All Forum Posts by: Robin Simon

@Robin Simon What I'd DSCR?

Hello David Maldonado,

I may be biased, but I cannot think of a good reason not to use a independent loan broker.  They are professionals in the lending space and can provide an advantageous level of access to lenders.  Typically professional loan brokerage firms will have access to several hundred lenders and an intense level of understanding of the market for the type of financing you wish to arrange.  

Many firms employ or contract with highly experienced loan officers and/or experienced underwriters. The knowledge of the business that a firm brings to the table can often times offset the costs associated with working with a financing brokerage.  The advice and input you receive from such a firm is of great value in itself. 

Be wary of firms requesting upfront fees.  Good brokers will spend time to assess your position and your goals.  Be ready to provide your financial data and documentation so the broker can properly assess your likely credit request outcome.

Good Luck and invest well.

Regards,

Tracy Tippett

TNT Funding Associates LLC

Hello all - Excuses my ignorance but I would like some advice.

My partner and I are looking soon to talk with lenders for our first investment properties. My partner and I are unrelated and we don't want to form an LLC. Will this be an issue for lending? I know most recommend an LLC for partnership, & we plan on doing that after we get to ten loans in our own names.

Can we jointly apply for a mortgage if we are unrelated/unmarried? I know car loans allow a co-applicant but not sure for REI

Thanks in advance

DSCR cannot fit with land purchase as at closing you have zero rents vs principle interest taxes and insurance plus all your other bills- primary, car, credit cards. You probably need 20 -29% down to make this work plus a large deposit to the modular builder plus cash for permits and hookups.

Land purchase $650000 + $150000 modular + permits and hookups $20000 = $820000 will it appraise are there comps for a manufactured/modular for $820000? 820000 -164000 which is 20% down your piti will be $5562 you say rents are $3000 the answer is no you cannot do DSCR even when the whole project is complete.

Manufactured/modular is not the same value as stick built. I would suggest you plan to build this as a duplex. Set up the utilities for two houses. Move into the modular and build the stick built house while living there and rent your current house or sell it for the cash you need. Ask seller of lot to carry paper at 8% 15 year note due in five. Lots take a while to sell and give them small down payment. Then save the $164000 that you need in cash. Then find the modular and permits.

https://www.bloomberg.com/news... in Bloomberg news a couple of days ago, basically comparing DSCR loans to the subprime mortgage crisis of the mid-2000s. Their premise is that demand, rates and occupancy - all of which peaked during the pandemic - do not support the income assumptions for these DSCR loans so the banks and buyers are going to be in trouble soon. It's a sweeping generalization, but I don't think they're entirely wrong. It's just unfortunate to see the vacation rental niche taking another shellacking in the news. Average homeowners, government officials and pundits are already looking for scapegoats to blame housing price inflation on and, of course, the vacation home sector is an easy target. I would assume DSCR lenders have taken this into consideration when underwriting the loans, but we've certainly seen that not be the case before. I do think we're going to see some first timers throw in the towel since many hosts report operating on very thin margins which indicates they won't be able to weather the ups and downs. Hopefully people bought smart, have some equity and some reserves. We'll see.

I'm not an expert but I know the underwriting of DSCR loans requires the borrower to show a pretty good chunk of reserves. And I believe most require at least a 25% down payment.