All Forum Posts by: Patrick Roberts

 lol right? especially since he's closing today on a fed reserve holiday...but hey, "the other guy's offering a better rate.."

If Im understanding correctly, youre buying the home from your mom who will take a first position lien on the property in exchange for carrying the $100k of the purchase price on a private note. You're also trying to raise another $100k to rehab the property to get it leased up. 

If your mom is wanting to keep the note in place once the property is stabilized for personal income, I would probably cashout refi your other rental that has equity and use that cash for the rehab of the new property. This is likely the cheapest and simplest pathway. If your mother does not want to carry the note long term, there are GSE renovation loans that can be used for both purchase, rehab, and permanent financing all in one loan. Another option is hard money for the purchase and rehab, which is paid off with a Rate/Term or cashout refi afterward.

I would not have her deed the house to you so that you can borrow against it if she's selling it to you and not giving it to you. This will create a huge mess. I also would not use your heloc unless you plan to cashout refi one of the properties once the rehab is complete - if you dont cashout refi one of them, you wont have any way of extracting the rehab funds to pay off the heloc. 

The only other options I can see are A) your mom partnering with you rather then selling the property to you - you become 50% owner and bring the funds and management to the rental while she provides the existing equity as her contribution; or B) your mom lending you the rehab cash out of her personal funds while also seller financing the house to you. 

I doubt that any serious lender is going to lend you construction funds in second position behind your mom's purchase-money lien on a distressed property. If anyone does this, theyre likely doing it as a favor and not a for-profit venture. 

A lot of this depends on the circumstances. If youre househacking or buying a property that will be your primary residence for a while (over a year) and then converting it into a rental, then most loan options will be available to you (Conv, FHA, etc). If youre buying a property that will immediately be a rental/investment property, then Conventional loans and DSCR loans are your two main options.

The big difference between Conventional and DSCR is that Conventional loans will look at your personal DTI whereas DSCR loans will only look at the debt payment and rental income for the property you are financing. DSCR loans will typically be slightly more expensive, however.

Generally, the BRRRR strategy involves buying a distressed property and rehabbing (renovating) it. Most mortgage loans will not work for this - you will need some form of bridge loan to purchase and renovate the property, which usually is in the form of construction loans are hard money/private lending.

DM me if you want to chat about all of this. I'm originally from Baton Rouge and still invest/lend there. 

The Lenders tab at the top of the site helps with finding lenders by product and location. Also, I'm sure several lenders will respond to this thread and offer to work this deal. 

That being said, the vast majority of mortgage products available (primarily DSCR) to LLCs are still going to consider your personal credit in the underwriting process. If you have a partner and are a minority owner or LP in the deal, you may find something, but that doesnt sound to be the case from your description. Mortgages for LLCs with personal credit under 680 are tough and expensive, and under 640 are typically not really economically practical for the borrower. If your entity has several years of operating history and good and reliable financials, you may be able to find something.

Inflated ARVs - Im starting to see this on cashout refi's and purchases as well. DOM is creeping up, properties are sitting, and appraisals are not coming in where the borrower expected. A lot of the deals that I analyzed (and passed on) over the past 12-18 months had unrealistically thin margins, and I saw the same thing on some of the loans that I looked at. We're starting to see the fallout from this - borrowers cant exit deals without taking a loss but are refusing to accept this.

SC seems to be doing OK at the moment, but Louisiana is seeing price declines. Insurance costs have been crushing cashflow on a lot of rentals as well - I've seen HOI quotes on $200k-300k houses come in as much as $200.00/month over expectations.

Probably, but not really enough context to for me to say one way or another.

Most DSCR loans allow LLCs to hold title and sign the note. While technically business purpose loans, these will still basically be 30yr (or whatever tenor) fixed rate mortgages. The only major difference is usually prepayment penalties and maybe some obscure, unusual loan terms in certain cases. If the LLC is the maker on the note, there's a good chance you'll be required to personally guarantee the note. You will not be able to get a Conventional (Fannie/Freddie) loan with the LLC holding title.

 You have a few different options, but a cashout refi on the free and clear property is probably simplest. 

Honestly, I think this might be more symptomatic of larger issues in the real estate world in general. Generally speaking, I think tech like this stuff and social media have lowered the barrier to entry, allowing people to take risks they dont fully understand, whether wholesaling. flipping, lending, etc. The tech itself is great, but this is the equivalent of letting 12 yr old kids drive on the freeway. Some will probably do fine with it, but the number of spectacular crashes amongst this demographic will be a multiple of the norm. 

Never heard of Investor's Edge, but this sounds like a straight up scam. Other than paying for an appraisal or BPO (and maybe a credit report), you should not pay a lender anything until your loan funds. Lenders get paid to get you to the closing table, not to try. 

Also, 100% financing is almost always BS.