All Forum Posts by: Shane Ward

So i own a rental, in the mid-west, for about a year now and trying to do a cash out refi using only the income from the property, $2000 per month, and not any personal income. Home was purchased for cash in an LLC. my credit score was 710

So the home appraised at 125k and they want to loan 75% @ 6.8%

Origination charges- $9000

1.6% loan points $1500, lender fee 1300, origination fee 3500, ordination compensation fee 2500

Services- $6300

appraisal 1500, credit report 150, 1004d inspection 250 ,3rd party processing fee $900

closing fee 350, document prep 2200, lender title ins 900

Other - $1600

there is also some recording fees 425, pre paid interest on mortgage ins or property taxes 500, and holding some $ for property taxes and insurance in escrow about another 600

so thats nearly 17000$ in closing costs on a refinance for $100,000

Just feels like way to many fees associated with this, but i don't have much refinance experience either The monthly payment is $600, so Its possible for me to make this work and just move on with my life. But i hate the feeling that I'm over paying or maybe i just had different expectations that weren't met.

Are people really paying this much? or is it just me and this lender?

Shop around. I’ve done a few No Doc loans and they suck. I’m calling Dominion Capital today to see what they can do. They sent me a flyer that looks pretty good. It sounds like at least you’re getting the numbers up front. With me they brokered my loan three times and charged me for it at just over 2k each time plus all the bs fees like you listed. I’m looking at doing the same thing you are so I’ll see what I can find.

1 Vote

Quote from @Jeff G.:

@Shane Ward, can you explain a bit more about how that works? How did you find the HM lender and convince them to work with you on your first deal? How did the first deal work out?

My first deal was what they call a twin in pa. It’s like a duplex but both sides have their own deed. There where what a lot of people would say where big problems with the property. Tree branches had broken off and penetrated the roof, large front porch was rotted etc. I learned from one of the early BP podcasts that big problems can be better than small ones. You can identify them easily, estimate the costs easily and usually get them fixed in a short amount of time. So I needed a roof 10k, two furnaces 10k, a front porch 8k, etc. The asking price was 50k for one and 60k for the other or 100k for both. I had taken a HELOC on my primary to start my journey into REI but understood early the advantage of leverage. I took a shot and offered 70k for both units at 3pm on a Friday and by 5pm the offer was excepted. Turned out that the guy hated landlording and lived two hours away. I had found (luckily) a local HML and had walked into their office about a month before and explained what it wanted to do and that I was new but would be happy to take any help they could give me. I also used some advice from other BP podcasts about what “to” and “not to” say. Do Not tell them you will do all the work! Let them know that you will hire licensed pros and get the proper permits etc. they told me that I was the kind person they loved to bring on board but to start the points and rates would high (3pts @ 13%) they fund 90% of purchase and 100% of the rehab. I brought them the deal, they looked it over and said we need to get an appraisal for the ARV and we’ll go from there. They appraised for about 105k each (ARV) and my rehab budget came to 48k. I finished the rehab and started the refi process (the worst part of it all to me), ordered a new appraisal and came back at 112k each. The deal cost me $9500 to start and $1200 a month for 9 months after the refi I pulled out 24k and was cash flowing $800 a month with an 8.27% rate on a 5/1 arm. I’ve done 7 similar deals and 3 flips using this method. I’ve gotten better rates after that first one. Im setting up a deal this week with the same lender and will use about 7.5% as my refi rate to estimate my cash flow.

5 Votes

Quote from @Jeff G.:

Is it possible to start investing with only $100k in this market? I keep looking at potential BRRRR properties on Zillow and thinking "the numbers just aren't going to work." Most of the wholesalers I know have suspended their direct mail campaigns until sanity returns to the market. Admittedly, since I'm in CT I'm in an expensive and high tax market. But, even so I should be able to acquire something workable to rent out and refinance.

