All Forum Posts by: Riaz Gillani

Seasoning is the major difference. A requirement of a Cash Out Refinance is that the property has been owned for at least 3-6mo (I've now seen 12mo be more frequent for a cash out vs rate & term). Seasoned properties are more likely to be fully occupied, freshly renovated / brought up to date and NOT the result of a fire sale or a sneaky wholesaler / flipper who dusts off the property, pulls the equity out, and then potentially defers maintenance (no skin in the game = no pride in ownership = more likely for this kind of negligent behavior).

But, like you said, there are plenty of cases where a property is bought at a bargain. No ifs, ands, or buts. And when such is true, the smart move really is to sell and put those funds into a different project. 

To my knowledge, there's no literature on whether or not seasoning is an objectively effective safeguard to the risks I mentioned. But, the rules of the game.

Highly unlikely. Having no skin in the game is a hard and fast non starter from a lending perspective. 

Possibly a bit nuanced of an answer, but would a quarter rate increase cause you to lose sleep OR greatly diminish your ROI? What about a half point? 

I also think Brad was implying that you can conceptually view paying for the rate lock as a "buy-down" and if your time horizon is greater than 5-6 years ... you'll be reimbursed and eventually earn savings (without accounting for inflation). And I agree. Without knowing loan amount, amo, etc. 

Rates can be anywhere from 6.500% to 8.000% for a 30 Yr FRM. 6.500% reflecting a higher credit score borrower and potentially with buy down points. 

Turnaround is a tricky question also. 30-35 days is a good turnaround for a deal in an appraiser-rich to semi-rich area. 

But, a good lender is probably closer to 45 days (due to volume). 

David Greene mentions it often in his book about BRRRR. Rockstar lenders / realtors will be harder to reach than newbies or those less qualified...But, they'll always get the deal closed, offer alternative solutions / products, and keep an open channel available for important updates. I'd harp on those qualities rather than rates + turnaround.

You get what you pay for!

Don't want to repeat what @Matthew Crivelli said. But, DSCR / Non QM would be the route. 30 Yr Fixed Rate Mortgage. No blow up /no term renewal / no Income Verifications. LLC is ok (preferred at times, even). Title will only list the LLC but your operating agreement or membership resolution will state all owning members and their percent interest.

Credit must be checked for the rental product. But, can be as low as 600. 

If not an option, you'll have to go back into hard money. 

@Matthew Masoud Title, escrows, recording, and prepaid look good. Origination is the only item that catches my eye. But, it's also the only that is subject to the terms of your agreement. 

Looks like 5.75% with 3.742 points? Are all of those points origination or is a portion buy down? My very educated guess is the latter. But, even if not, the terms are pretty good in this environment (assuming you're with a Non QM Lender and the process was reasonably easy). 

1% isn't high. It's not low, but remember that you're paying the money now so as to save more throughout the life of the loan. I'd suspect you recoup your money back in ~ 5 years (without accounting for inflation). 

Happy closing!

Agreed on Stephanie's comment. No lender can get you long term financing here as it's non conforming use and the property cannot be rebuilt to current specifications. I also don't think it's a question of a lender getting 'creative' - you'd need either a negligent appraiser or underwriter to get this qualified as it presently stands.

Solutions would to petition for a zoning variance OR revert back to an STR and take the cash flow hit in exchange for pulling out the equity.

The short answer is yes. A seller financed loan may not show up on your credit report like a bank loan will. But, it will be counted against your DTI insofar as you have an obligation to disclose it when applying to for a mortgage on a primary.

First and foremost, by HML are referring to a short term / pure Hard Money Lender? OR, a long term, private DSCR lender?

If a short term, pure HML - I'd call BS. Vacancy should be a non factor. The lender may have been holding on to pertinent information and held back knowingly. VERY BAD.

If the latter, I'd be more inclined to say that this is not an impossible scenario. Private label MBS buyers are narrowing their 'box' beyond just interest rates. And, it's very likely that your lender previously calculated DSCR with 100% of FMR and is now using let's say 90% due to vacancy. Or, simply has a greater DSCR requirement (1.20 rather than 1.10). I don't know - but I'd get these answer ASAP. Especially if this is a lender you may work with again.

From when you purchase the property, so the date listed on your closing statement during the purchase. Most lenders, like the company I work with, can start the process while within seasoning. But can only close on day 91 / 181.