All Forum Posts by: Sean Thompson

Echoing @Wayne Brooks. Hard Money is typically utilized for business purposes only meaning you have to have intent to upgrade, flip, or refinance for a buy and hold investment property. I would keep tabs with your lender that you reached out to and ask them exactly what you need to do to qualify. I would keep working on your credit, build your income and savings. There will always be more deals! Keep at it my friend.

Reach out to DSCR lenders. Keep in mind each lender may calculate the DSCR different but many have a 1.10 minimum so you shouldn't too many issues finding them.

I would start with the end in mind if you are wanting to BRRRR with STR properties. Find the company that you will be looking to do the cash out refinance with first. Find out their requirements, limitations, and leverage options. Then work your way into how you would like to initially finance the property. This will help paint a picture of what kind of deal you need and estimate project timelines a little better.

I would pick 3 lenders and get quotes from each one!

Hey @Chris Lyons,

First thing you need to do is determine how expensive your loan would be if you went with HM, then compare that with a larger offer price going with FHA. From here you can understand the math as is relates to your pocketbook.

Now the next part of the equation is seeing it from a sellers perspective. If you are getting a ton of offers why would you go FHA unless it is astronomically higher than the other offers? Maybe talk to your agent about putting out two different offers? Both that cost you the same, but present a higher price & a quicker close less hassle option to the seller.

If you mean use "rent by the room" rents vs. entire house. It depends on the lender if they allow this or not. In some cases they will allow but might drop the leverage by 5% to cover risk. Example refinance at 75% LTV to 70% LTV.

I would start by networking with people in your local market who have used private money or HML. Ask them what their experience was like, what kind of rates & terms they got. I would also start educating yourself on hard money (youtube university) so you start to understand the terminology, common terms, advantages & disadvantages, difference between local HML and Nationwide HML. Good Luck!

@Michael Keane typically across the board rates will be higher, but maybe not as much as you think depending on a lot of the details of your property. Cash flow, market, your credit score can influence your rate and leverage with DSCR, or commercial loans.

Agree with @Tyler Vogt. Work backwards, decide EXACTLY what type of investing you are looking at doing. Then come back to the forums and ask this same question and you will get direction on what path to go. 

There is not a standard or a precise formula for a BRRRR because it all depends on your loan LTVs, cash invested, and carrying cost... You could buy an overvalued home but potentially add enough value to it in order to cover your cash out on a refinance.

BRRRR Formula.....

(out of pocket cash) - (cash back from refinance) = as close to 0 as possible