I'm reticent to BRRRR out-of-state for my first deal — but, if I have to, I have to. I just don't want to get burned. I just want to get the ball rolling in the next few months because properties just aren't going to get any cheaper. I'm just really frustrated. I would be extremely thankful for any suggestions as to how to get started. I'm reading David Greene's BRRRR book right now, but I don't want to get myopic if I have other realistic options to get started investing I'm open to them.

It's all about how you deploy the 100k. If you want to be all in with a 100k you are very limited, if you use the 100k to get financing ie. Hard money, private lender, partner etc. you can do a lot with 100k. I have only used Hard money to do all my deals (8 BRRRR and 3 flips) since 19'. I calculate the HM expenses as cost of doing business and work the deal on the numbers from there out. If the deal makes sense (in my analysis) after the refi I will do anything I can to get the money to make it happen. Put in buffers in your analysis for some error in market fluctuations. The other great thing about HM is that they will save you from yourself when you miss something. Hope this helps and good luck.

1 Vote

Quote from @Kerry Baird:

@Heather Hall, I like how quickly and easily these DSCR lenders can close. I don't like the higher rate and fees. However, I can actually buy houses and get it done fast, which is what I need at this stage of the game. These lenders have done mortgages on STRs: Visio, Host Financial, American Heritage, LendingOne and RCN. I have used Visio, LendingOne and RCN.

Which of those did you have the best experience with? Visio was a nightmare and super expensive. They didn’t offer the DCRS loan when I did my three LTR refi’s though, hopefully they have gotten better.

1 Vote

Quote from @Kerry Baird:

1 Vote

Quote from @Jeff Langley:

I have multiple DSCR loans and none are from any of those companies you mentioned. I'm a very direct but also analytical person so i be sure to ask all the tough questions up front because i don't like bad surprises. I always ask about processing fees, prime rates, closing schedules, and most certainly requesting a baseline loan estimate. If they can't or won't answer those questions and are unwilling to give you a loan estimate without pulling a credit check, i walk away. I don't have time for games and dislike when loan representatives act like they can't ball park me a loan estimate. As the consumer, we should be well prepared with your personal info(credit scores, dti, taxes, insurance, etc) to get a baseline estimate. It goes both ways.

With that said, i love my DSCR loans outside of slightly higher closing cost. The process is seamless compared to typical government loans. Personally, i always do 30 yr fixed loans, i don't mess with ARM's. I want to know my payment is fixed for the foreseeable future and can adjust accordingly if needed.

What lenders have you used? I ask all the same questions and have never been told the truth, I get answers they just never seem to be the truth. I’ve used Visio and Lendsimpli. Visio was beyond terrible and Lendsimpli just had more and higher fees than they told me up front.

1 Vote

@Kyle M.why don't banks want to lend to an LLC? I use an LLC to protect myself.

0 Votes

I have three houses I'm currently rehabbing that I purchased with a HML. I will renting two of them as of Dec 1st the other Jan 1. I'm looking for the best way to refinance them out of the HML. Any suggestions would be great. OBTW one house is in Monroe county Pa (East Stroudsburg) the other two are in Carbon county (Lehighton).

0 Votes

@Tchaka Owen the question is what will people do because they are worried about higher taxes that effect the cost everything and wether or not they hold on tighter to their money. If that happens the market slows. Biden was part of the almost nothing that Obama did to reduce the impact of the last crash.

0 Votes

All Forum Posts by: Shane Ward

Shane Ward has started 23 posts and replied 100 times.

Post: Transfer Loan to Family Friend?

Post: Rental refi, but mortgage co. to charge 18% in fees on 100k?

Post: Is it possible to start investing with only $100k in this market?

Post: Is it possible to start investing with only $100k in this market?

Post: DSCR Loans/ Hard Money Lenders

Post: DSCR Loans/ Hard Money Lenders

Post: DSCR Loans/ Hard Money Lenders

Post: Can’t seem to get a HELOC on my investment property!?

Post: Refinance out of HML NE PA (Carbon cnty)

Post: How Will Joe Biden as US President Affect Real Estate