All Forum Posts by: Richard Scholtz

@Eric H. - Yes...... that is 75% L.T.V and loan based on cash flow of the property NOT your debt ratio as many times loan is made to a LLC. No borrower qualification besides score.

B2R is too expensive and has very high insurance requirements that suck and a =$750 legal review fee on the LLC docs....and their minimum Portfolio Loan size  is  $1 million.

The lender above is not B2R..but there are a few out there better than B2R.

@Tyler LeonardThey will treat the 5 unit differently from the 1-4 family.

NO commercial bank can compete with FNMA 1-4 family financing ---30 year rental money at 3.75%.

You can finance up to 10 properties with a FNMA lender and given your scores and income and cash low you should be fine. They will do 1-4 family loans.

A portfolio loan is a pain if you try to sell one of the  properties if they do not write a deed release into the loan.

Then you are left with the 5 unit and that will need a commercial loan.

 Regards

Richard Scholtz

Hello

You may try Seattle Funding and Mortgage Equities and Eastside funding ( all King County based hard money lenders) The hard money guys in Seattle know the area. Tacoma sucks...I know I lend there all the time....Hilltop was awful. They may lend on the property as rehab them you can get a stated income fixed 30 year loan under 7% with no docs and no track record once it is done.

Regards...

Richard Scholtz

A Pierce County based lender  :-(

@Tim C. 

@Brit Foshee

Hello Tim 

• Hard money loan is a no docs  (private) non-bank loan...without the tax returns and many of the qualifying criteria...but it could be on one property could be 100
• A portfolio loan could be from a bank or a hard money loan or a hedge fund...and this is many properties (portfolio) all wrapped in one loan ...so they are cross collateralized.

Banks loan to US residents and are now required to get a 4506(t) from the IRS on loans they close...if they are Federally insured and regulated. So the Hedge funds and Finance companies have come in and do what the banks cannot. The are not as cheap as the banks but will still do 30 year fixed loans under 7% where as banks are under 5% for the same loan. A bank will not make a commercial loan for longer then 10 years...so you will get a 30 year loan with a 10 year adjustment or call. (This way they place the interest rate risk on you) 

-----------------------------

I have closed loans with all the Stated (NO Doc)  money portfolio lenders out there...

B2R and Dwell (Blackstone Hedge fund subsidiaries) are only one of them but they just upped their minimum loan amount to to $1 million for their portfolio loans.. In Dec 2015 I closed a 500K loan with 8 Milwaukee properties....Stated income for a new LLC..through them.

I am now placing another such portfolio of 13 properties in Dekalb and Decatur counties (Decatur and Atlanta) and these are my findings....

B2R is no longer the cheapest as they price off the 10 year swap rate...so you will end up at about 7.75 - 8.5%.

B2R will cost you $700.00 for a legal review to review the LLC docs and they also hit you you for some excess massively expensive insurance requirements - and you will NOT be able to sell any part of the portfolio off as they do not allow for deed releases....

So you have to hold all the properties and NOT sell one until you sell them all as B2R prices then as one security.

There are better sources that will give you a commercial loan and price it close to 6.5% if you have good scores...

1. Your idea of closing costs are accurate...What costs are there involved in closing? (I have on my list 2-3 points, valuation of $500 per property, closing costs of 1%, is this roughly correct)
2. NO a hedge fund wont will not foreclose on you any sooner than a bank will so you get the normal grace periods and the normal nasty grams to to get caught up, as they do not want the R.E.O. any more than a bank does.

Given your scores a portfolio loan should price around 6.5% to a foreign national or LLC with no tax returns and NO SSN---

As most banks who will loan at 4.5 - 5% may not loan to a LLC and foreign NON US national with no SSN. Banks are now required to obtain a 4506(t)  through the IRS on all loans they close if they are Federally regulated or insured.  So they are less able to make Stated Income loans with no documentation. Graham Dodd and the mess of 2008 changed all that.

Anyhow Tim.... ... 

1. More importantly is will your lender allow you to sell 1 or two of the properties off later...if they are all tied together....Can you get deed releases written in to the loan so when you sell one you get it releases....and keep the rest.
2. Would it be cheaper to get 10 smaller loans....1 for each property --with same closing costs...

Question for you...

How were you able to get those good credit scores built up with no Social Security Number...for consumer accounts??

These are the parameters you may find better...

