All Forum Posts by: Tanner Cohen

Good Day @Nikita Odnoralov, 

Congrats on scoring such a great deal! How did you close on this condo, in cash or with financing? Are you still intending to rehab the property? 

There are hard money and private money lenders out there that would be willing to support you with 90% LTV, but I think you may run into a problem with seasoning requirements. Unless you have already completed verifiable rehab to the property, these lenders will have to lend on your purchase price, so 90% LTP. If you are willing to accept that, then there is 1 solution. Reach out to HML's and PML's to dialogue about a 30 year loan and ask about fees and operating your rate and origination costs on what's known as a "sliding scale".

If you are looking to refi at your as-is value, then you will most likely have to wait 30 days (at least). OR complete your rehab and try to get a loan on the ARV, which is the now new as-is value.

Another option could be to do a delayed purchase loan and finance your rehab. The caveat is that you're still getting "acquisition" financing at the purchase price and not the as-is value, and may not be at 90% (depending on the lender), but that will be mitigated by rehab financing to help you add value to the property. That will most  likely be a bridge loan and not a 30 year term. Rates on that will be higher than the 30 yrs, i'm sure you're aware as an experienced flipper. Same thing applies, ask about operating your rate and origination costs on a sliding scale. 

I hope this was helpful. Good Luck!

@Robert Cuomo, 

Your risk exposure is high, I agree with @Stephanie Medellin you could be diversifying by parking that money in cash flowing and appreciating properties, and or offering equity financing, or even a mezzanine option with both debt and equity financing. Not sure what the minutia of your offerings looks like, but I am sure it carries a hefty origination and or interest rate.

@Joe S. has a good question, how successful has your business been? I am guessing not as well as it could be because you are posting on BP for people to talk you out of it... or you're finding a creative way to advertise on this amazing platform.  

Hey Evan, 

When qualifying potential clients, as a private money lender myself I am looking for a few things:

1. What is your experience? - How many investment properties have you purchased, sold or are in the process of selling in the past 3 years?

2. What is your middle FICO score? - Credit score is not the main source of qualifying, but it is one piece of information that we look at when seeing if you are worth investing in.

3. How do you plan to hold title, in your personal name or a business name? - business vesting is preferred by some like myself because we provide business purpose only loans, while other lenders like to see you hold title in your personal name. 

4. What are your liquid reserves? - How much money do you have to be able to make this investment happen? Private lenders usually require 2 months worth of bank statements showing enough liquidity.
depending on your strategy you may need anywhere from 10%-30+% for down payment + closing costs and then enough left over reserves to cover 4 months worth of principal/Interest, taxes, and insurance payments. And if rehab is involved, you will need more reserves. 

5. Be completely transparent - communicate clearly with the lender you are speaking with about anything that they may uncover when looking into you and your investments(s). We will run your credit and go through your bank statements. We won't need to verify your income via W-2's and Tax returns, unless you give us a reason to require that information.

6. (most importantly) Where is your property located, what is the condition and What is the investment strategy you are looking to accomplish? - what do you think the property is worth aka what is the as-is value? Is rehab going to be involved? What is the ARV? How long do you plan to hold the property? What is your exit strategy? If your deal makes sense and there are recently sold comparable properties nearby then you will have an easier time finding financing closer or at your desired rate/ltv than if you have a property in a rural area with no comps.

SO to answer your question plainly, in order to make a private lender like me feel confident in you and your investment you will need to have a property, a clear understanding of the market that property is in,  (bonus if you have recently sold comps within the past 6 months w/in 1/2 mile of the property to provide up front supporting the property value you think), a clear vision for what your investment strategy is, supporting documentation to back up your ability to pay your loan, share your experience, credit score and anything you think they might uncover, and communicate clearly as to what you are looking for from your lender.

You have all that and the lender's you speak with will be chomping at the bit to work with someone like you who knows what they are doing and are serious about getting financing.

Cheers and happy hunting!

Good Day Cayton, 

Your scenario is something i am currently dealing with for a client in DC. He is set to sign tomorrow. My experience of the HOA in my scenario has been that they are very slow in communication and are reluctant to provide pertinent documentation. Granted, your lender should have reached out for the HOA questionnaire immediately, and maybe they did. My U/W team required me to lower the LTV on the loan for us to be willing to still lend to the client on his non-warrantable condo. I am a private money lender, so this is where our scenarios start to deviate.

They can charge for the appraisal and HOA questionnaire, that is a cost your GF is responsible for regardless if proceeding with the loan.

