All Forum Posts by: Patrick Roberts

Traditional bank loans with follow a standardized process and will generally take 20-30 days to close. Private lending is all over the map - could range from nearly being a bank underwrite to literally a handshake with your cousin Jim Bob. The largest differences will be flexibility (aside from pricing and rate) and the ability to finance distressed assets. 

For conventional, the rental income for a property being placed into service will be 75% of the gross rent as an LTR. I'm not aware of any way to replace that metric with STR income. Typically for conventional, you would need the STR income on the sched E to be able to use it going forward. DSCRs are the go-to if you want to use STR income.

It will be tough to find cashflow in places like Charleston, Beaufort, etc, because of the prices. I know a lot of investors who have been pivoting to the secondary markets like Sumter, Florence, Orangeburg, etc. I don't have any direct experience on Florence. The flipside is that I expect the expensive markets like Beaufort will continue to appreciate strongly in the long term.

 Not sure what you're looking for, but I recommend speaking with Joe Brugeman at Mediabeast Marketing in CHS

By strategic, I'm assuming you mean brand/positioning/strategy and not specifically social media marketing, correct?

As the others have said, a DSCR loan wont be pretty with your current credit, if you can get one at all. Getting your utilization down on your credit cards and heloc will improve your score and should be your priority.

To answer your original question, the questions to ask are about prepayment penalties and points for DSCR loans. Also, get quotes at 70% LTV in addition to 75% - this will make a significant difference in rate and pricing for some lenders. If you have particular lender you want to work with, now is a good time to have a conversation about the MTR rent - lenders will vary on how they calculate this income and the seasoning required. The LTR rent is pretty straightforward.

I would definitely ask your lender for an alternative. From your question's verbiage, it sounds like theyre trying to verify the length of self-employment history, probably to meet either the two-year or five-year marks. Some of the alternative documents that can sometimes be used are state filings, previous tax returns, etc. If you have another professional advisor (attorney, CFP, etc) who is involved in advising your business, they may be able to provide a similar letter. 

Last thing - if you can avoid providing tax returns they are not already requiring, I would do so. This could do more harm than good. Stuff like that cant be unseen - if something unfavorable is discovered, it's permanent. 

I believe there is only a handful of title companies that will issue policies on tax lien foreclosures. If I remember correctly, Civic Source is an auction service that operates in the tax lien foreclosure space and they own/bought a title insurer to issue policies on the properties they sell. Might be worth exploring - I can't say for certain, though - my experience is limited here.

A lot of these details will be lender specific - especially for bridge loans. As an example, in your case, the bridge loan would be used to convert your existing mortgage into a temporary loan with a very low monthly payment. For instance, with how we set up our bridge product, we convert the house that you will be selling (your old home) into an investment property and payoff the existing mortgage with a bridge loan refi that has a 6 month term and monthly payments that consist of only tax and insurance escrow. The loan is interest only and it accrues and is paid when the loan is paid off - there are no monthly interest or principle payments during the life of the loan. This gets rid of the old mortgage payment and replaces it with a very low monthly payment, reducing your DTI.

Simultaneously, we close the new mortgage on your new home. This process allows you to get a new mortgage for the purchase and roll any cashout from any equity (whatever is leftover after the existing mortgage is paid off on the old house) as the downpayment - all without having to actually sell the old home first. The result is that you get a 6 month window in which to sell the old home after buying the new home without needing the income to carry two mortgages via DTI.

The term, structure, LTV, and rate for bridge loans will vary by lender. Using rental income via a short term leaseback on the new residence will not help your DTI unless you're getting financing as in investment property - it will only give you cash income to pay for the new mortgage until you sold the old home and actually moved. I'm not a huge fan of these short term leasebacks as you could have a serious problem on your hands if the sellers refused to move out.

Bridge loans like this are not without risk - in this example, you have to get the old home sold within 6 months, and this may require you to sell if for less than you would like. In our case, we would absolutely call the loan after 6 months unless there was reason for an exception. I'm not licensed in Ohio, but I'm sure you wont have any problem finding a lender who has access to a similar product. 

Many DSCR loans do not allow subordinate financing and will require downpayment funds to be sourced. DSCR loans typically wont work for rehabs, either. It sounds like what you're looking for is an equity partner - you will have a tough time finding someone to lend in 2nd position at 100% CLTV.