All Forum Posts by: Riaz Gillani

My first thought for house hacking is always FHA loans. As low as 3.5% down payment. They also allow co-signers who are related by blood. So, your father's income, assets, liabilities, and credit history are joined with yours.
You’d be required to reside in the residence for at least 12mo, so keep that in mind. 

Best of luck!

No one has yet chimed in on stabilization and ensuring the property is rented…Unfortunately, it’s rather easy (or at least easier than it should be) to make a property appear leased. And neither the appraiser nor the lender for the refinance would be the wiser.

Inside of 6mo, a cash-strapped flipper may feel the urge to resort to such measures. With a 6mo seasoning, and knowing such requirement exists, a flipper is all the more encouraged to in fact get a tenant in place to start cash flowing.

Another ‘extreme’ scenario. But these things happen. 

Selling an individual property, or partial release, is something you’ll want to ask your lender about. Some lenders will allow it with free will (especially in the case of a 50+ property portfolio), others may impose a fee (similar to a PPP fee), while many others will not allow any partial release (especially in the case of 5-10 properties). “All or nothing.” 

Whether or not title can be held by multiple LLCs is also something you’ll want to ask lender. The rules / regulations may vary by state. But, my short answer is no. All properties will have to be transferred to a single entity so as to prevent any defects or encumbrances on title.

But, my two cents would be to have a conversation with a trusted lender. There is benefit in ease & consolidation of payments. Some fee deduction as well (I’m talking title, the lender should relay cost savings on a portfolio or a tranche of single asset loans). But, I’m not quite sure what else. Unless it’s a LARGE (25+) number of properties, your lender should be able to provide you with single asset loans that are all ACH’d and feel pretty much like a portfolio loan.

I wouldn't send the exact term sheet as some of the information included may be only intended for the immediate recipient, but there's no hurt in jotting down the major items (rate, LTV, closing costs) on a separate piece of paper / email and letting them know this is what they are competing against.

In this case, though, I'd urge against 'peacocking' or suggesting the other offer is cheaper than it really is. That just hurts all parties involved...

The way David put it is spot on. If a 'fire sale' situation and no seasoning period, a scammer flipper could dust off the home and immediately pull out the equity or even make a profit. In this case, he or she no longer has any skin in the game. Theoretically, he or she may no longer maintain the property to the necessary standards to keep the asset alive, well, and cash flowing. 

From the lender's perspective, this is a scary thought and an IMMENSE risk on their investment. Some lenders may seek to attract investors / stimulate growth by offering 0 seasoning requirement - especially to experienced and efficient borrowers. But, probably needless to say, you'll notice that risk is often offset with higher interest rates. 

I would say to almost "Zoom" out and take a look at the whole. I tend to learn best by visualizing or picturing a sort of flow chart. 

Real Estate is a system. Systems have processes. Processes are a series of actions. Actions have an aim.

Do you have an aim? Then shoot and fire - "swiftly and decisively" BUT with humility. Adjust as you learn and know that you'll never stop learning. 

@Niko Duffy You'll want to be careful with the stated and agreed on purposes of the cash out of your primary. If you are turning it into a rental property and therefore get a Non-Owner Occupied loan, you would be unable to use the cash out proceeds for a down payment on a new primary. They would have to be used for investment purposes. 

@Sean Tift I'm a private lender with expertise in BRRRR.

You may want to go DSCR / private. Here you can get up to 75% of the Appraisal Value back to pay off the HELOC and turn some equity into cash.

Qualifications are credit score and DSCR (which is essentially a measurement of cash flows). So, to answer your questions, you'll want to make sure the property is occupied #1. Then consider the monthly taxes, insurance, and an estimated P&I payment. When taken against the rental income, if you're in the green, you ought to be good to go.

DSCR lenders also offer 30 Yr Fixed Rate loans. No balloon or term renewal. Fully Fixed Fully Amortized. Generally embedded with some variation of a PPP, so consider your time horizon and exit strategy.

Not much else besides the primary benefit of private / DSCR is that it's "LITE" doc. So, no tax returns or income / employment verification. Like I mentioned, credit + DSCR. Liquidity shown via bank statements. The mortgage generally doesn't show on credit reports either. Though you'll personally guarantee the loan, the transacting party can be your entity.

Hope that helps.

@Clay Massey On the DSCR side, it's case by case, but most lenders will cap leverage for a non-warrantable condo at 65% LTV. There will be a surplus of options.

I'd be more wary of the STR revenue. Does the property have 12mo of provable revenue? The lender I work for uses that in addition to an Air DNA Report and a reservation detail history.

@Brandon Allenczy

Good plan - BRRRR's an awesome way to go.

(1) Borrowing money from a friend isn't illegal. But, it'll be based on the hard money lender. Some of the lower cost / slightly more doc lenders will source your assets to ensure they are wholly yours and NOT subject to repayment. For example, if a $30,000 deposit was shown in your bank statements (which are requested to verify liquidity), an LOE might be requested to confirm it's source. The answer generally cannot be a 'gift' or 'loan.'

(2) The lender can provide you with a proof of funds letter. It affirms the lender's intention to finance your purchase, but it is NOT a mortgage commitment. It simply states that preliminary diligence was done and the lender intends to finance your purchase. We distribute these upon a soft credit pull and bank statements that verify proof of a down payment, closing costs, and 4mo of ITIA payments. Again, though, this is coming from a lower cost + slightly more document HML.