All Forum Posts by: Sylvia H.

The problem with that is you have to owner occupy the second house. Lenders are hip to that and will most likely deny you because they would not believe you are going to live there. You can't just move from one multi to another. The next home would have to be superior to the house you are living in and at least 50 miles away from your current home for an underwriter to approve it. At closing you sign an agreement stating you are going to owner occupy the dwelling. Not worth getting charged with mortgage occupancy fraud. They do check and its a serious charge if you get caught.

0 Votes

Grand Rapids, Michigan

Quote from @Leanne Sorg:

I am rehabbing and flipping a property in Chicago 3br/3ba. I took out a hard money loan on the project but unfortunately the house needs alot more work than I originally intended and I don't think I'll make a reasonable profit by selling it. I'm not happy with some of the contractors work. Can I convert my hard money loan into a traditional loan with a mortgage company so I can try to turn it into a rental instead? Do most hard company officers frown upon this?

You state you are rehabbing and flipping. If the house is unfinished you would not be able to get traditional financing. You can do a rate term refinance when the house is finished and turn it into a rental but this would have to disclosed to the new lender as such. There would be a maximum LTV the bank would refinance because it is a rental property. Rate would be higher and points as well.

1 Vote

Chicago, Illinois

Quote from @Burt L.:

It seems the thread has taken a turn that I don't understand and didn't intend.

When I say that the cash I get to take out at the time of refi covers the required 6 months reserves a couple of times over - 6 mos reserves is approx $30K and I can easily take cash out $100K on appraised ARV value of $1.0 M on total rehab loan/purchase loan of $540K at 70% LTV. All the lenders I have spoken to so far have said I can use the cash out for the 6 months reserves. I am more asking about having little other funds left and the same DSCR lenders to date have all wanted to have bank statements despite being a property based loan with a 705 FICO mid-score; good, not great.

That is more my question- am I DOA because of little other cash on hand and what else are they seeking to find on the bank statements? I really thought a lack of financial documents is why people use DSCR loans in the first place.

Hi there. The DSCR loan (Debt Service Coverage Ratio) is a loan where the lender does not verify your income in the traditional way or require tax returns. This simplifies the process for many investors and commercial buyers. The bank statement has to show that you are able to cover your monthly debt. That is why they want to look at your bank statements. There is a formula they use for this. It's basically your net operating income divided by your debt service. You need to show a lender that you have enough cashflow each month to cover your debts. If the lender is asking that you have 6 months reserves they do not want the cash out refinance to part of that because you should be able to show the lender that you have enough money in the bank should an emergency arise to cover 6 months of mortgage payments. That is what is expected on a day to day basis, not after you cash out from a refinance. They expect you to always have that money as a matter of course.

0 Votes

Quote from @Kerry Pangan:

I just purchased my 1st duplex in January. Renovated and tenants area now paying 100% off the mortgage.

What is the best way to acquire a 2nd rental property? I've already used my FHA so I'm thinking conventional 20% down?

Which route do I go to fund it? I’m starting to work more hours at my job to save 40k-50k. It’s not going to be easy but if there’s other routes to achieve capital too that’s easier I’m willing to hear it.

Hi there and congrats. You probably should wait a bit and save some more money before buying another property. Give it a year or so and save, save, save. Your next loan will be an investor loan which will require anywhere from 15 to 20% down. You cannot go FHA again as FHA only allows you to have one FHA loan at a time. Also FHA is only for owner occupied so that will be the end of that. Word to the wise, do not buy any property and lie to the lender telling them you are going to live there. They do check and the fines and penalties for mortgage occupancy fraud are severe. 30 years in prison and up to 1 million dollars in fines. Ouch! You are doing everything right. Save your money and put down the required deposit for your loan. Best of luck to you!

1 Vote

Grand Rapids, Michigan

Quote from @Suresh Ram:

My tenant has been missing timely rent payment, explaining her financial hardships. In an effort to change the tenant I said i need to sell the property once her current lease ends by Dec 31st. She sent a notice asking to deduct the rent from security deposit to which i responded over an email asking to pay rent and the deposit would be refunded after their departure upon assessing the property for damage if any made by them. She has not responded yet. I'm worried that the tenant is going to default on rent payment and that she would not vacate the property. I would like a consultation to explore my options legally. What would you recommend in this situation?

If she doesn't pay you will have to evict her. Don't tell her you are selling the property if you are not. That is not the way to handle this. Send her a letter and tell her that at the end of her lease you will not be renewing it. You don't have to give her a reason, just that you are not renewing. If she is still in the unit you move to evict for lapse of time. She will still have to pay the rent but you can evict her because you no longer want her there. I strongly urge you to contact an eviction attorney to find out your options and cost of eviction. Part of the landlord game I'm afraid.

