All Forum Posts by: Richard Scholtz

@jay Look at FNMA Delayed Financing

We just did 4 two 4 plexes as a NMLS lender....--  

Normal rules are 6 month seasoning to get the benefit of the improved value ,,,,but DELAYED FINANCING EXCEPTION says you can use the new rehabbed value!!

They were paid for by IRA funds taken out for 60 days....then FNMA allowed us to use the NEW rehabbed value as the 4 plexes had been paid for by funds not secured by property ....so the 30 year loans we got 45 days after the purchase allowed us to go 75% L.T.V. of the new rehabbed value ....so were able to recover all the funds paid for the property and put the IRA funds back...Risky timetable but it paid off.

@Jay Baxter

Here are the FNMA guidelines  -->   Google FNMA Delayed financing exception

Borrowers who purchased the subject property within the past six months (measured from the date on which the property was purchased to the disbursement date of the new mortgage loan) are eligible for a cash-out refinance if all of the following requirements are met.

@matt smith 

 RUN --  A FNMA appraisal will cost no more then 700-1000 for a multifamily 4 plex....so figure a condo to be less.  

There are local savings and loans that will offer portfolio loans --meaning they are NOT tied to FNMA condo qualifications and  they will want NO MONEY upfront until they order an appraisal. 

You just need to tell them it is a NON WARRANTABLE project... and they will be very similarly priced to FNMA rates....under 4.5% 30 year fixed.

Make those calls to local Savings and Loans and Federal Credit Unions....in your town.

Warrantable Condominium Definition: A warrantable condominium is a condominium that meets

standard Agency guidelines and is therefore eligible for delivery to FNMA and FHLMC. This definition

does not apply to FHA insured or VA guaranteed loans. Guidelines include but are not limited to pre-sale

requirements, occupancy requirements and LTV/TLTV restrictions. Guidelines for warrantable

condominiums are subsequently outlined in these guidelines.

Non-Warrantable Condominium Definition: A non-warrantable condominium is a condominium that

does NOT meet standard Agency guidelines and is therefore not eligible for delivery to FNMA and

FHLMC. Guidelines for non-warrantable condominiums are NOT outlined in these guidelines.

Hello @Angela Jossy  I really want to agree @Troy Fisher This website and the podcasts and the meetups at the RAM restaurant here in Lakewood to talk face to face with folk doing just what you plan to do costs NOTHING. Nobody is selling anything remotely as useful and most online courses are some book they cobbled together borrowed from a site like Biggerpockets --  Only then to sell you for a  fortune.

You already made your first great decision to question the material in a post....Wasn't that easy?

 You wrote = I want to learn how to assess properties and run the numbers so that when its time for me to jump in and buy my first small multifamily home I will be ready. 

There are great valuation tools and spreadsheets....under tools and FILEPLACE on this site.  Shoot me and pm - I have two valuation excel spreadsheets and a few RE valuation tools we use in lending ((for cap rates))....all that is free.

Start tagging new transactions in keywords.....or just Tacoma...and  you will get a bird's eye on a 1000 deals a month right on this site and see the responses and the wisdom as they each newby runs into issues and opportunities. 

Meanwhile save your money - listen to the podcasts and maybe buy one or two of the books offered here and within  6 months of spending an hour a day here...you will have the answers...to others questions as you will have seen them come up over and over.

Welcome to the board!

...the best gift I give the investors we loan money to is the ability to say ...Thank you for doing business with us....now here is a gift of a resource that will blow your mind...You need to be a part of this site...   www.biggerpockets.com

Hello @Alex Tonu  This site is amazing.....  I  highly recommend you download some of the resources under TOOLS and FILEPLACE ....From Spreadsheets to free books....

It will feel like taking a sip of info from a fire-hose....knowledge and wisdom will come running out your nose.... :-)

Hello @Shalabh Jain

That is standard FNMA guideline. They do not want condos that are 100%  rental units with a lot of H.O.A. dues past due so the buildings cannot pay for upkeep and all get turned into meth labs. The FNMA condo guidelines are all here  https://www.fanniemae.com/singlefamily/project-eli...

Condo projects and properties which don't meet Fannie Mae and Freddie Mac warrantability standards are known as non-warrantable.

Non-warrantable condos are more challenging to borrow against.

Typically, a condo is considered warrantable if:

• No single entity owns more than 10% of the units in a project, including the developer
• At least 51% of the units are owner-occupied
• Fewer than 15% of the units are in arrears with their association dues
• There is no litigation in which the homeowners association (HOA) is named
• Commercial space accounts is 25 percent or less of the total building square footage

What  you want is lender that will lend on NON warrantable condo project. 

