All Forum Posts by: Patrick Roberts

Sounds like this is Conventional. Your FICO will have a major impact on the pricing (points for the rate). 

Lender fees (underwriting, processing, credit report stuff, appraisal) should be between $2k and $3k. Depending on the lender type, some of these fees could be in either box a or box b on the LE. Attorney/Title fees are around $2k in my state, but this varies heavily by state. Prepaid interest could easily be another $750-$1,000, depending on which day of the month you're closing. 

I wouldnt expect more than 2 points on a Conventional investment loan. 

Insurance and taxes, as well as escrow establishment/reserves, could easily be another $3k-$5k on an investment property depending on the region/state. 

So, all in, approx figures of $2,500 in lender fees + $2,000 in points + $2,000 in attorney/title + $4,000 in tax/insurance/escrow/prepaids = around $9k-$12k, give or take depending on the state. $14k is a little high unless your FICO is under 680

2. Fannie, Freddie and Govt loans cannot close with an LLC as the owner. There is a provision for Fannie loans that allows properties to be moved into an LLC after the loan closing so long as a few conditions are met. If you make any changes relative to title/ownership that are not allowed, then the lender will likely have the right to call the loan. Whether this happens is hit and miss; it seems like this almost never happened in the past, but anecdotally I feel like Im hearing about more of these.

3. Very few lender have pricing adjustments for DSCR loans in LLCs vs held personally. In general, DSCR loans will price similarly to conventional loans at 75% LTV, good credit, and a 4-5 year PPP. When the PPP is 3 years or less, typically there are points on the front end to compensate.

4. $2,500 in annual premium on a $430k rental is actually low in my markets - I would expect the annual premium to be over $3k in this scenario. While insurance is currently very differentiated by market/region, I expect the insurance trends we're seeing on the coast will be everywhere eventually due to inflation and other factors. Replacement costs are getting more expensive by the day. 

 North Carolina is similar to this. There is commonly a non-refundable "due-diligence fee" that the seller gets to keep regardless of the outcome. 

Welcome. BP is a great forum to connect with like-minded people. Also, there's a real estate networking group in baton rouge that meets in person at the beginning of each month. It's called red stick REI and the meetup is on the first Tuesday of each month at Red Stick Social on Government St. Turnout is typically 25-50 people and it's usually a very good use of time. This month, the meetup is tomorrow night (4/8/25) because of a scheduling issue.

I'm originally from baton rouge and still invest there. Let me know if I can help with anything. 

You're going to have a very, very hard time financing that with a DSCR. I would check small local credit unions and banks that have only a handful of branches and are present in the market where the property is located. They may do this as a commercial loan.

Another option is seller financing if the seller is willing to entertain that. Just be careful with low value properties like this - they can be traps.

Youre on the right track. If you're able to retain your current property and the expected yield makes sense, then keep it. If the numbers dont work, liquidate it and move on to the next one. Take some think to think through what youre trying to accomplish and why and then weigh how keeping vs selling fits into that plan. This will clarify your answer. 

I think this question comes down to strategy and what you're trying to achieve. Finding cashflow in SC is tough because of insurance costs and non-owner occupied property taxes, as @Stephanie Walker mentioned. Property taxes in SC for rental/investment properties about typically about 3x the amount of owner-occupied taxes. This typically consumes $200-$400/month more than what investors expect for rentals, which makes cashflow difficult. 

To answer your question directly, I havent invested in markets I don't know and deeply understand for the very reasons you mentioned. I spent over a year learning the Charlotte market before I first invested there, and I had detailed, in-depth knowledge of Charleston before I pulled the trigger on my first investment here. That being said, Im very in-tune with my own risk tolerances, blind-spots, and preferences, and I have built my box around this. That is just my style, and everyone is different. 

Tying this back together - if your strategy is primarily built around cashflow, then the NC market may be a better bet. If you're looking for long-term appreciation, I think Columbia is an excellent bet for 5+ year horizons. It's a college town in the Carolinas that hasnt yet seen the explosive growth that Charleston, Charlotte, and the Triangle area have experienced. My opinion is that it still has a lot of room to grow, and if this interests you, then my advice would be to spend some time learning the market before pulling the trigger. 

You are entitled to received a copy of the appraisal since you paid for it. That being said, the issue is that the new lender is not accepting the appraisal directly from you - they want the previous lender to transfer it. On govt loans, there is a formal transfer process; on Conventional and DSCR/Commercial/NonQM loans, there is not.

Most lenders will not voluntarily transfer appraisals for non-govt loans because A) you're asking them to do work that they are not being paid for and B) more importantly, some lenders are of the opinion that this puts them at risk of liability. If there is an issue with the appraisal or fraud by the borrower, the old lender may face a suit by the new lender or be roped into a deposition or discovery for a suit against the borrower relative to the appraiser/amc/client etc. From the lender's POV - why risk the headache and hassle for free when there isnt a long term relationship element. 

If the old lender used an Appraisal Management Company (AMC), there is a possibility that the new lender could use the AMC to formally obtain a new version of the appraisal for cheaper. Some will do this, others will not.

Use a mortgage/deed of trust, not a contract for deed. Regardless of the financing instrument, you're not getting refunds or money back. That being said, my opinion is that you have better protection of your interests in the property by not using a contract for deed.

Overall, I'm generally a big fan of this strategy and frequently recommend it to my clients who have kids in college. A couple things on this:

- Does your son have no credit, or poor credit? Assuming he will be the owner-occupant borrower and you will be non-owner occupant borrower, then your son will need a qualifying credit score for FHA. Your income can replace his lack of income, but cannot substitute for him not having a FICO. If he has no FICO at all, Conventional will be a better option than FHA.

- Going joint with your son on an FHA loan as described is fine for a 1-unit property. A multifamily (2-4 unit) requires 25% down for FHA in this situation.

- If you have good credit and your son has either no credit or good credit, AND your income is below 80% of the area median income, you may be able to use HomeReady/HomePossible (Conventional FTHB program) for a 3% downpayment and cheaper PMI. This will likely be the best option if you can swing it. ADU's can also be really beneficial in these scenarios as well - kid lives in the ADU and the house is rented by the room to other students.

- Having your son on the loan and deed will help him build credit and will lower the property tax rate in most jurisdictions as it will be his primary residence.