1 Vote

Newark, New Jersey

Quote from @Joshua Brito:

I have just started Note Investing with a local house flipper/Investor and i plan to continue doing so. My question is should i create my own LLC for this, and how complicated does it make it to pay my self from the LLC especially if i want to take out all the cash i originally invested out of the LLC?

Or would it be easier to continue doing it without one.

Thanks in Advance

You really need to ask a real estate attorney rather than us lay people on this forum. We are not familiar with the laws in your state and for something as serious as this I really think you should defer to the professionals. Sorry.

0 Votes

Santa Fe, New Mexico

It's a lovely home and it doesn't look like it needs much work. Make sure the roof and mechanicals are all working as those items are costly. The HELOC isn't a good idea with rates on the rise. If you can fund the repairs without breaking the bank I would do that. It's desirable because most would rather rent a duplex than a stacked multi family so the rent is worth more than a standard one bedroom flat. People would pay a bit more to have their own entrance and not have anyone living upstairs from them. Best of luck

0 Votes

Saint Louis, Missouri

Quote from @Heath Watson:

Duplex available for 100k.it’s a 2 bed 2 bath 1800sq ft so each side is one bed one bath. One side rented for 550 but I believe they can definitely be raised to 650-700. the other side needs renovations. Arv I think is around 175. Probably needs 10-15k in work. I have the money to put the 20% down and I was planning on opening llc and using line of credit with 0% interest to fund the renovations and keep as rental. Or I could fund with own money. Does it sound like a decent enough deal to try and make work? This is my first real estate deal other than buying my own home. Is putting 20% and spending 20k on a deal like this sound worth it? I’m trying to think about the future so I know I won’t see investment back right away.

0 Votes

Saint Louis, Missouri

Quote from @Matt James:

Hey all, I have just purchased a 4 units multifamily property through county auction. Just made the payment but have not received the certification of title yet (taking 3-4 weeks). I am thinking the tear it down to sell the land. The current property is in bad physical condition. Please advise what is the correct procedure to evict the current tenants. They signed contract with the original owner but I have no way to contact the original owner. BTW I am in Florida.

Thank you!

If you can speak to the tenant I would ask for a copy of their lease if they have it for your records. If there is no specific language in the lease that states lease is ended when house is sold you will have to honor it. I'm not sure what would happen in a tear down. I would contact a local attorney and ask them what your options are. Best of luck

1 Vote

Orlando, Florida

Quote from @Marcos Carbi:

Hey guys,

I'm in the process of closing on my second duplex and I honestly don't understand insurance as much as I'd like to.

My situation: I'm closing on the property under my mom's and my name and then transferring the title into my LLC - I'm doing this to get a better mortgage rate/terms. Since the property will be under my LLC, the insurance company doesn't provide personal liability coverage on the home insurance policy. Therefore, I'm getting an additional personal liability policy for my LLC, with $300K in coverage.

I was wondering if this is the right thing to do, or if I should be doing something else. I did this with my first duplex as well.

I appreciate your time and help!

You cannot transfer title to an LLC if the home is mortgaged. If the lender finds out you did this, they can and will call the mortgage. Do people do it? Yes they do. If you get caught, don't say you weren't warned. Also you mentioned that you took out a mortgage in your name and your mothers name. If you took out a mortgage and presented to the lender that you were going to owner occupy the property you need to owner occupy the property for at least one year. If you don't, it's mortgage fraud and it's a federal crime. Lots of people tell you that the lender doesn't check or care. Not always true. Ask the cop in Jersey who bought a home as a first time homebuyer and didn't occupy the house. He got a year in jail and a 537k fine. And that was being easy on him. The guideline is 30 years in prison and 1 million dollars in fine. Ouch!

0 Votes

Cape Coral, Florida

All Forum Posts by: Sylvia H.

Sylvia H. has started 7 posts and replied 139 times.

Post: Best way to acquire 2nd property?

Post: Can I turn a hard money loan into a traditional loan?

Post: What is DSCR Lender Really Looking For On My Bank Statements?

Post: Best way to acquire 2nd property?

Post: Tenant defaulting rent payment

Post: Should i Start an LLC for note investing in real estate flips?

Post: 20% Down on Investment Property

Post: 20% Down on Investment Property

Post: Foreclosure purchase. How to evict current tenant?

Post: Does my LLC. need a personal liability policy?