All Forum Posts by: Patrick Roberts

This is exactly it - it is impossible to know the future. For almost two years now, people have been predicting rate cuts that were right around the corner and were a sure thing. If anything, we're now seeing data that suggests there isnt much reason for rates to drop significantly any time soon. Rate drop predictions are largely a bunch of hopium from Barry, the MBA, and the NAR looking for a bailout.

DSCR loans are great options when the borrower has good credit and the deal is really solid. As someone else mentioned, what I've seen a lot of in the past six months is deals that don't have the rental income to service the debt and borrowers with marginal credit. There are DSCR products for those scenarios, but they generally price worse than regular DSCRs. Conventional is still the gold standard, but DSCRs are a close second for good deals.

Hi Lea,

You're definitely in the right place. Charleston has an REI group that's pretty active. REI Central is probably the largest event - it's the first Thursday of each month. There are also smaller, focused subgroups for the members (flippers, landlords, commercial, etc). There a few other groups that meet monthly such as the CHS Circle and the Tri-county investors association. Dan Rivers at Maven Realty also organizes a monthly early morning meetup on a Friday mid-month. That one is tomorrow morning in North Charleston. There are also facebook groups associated with all of these.

I'm happy to help if needed. 

As Jaycee said, there are countless ways to generally analyze potential investments. Specifically in SC, though, I would check two things - 1) see if the ATI exemption applies and actually quote the taxes for that particular property on the county tax estimator tool, and 2) get a ballpark quote from your insurance partner on the particular property. Property taxes and insurance can vary wildly depending on the location in SC - there really isn't a rule of thumb or generic figure that can be used. 

This is highly specific to the loan product and the lender. For a Conventional cashout refi, you will need 12 months of seasoning. For a DSCR cashout refi, the seasoning could be anywhere from none to 6 months. Generally, the ARV will be used so long as the circumstances are reasonable. In some cases, if the ARV is outlandish or the change in value is rapid and extreme (ex: purchasing for $100k last month, appraising for $500k thirty days later), it may need to be supported by a CDA or evidence of repairs/upgrades.

You're unlikely to find any kind of mortgage product for the business purchase. If the property is residential rental real estate and can be separated from the financing of the business acquisition, a DSCR loan might be an option for the RE part if you have the downpayment. I'm not aware of any mortgage products that will cover the acquisition of the business itself. SBA or CRE from a local bank is your best bet.

It sounds like this might have been some sort of "creative financing" scenario where the buyer has $0 but is trying to cobble together 3 liens and 8 JV partners to buy something they cant afford. I wouldn't sweat it. If I was in your shoes, I wouldnt waste my time with an unqualified buyer. If they cant be bothered to provide basic proof that they can close before tying up your time, then they will be a nightmare to deal with once under contract.

This is literally what a pre-approval letter from a lender does - it shows that a lender has taken a solid look at the buyer and confirmed that there is a decent probability that they will get the loan needed to close. If they wanted to send a hard money pre-approval for half of the purchase, then either A) the lender needs to confirm that they verified the borrower possesses the remaining cash to close, or B) the borrower needs to show proof of funds for the remainder. I regularly call sellers on behalf of my buyer clients that I have preapproved and walk the seller through the rigor of my preapproval process to prevent this exact situation. 

I agree. Some of the stuff I've seen and heard in local REI meetups is unbelievable. People funding in 2nd position behind hard money at 75%+ CLTV on flips with aggressive ARV's, people funding EMDs and closing costs for "wholesalers" who have completed 1-2 deals and dont have $5k to their name, etc. At least 2-3 times each week, I get a referral or lead for someone wanting to buy an investment property with 5% down that cashflows $23.00/month with an insurance estimate that is half of what's realistic. It's wild.

I feel like just about every month, I see RE investors with 1-2 year's experience starting a new fund and advertising on Facebook for LP's, as well as the daily "JV deals" that straight-up violate securities laws. While I don't think there's going to be a crash, I do think we'll see a reversion to mean in which a lot of the aggressive investors on the bleeding edge of the risk frontier get smashed.

It's highly unlikely that you'll find something like this, and if you do, the max loan is likely to be no more than the value of the land minus any demo costs. A lender would have to be a fool to lend on collateral that wasn't protected - if the house is lost in a fire or whatever, the loan is unsecured at that point and is basically credit card debt. 

Also, if you currently own a property that is not protected by insurance, I strongly recommend that you reconsider this strategy. Trying to save money by foregoing insurance is playing russian roulette. Most of the time you'll be fine, but when something bad eventually happens (with enough exposure over time, you are virtually guaranteed to have something bad happen), the outcome is likely to be catastrophic. 

Generally speaking (I dont have any details about your situation), househacking is the best way in for people getting started. The reason for this is that existing loan guidelines are set up to favor people buying their primary home. Conventional, FHA, and USDA all have products with very low downpayment options and government-subsidized rates for first time homebuyers who have a normal income. Also, Conventional and FHA allow for buying multifamily properties as your primary home, meaning you can buy a duplex, triplex, or 4-plex, live in one unit, and rent out the others. On the other hand, most true investment property loans are going to require at least 20% down.

I also recommend that you network as much as possible with other investors. You can learn a lot by being around others with a similar mindset or who have more experience than you. Charleston has a very active REI community and several meetup/networking events each month that are pure gold. REI Central is the most prominent event. I strongly recommend you start attending these as often as possible and soak up as much knowledge as you can.

I'm more than happy to help if you have any questions about loans or networking. Shoot me a DM if you want to chat about it.