All Forum Posts by: Sarah Hatton

Hey Sean, 

There are a handful of states that require lenders to be licensed in that state with a physical office to conduct business; ND, SD, NV, VT are a few that come to mind. The 'work around' some lenders do is register with a licensed broker to run their loans through. There's some gray area around wether this is legally acceptable, I've heard horror stories from a lender who did this and was still fined heavy penalties by the state. I think ultimately the level of entry and risk is higher for smaller lenders so it's easier to stay out of these states. DSCR loan many be a better option; these larger institutions are more capable of entering these markets. Happy to help out there if interested, otherwise best of luck on the loan hunt!

Hey Viktoriya, 

IF you have a good W2 paying job go the conventional route, better interest rates and lower down payment. 

Once you hit your limit for conventional loans (and I believe that number is somewhere around 10) you can move into the DSCR space. These loans qualify the asset, not the person, and do not report to personal credit. As long as the property qualifies and you have the liquidity to purchase the property you will be approved.

Either way congrats on taking this next step. Good luck!

Hey Craig, 

Does your loan have a prepayment penalty? You may be able to refinance into a hard money loan with rehab included. 

Hey Rich,

Is there a reason why you're looking for AIRDNA to determine short term rents? Most lenders will order an appraisal based on STR rents, this helps in the case where a house has been renovated and AirDNA does not reflect the increase in nightly rate.

As far as seller financing...no lender or institution I've ever heard from will allow for a second. Best of luck with your search!   

Hey Raymond, 

Every institution that offers DSCR loans has different credit box requirements. There are some that will require owning a home within the last 12 months but it is not a rule across the board. I would suggest shopping around!

Hey Mike! 

I would suggest using hard money for both. First, for a fix and flip loan to rehab the main house while you work with the city on splitting the lot and with an architect for permit/plan approval. Once that happens you can apply for a construction loan for the DADU and ADU build.

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Some HM ad DSCR lenders will require an entity. Reason being these are business purpose loans and nothing shows that more than it being held in an entity. If you want to close as an individual its possible, you options may just be more limited.

First, congrats on getting the second project underway!

If you plan to scale your portfolio fix and flip is the way to go. The goal with buy and hold is to build generational wealth - which is the long term goal - and you need a certain amount of capital get there. Taking down one property at a time can slow down the path to scaling substantially. As you learned with your first project, flipping is all about making profit, faster. What you can do it start to hold onto some of the properties you flip, for example for every 10 properties you flip maybe you hold onto 2, or 4. You keep the profit moving for future investments while refinancing and holding onto the best ones. 

Hope this helps!

The time of financing is going to depend on a few things...

1) How do you plan to write your offers? If your marketing strategy is a QUICK close with sellers, you can't go the DSCR route. Best case scenario these loans will close in 20 days (if all the stars align), in reality they average 30 days.

2) I understand the end goal is LTR but if you're calling eviction records, auctions, craigslist, etc chances these homes are going to need a rehab component. Not to say this is always the case, but if someone is being evicted chances are they are not maintaining their home. If you plan to rehab, rent, and refi then a HML or PL (same thing, really) is a good option.

3) The last piece I would mention is to line up your capital now. If you plan to pull on equity, aka HELOC, you're looking at around 30 days. Obviously pulling on the 401k will be faster, but that may come with some tax disadvantages.

The good news is that whether it's DSCR/HML/PL no one should be pulling your credit upfront or taking deposits. You can get a preliminary approval with soft quotes then once you have a property under contract and start the loan process you can approve the credit pull.

Good luck with all of this. Feel free to shoot me a dm with any questions!