Good Day Jorge, 

My suggestion is to start with ordering a list of importance. What is most important to you right now and long term? If you can create a solution that aligns with both then great! But if you have to choose one or the other make sure you are clear on what is most important to you overall. Please also keep in the forefront of your mind what level of risk you are exposing yourself to and what your risk threshold is. Establishing a time horizon for your investments and goals will help point you in the direction of your true vision. 

What I would do if I were in your situation is keep that 30-year loan @ 2.1% because that is a great rate and Iwill not get better than that in this market. Allow myself time to accrue more equity in my property and let the market appreciation do its thing. I would ask myself, does the HELOC move the needle for me now? If I'm coming up short on every scenario to make the investments happen now, then the best thing i could do is to hold tight. Whatever my income is, save as much as I can so that I can reach my goals when i am ready and not sacrificing what I don't have to.

But since you are here asking for more than just basic hold steady advice. I would reach out to friends and family to see who is interested and willing to invest with me. I will make sure to have a detailed proposal ready. See what I can create that route before extending to business persons that may be interested in partnering with me. I would look for partners who are willing to bring the majority of funds to the table and I will be responsible for deal sourcing and process. Utilizing OPM while I build my own bank roll before ultimately scaling out on my own if I see that being the best way for me to move forward with my real estate investing journey.

I wish you the best of luck and please don't feel like you need to make it all happen right now. You will have plenty of opportunity to make your moves what it is most advantageous to you.

Good Day Nicole, 

You get to tell your brokers and lenders what you are looking for. As long as you communicate what your score is, they should have no need to run your credit until you decide to proceed with them. 

Hey @Walter Hogan, 

What you're describing is normal. I am an asset based lender offering loans based on your deal, but we don't consider the deal alone. It is the most important factor in deciding if you get access to a lenders capital, but you are also the one implementing the investment strategy and we must take into consideration your experience, credit and vesting when vetting your deal. If you have a middle score below 600 that doesn't give a lender the greatest confidence in your ability to repay, but if you have loads of experience with that score below 600, you should have no problem getting a loan with max leverage @ great rates because you have a proven track record to mitigate that score. 

If you don't have experience and score below 600 that won't disqualify you from getting access to financing, but what that will mean is that a lender will want to mitigate their risk by lowering the LTV, and in some cases even require interest holdbacks to make sure they aren't exposing themselves to too much risk and hedging their bet in the case that you do not succeed with your investment strategy.

This is the realization with private money / hard money. Hope this was helpful

Hey @Mercedes Riina, 

Looks like the Tanners are here to help! As a lender myself, establishing a relationship is going to be the most important part of your experience when working with lenders. Establishing industry relationships in general is going to be the most crucial aspect of this industry. Even if you don't have a deal right now, talking to multiple lending shops and developing a relationship with one or multiple lenders will be advantageous to your real estate investing experience. At the end of the day, we all offer just about the same stuff. What it's going to come down to is who do you like and trust. 

So my recommendation is give that person a call and tell them who you are, where you're at and what you're looking for in a lending partner. Ask a ton of questions about their loan products (rates, LTV, PPP's, origination charges, processing fees, turn times, fico requirements, DSCR requirements etc...) and see if you like them. You're in the drivers seat Mercedes, so whoever you like the most that can support you in the way that best supports your investment strategy. I say that they may be the lender worth giving a shot at supporting you with financing your 1st deal (when you have one) to see how they operate and if they can walk the talk. If they aren't willing to give you time when you don't have a deal, why would you want to work with them when you do? There are plenty of lenders out there!

Good luck and happy hunting!

Hey @Andrew Merritt,

I would agree with @David Krulac. If you can lock in a lower or equal rate to what you have currently on your properties then it would be advantageous to do so now while rates are where they are. Keep in mind that the fed has already begun to increase rates and are continuing to do so, so you aren't going to lock something in at the historical lows like others did during peak covid but you can still get a great rate. 

Since you want the cash on hand to make another purchase for your portfolio, again I recommend you move on that c/o refi so you can simultaneously ramp up your hunt for properties to put some of that cash towards. The window for your refi and new purchases at current rates is closing. Best to capitalize on that now especially since you think you have enough equity built in the past 3-4 years to tap into the make this happen at little to no out of pocket cost. 

Good Luck and Happy hunting! 

Hey @Amir K.,

Your way around that 6 month seasoning requirement is what you're already doing or done. - COMPLETED verifiable improvements. If the rehab is completed and verifiable, you should have no problem bypassing those seasoning requirements and completing your c/o refi.