There are bunch of PORTFOLIO lenders that do NOT sell their loans to FNMA. They can and will lend on such projects and rates and term are not that much different. Your large down payment meets their requirements.

Reach out if you want those details.....your problem is not a problem

   @Kenneth Nyanjui  There a couple guys in Seattle WA  that can get that done ASAP.....not me ...but pm and I can get you the contact data.  Local is good as they will drive the property in hours... 

@John Jacobus  Pull a TRI-merge from a credit bureau for $30.oo . Must have all three scores and coming from a Credit Bureau will not impact you score wise. However each inquiry is only a 5 point hit if that.

Submit it to lenders with instructions to base the pricing off the submitted current  Tri merge bureau and not pull a new one until you have formally applied.

This allows them to accurately price their product and generate the estimates. Also tells them that you are shopping so they get more competitive if it is a borrower-paid transaction vs lender-paid transaction where the pricing is set.

I totally agree with @Lane Kawaoka Two 2 local community banks will do the Portfolio Loan right here in Seattle with yields under 4.75%. This can be a single property or multiple properties - cross collateralized properties? They are underwritten as a commercial loan based on 1.20X DSCR and do not run into the FNMA 10 property or FHLMC 5 property cap and structured as a 25 year amortization with a 7 year adjust. If it is in a LLC then they stand alone so less about your personal returns.

@Greg Harriman @Alex Chin Please read some of my previous posts...The stated loans have been discussed at length for Seattle/King County and the underwriting is 1.20X DSCR --- Two banks here will allow a portfolio loans so the equity in the 5 properties become the new down payment ...as these are commercial loans ...you do not deal with standard FNMA D.T.I. ratios and they are cross collateralized with deed releases writing in to them.

If that is not acceptable then a pure Stated Loan is available through 3 or 4 hedge funds...but I would suggest the portfolio loan first to get yields under 5%. I have posted on this at length. 

Hello @Jameson Sullivan

Lima has some quirks....for instance they want the actual corporate docs from the State for your LLC......which is a hassle....The will not accept just a WA state lookup..for the State website as most others will. Lima does compete with Black Rock and 3 others that do similar business but they are not the most cost effective.

As for the numbers...

You buy a house for  100K with hardmoney in Tacoma .....maybe you put 20K down so you owe 80K to a ((SHORT TERM 12 month)) hard money lender as  all the windows are busted and it is a mess and at that point only worth the 100K you paid.....but in a great neighborhood of 200K homes.

You spend 30K on the Repairs.....

.If you hold it 90 days....and you are now in title ....

After you fix it ...It is then re-appraised........once it all pretty and has a tenant in ....for a new fixed 30 year loan based on it FINISHED A.R.V. value...

Your new REFINANCE loan is based on 75=80% of the ARV finished value.....which I hope is about now worth 160,000 - 170,000.oo

So 75% of the  new160,000  = $120,000 new loan amount.....which pays off your hard money loan of 80K and the 30,ooo repairs your put in ,....and almost all your down payment.

You have now recovered all your costs in  place....and have a fixed loan covered by the rents...

Wash Spin Rinse Repeat.....

As for the Rates..we are both a FNMA lender and commercial lender....so these are accurate..

1) FNMA owns 80% of all residential mortgage paper in this country and 30 year fixed - Full Doc loans at 3.75% to 4.25% => Credit Union and Residential A paper lenders VA -FHA -USDA etc

2) Commercial loans - 30 year am 5,7, or 10 year term = full doc loans price with good credit price at 4.375% - 5.5% ==> Think community banks and big 5  - WFC  - BOA - Chase etc and local Portfolio S+L's and some Commercial Credit Unions....

3) Stated Income Hedge funds....30 year fixed - No Doc  or  Low Doc with Great Scores ===>  loans price at 5.75%  - 7.5% ...think Black Rock, Velocity,  Lima,  RNC and others

4) Hard Money = short term to 3 years....prices at 8% - 10% 

There are no hedge funds or finance companies like Velocity or Lima or RNC or  Blackrock that will make you a  loan < under 6% as they need the 300 basis point spread over the 10 year commercial swap rate to cover their cost of funds...regardless of L.T.V.

I get wholesale rate sheets from some 30 lenders a day/week....and that is the risk/reward spread.

Hope that helps explain the process and the tiers of lenders...