As a mortgage broker....we get paid by the lender --  so your cost to use usr is no more expensive than had you approached the lender direct. It was that way with B2R and the portfolio loan we did in December....same with SE Capital  and Civic and Velocity Capital and Regis and others....

Email me the property addresses and we will send you a complete written proposal....of costs and rates etc...

Regards

Richard Scholtz

Commercial Lending

 Hello

In Washington State and in Oregon I have found the Federally regulated banks cannot touch the 420 business as the Feds have not yet signed off on the industry. Who has filled the void has been the State chartered credit unions who has handled their banking and their credit card processing and portfolio loans...

So a recommendation is try the Credit Unions 

Regards

RIchard

MINOR CAUTION TO CHECK OUT FIRST...

Please check the rules on deficiency balances???

 In Washington for example - A Short Sale is the kiss of death....as a foreclosure does not allow for a deficiency balance, but lenders can come after you for whatever was "forgiven" in the short sale years afterwards.

People trying to do the "right thing' worked hard at selling their home and worked with the realtor and bank to get it sold as a short sale. Thinking they were done they moved on. Three years later a collection agency is hounding them as the bank sold the deficiency balance for 10 cents on the dollar and now a collection agency can and will collect.

That cannot happen on the foreclosure here in WA ....so my advice at times is quit paying the mortgage and save the payments to move.....in year you have to ,....but you are no worse off than if you did a short sale..... Check your local rules about deficiency balances.

Hello

The reason this topic has been discussed because every ones experience is unique...and will remain so. There is no way to make hard a fast rules for what each can do.

Forget a long term relationship - Each deal is evaluated individually. IF your project is what they like they will fund it . Some banks like franchises - some will fund churches...Credit unions do not like  or understand  either....as a rule...

Banks and Credit Unions are driven by people evaluating each deal individually. In Washington State charted credit unions can fund marijuana dispensaries while Federally chartered banks still stay away from what the feds call "drug money laundering.

Bill Gates will not need an appraisal on a rental purchase and pretty much find it easy to fund a 90% purchase. His bank rates will be better than you Credit union rates and fees may be waived. So loans are not all the same.

As a rule banks want to re-adjust their rates every 3-5-7 years so lower their interest rate risk. Banks syndicate loans. Some aggressive banks price as good as Credit Unions.

Credit unions never syndicate loans and so portfolio them and will make longer term loans.  Underwriting for both will be similar.  

I got a local bank to accept some terrible credit scores because the bankers knew the family and had done business with the family businesses for years. Three credit unions had already said NO WAY.

 Regards

Richard Scholtz

Joe,

Go work for someone first or broker some deals...so you see their paperwork, how others structure their loans, and get to pick their brain on their "sweet spot" and why they are there. If you do not know what that is....You had better find out. 

Some lenders understand churches and lend there....others lend 100% LTV to franchises they understand, which scares the hell out of me...but they do not loose money. In Washington some lenders will loan to the Marijuana growers and dispensaries...while Feds say NO GO....so they work their niche...

Hard money lenders are NOT the same ....they each have a niche they like...they have a way of processing a deal....and it is only when you broker//refer deals to  many of them consistently do you understand and deal with all their quirkiness.

So get the education free....on their dime and then put your own money out...

Some will pull a tri-merge credit while others will include a criminal history and some will even screen in other creative ways. Most the lenders I refer to go and walk the project and let the borrower sell them on the deal. You will get a feel or the skills they bring to the project. A carefully thought out and  realistic plan and cost estimates carries more weight than a 800 credit score by some naive dreamer.

Finding out your note is unenforceable and or noncollectable is expensive. Worse is when the EPA decided the leaky oil tank on the property is your cleanup since the buyer took off.

That rehab buy2flip project became a Meth Lab - Now the Meth Lab hazmat cleanup bill is yours as lender -  since the owner/borrower  got arrested and he is jail.

I have seen lots of fun and strange things in my 20 years in the trenches...

Good luck with that 

Regards

Richard Scholtz

 There are hard money lenders on this site...so go to their websites

I have found in the ""file download"" section some great spreadsheets and cost break sheets to review opportunities with

Welcome to taking a sip from  a Fire Hydrant :-)

Regards

Richard

 Email me ...I have two WASHINGTON state versions as a word.doc...You can edit ti to protect the guilty and condemn the innocent ;-)  Was not real keen on donating 10 years worth of documents and spreadsheets to the general uploads...

Regards

Richard Scholtz

My two bits worth discounted for inflation is now only a penny...