. If this is conventional, the lender fees are ridiculous.

This loan should be somewhere around 7.125 - 7.375 at worst with a decent FICO while going borrower-paid. I could see this quote being realistic if it was lender-paid and you werent having to pay the broker out of pocket. Total loan fees (not including broker commission) should be at or under $2,500; maybe $2,700 at worst. Even below 700 FICO, you should be at or under par at 7.5% on borrower-paid and under 75% LTV, not paying points.

Depending on the PPP and the FICO score, box A might be reasonable or it might be high - Im leaning toward high. I would ask for a rate near par to see what the breakeven period is on the points. At the very least, see if the breakeven approximately matches the PPP. I dont lend in TX, but box C looks high as well compared to what I regularly see; this could be state specific, though. 

Couple questions -

What's the rate and remaining life of the $130k first position?

For the closing costs, how much of that was escrows? If you're currently escrowing with the existing first lien, you would be refunded the balance of that escrow account about a month or so after closing on the new loan.

This is the trap of low ARV properties that I was discussing in a different forum the other day. Financing is difficult to find when the loan amount is under $100k. There are some DSCR lenders who will fund loan amounts of $75k, but you'll likely need ARVs around $100k to make those work. If youre trying to get a portfolio (blanket) loan on these, that will likely be even harder.

What youre currently being offered are true commercial loans - they rarely have tenors longer than 5-7 years. Might be as good as it gets. Maybe some other lenders familiar with the Michigan area have some other ideas. 

Another thing to check into early on is title insurance - many title companies wont issue policies for properties that are obtained via tax foreclosure. Id ask about this up front before you pay for appraisals and everything else to find out a week before closing that they cant lend because of title issues. 

6% for property taxes is the assessment ratio, not the tax amount. Richland county has a tax estimator that works fairly well, but youll need to know the tax district that the target property is in. The assessment ratio gives you the assessed value, which is what the millage and other variable taxes are based on. 

Overall, though, I'm bullish on Columbia for the long run. 

Even without tax returns, there are a ton of program like CLEAR, CoreLogic, DataTree, etc, that are used to find undisclosed debts and properties. 

 Sure thing. Let me know I can help with financing. 

Yes, there are approx that loans that should be in foreclosure, but theyre not, and in my opinion, are unlikely to be. If you look into the data, you'll see that something like 500k of these are 90+ delinquent, but the average days delinquent is over 500. These loans have been sitting in limbo for years, and my guess is that it's unlikely they ever make it to foreclosure. There are so many programs for homeowners to mod, access forbearance, etc, to keep them in the homes that I doubt these are resolved anytime soon. 

On the other hand, I think investment loans are something to watch for forced selling. A lot of DSCR loans being made right now are on the fringe of solvency, and I expect more pressure in this market segment as operating costs continue to rise and rents continue to stagnate over the next couple years.

Check with Dan Rivers and Mike Savage - theyre the local STR experts.

North Charleston just passed regulation similar to Charleston for STRs if I remember correctly. You have to have a permit and they limit the number of permits. You also have to have at least one dedicated parking space and the manager has to be available 24/7 to be on-site within 30 minutes. In Charleston, I believe the rule is that you have to live on the property as your primary residence unless the property is in an STR overlay district.

I personally know some investors who are starting to struggle a little with occupancy/bookings. This market is somewhat saturated, but there are pockets where STRs are still viable. Dan Rivers will probably have better insight. 

Make sure you account for SC property taxes correctly in your analysis. This is the most common mistake I see investor clients make in this market because there is a huge difference between legal residence and non-legal residence taxes. Also, expect insurance to be significantly higher than other areas of the state and country. I typically use 0.8% of the property value as a starting point, but this will depend heavily on the age of the roof and the structure type and age, as well as deductibles on wind and hail. 

What are you trying to accomplish with the new loan? Are you just wanting to pay off the existing lien, or are you wanting to pull cash out? Since you plan to live in the house, DSCR loans and other commercial options are off the table. For Conventional, here are the basic products:

- Delayed Financing - this is basically getting a purchase loan after having paid cash. The lender treats the loan as though you were using it to buy the property. This can only be done if youre within six months of the original purchase and if you truly paid cash. The lender will use the settlement statement amounts for calculating LTV and other figures, not the current appraised value. Since you used hard money, this wont be an option.

Rate and Term/Limited Cash-out - you can rate and term refi the existing lien and purchase money 2nd liens into a new Conventional loan. Closing costs can be included the loan amount. You cannot receive more than $2k cash back at closing. No seasoning requirements - you just have to be on title. 

 Cashout Refi - To receive cash from the loan greater than $2,000 or to payoff non-purchase money 2nd liens. You need 6 months on title and 12 months seasoning on the existing note to qualify. 

Since this will be your primary, I would probably R/T refi the hard money into a Conventional loan and then get a heloc on the property afterward. The heloc requirements will vary by lender as these are mostly done by banks using depositor funds - they will all have slightly different requirements and will not follow conforming loan guidelines.

The LTVs for R/T and cashout refi's will be based on the new appraisal completed during the loan underwriting for the new loan. The appraiser will likely want to explanations and documentation to justify the increase in value from the original purchase.