All Forum Posts by: Ryan Moore

Originally posted by @Caleb Heimsoth:

@Ryan Moore. Yeah this is mortgage fraud if you don’t disclose that it’s borrowed to your lender. Likely your lender won’t go for this. Suggesting fraud in a public forum probably isn’t s great idea.

Ok, you can get down from your high horse now because no where am I suggesting that I plan to commit fraud.  The 60 days in the account seasoned, with knowledge of where the money came form originally, is information provided to me directly from the lender.

If you want, feel free to reread the actual question "what other structuring options do I have with a commercial loan" for what it is, and not "hey how do I commit fraud", then constructive feedback will be welcomed. 

I want to purchase a 5-unit property with a commercial loan. I plan to borrow some funds towards the downpayment. I was told that money needs to season for 60 days in my account before closing. This money will be coming from a family member's HELOC and ideally I do not want to be paying interest on this money to just sit in my back account while I make an offer and go through the contract period.

What are other structuring options do I have with a commercial loan to be able to pull over this money when needed at closing time?  I assume a simple option is to have my family member on the loan also, but we'd prefer to keep them off the loan.  This person also really just wants to lend me the money and return it whenever I can, and is not looking to make any money or have any part of the property.

Hey I found myself very interested in a 5 unit.  I've never had a conversation with a commercial lender before and I can't call around until later today.  I know 2-4 units require 25% minimum, but what are the standards (if there are any) on commercial loan down payments?

I'm looking at a Triplex & duplex packaged deal, they are next to each other, sharing a courtyard, but on 2 different parcels.  Can that be broken down into 2 separate conventional loans?

Debt coverage ratio is only for commercial loans correct?  It is not a figure I need to be concerned with for purchasing 2-4 unit MF properties?  

Is the residential loan equivalent the DTI?

Originally posted by @John Boychuk:

Is doing an owner occupy loan like FHA off the table for you? I know that's what everyone recommends, but it is a great tool to get into the game. Otherwise, you can get a conventional loan as low as 3% down, but 5% is easy to get with decent credit.

If you are in a position where you won't qualify for FHA or owner occupy, I would recommend looking into private money loans.

Someone please correct me if I'm wrong, but you cannot get a conventional loan on a 4-plex rental below 25% unless you are owner occupying.   I've been speaking to several lenders for a few years on residential multifamily and 25% down is the minimum I've ever been told for non-owner occupying.  I have had agents and other investors shoot me figures that included 20% or lower, but then they are alway correcting themselves when I bring up the 25% rule.

@Hadar Orkibi Thanks for the detailed response. So the really only way to make the offer on a triplex would be to see how other triplexes closed in the area.... and this is regardless of the rents they state?

I have a few questions on determining an offer amount for a small MF (2-4) property and trying to stay competitive in the market at the same time.

1)  Should I be making an offer based of the local market's cap rate?

2) If yes, then do I use the seller-provided P&I to negotiate a final contract price based off the that P&I to meet the market cap rate?  Or do I make an offer based off my own projections (i.e. % towards repairs, property management, etc.) and current market cap rate?

3) If a property's current rents are undervalued, then I should create my offer based on the current rents, and not the rents that I can raise it up to, correct?  Or am I competing out there with investors who are offering based on the rents they can achieve?

Is it possible to keep purchasing rentals where the property's cash flow offsets any impact that the new loan will have on your DTI? Or will my DTI always have a chunk of it taken off with each new loan on a rental?

Thanks @Account Closed  The real basics of it is that I was going to use money from family towards the downpayment of a property that I have an offer.  I did this a couple years ago and it worked fine.  The only issue is that this time it won't be in my bank account for over 2 months by the closing date in the offer.  So trying to come up with creative ways to have money in my account that a lender/underwriter would approve within a month and a half.

My credit is great, my buying power is more then double what this property is, but I'm trying to use this family cash as a means to get into a property sooner.

I was trying to think of a way to take the money that was being lent to me by my family and turn it into something secured by something other than this potential deal.  Perhaps my other rental that has lots of equity, personal home, car.  Plenty of equity in those.