All Forum Posts by: Tanner Lewis

Quote from @Matthew Kauk:

I have an AirBNB in Savannah GA that I bought in August of 2023 it coming on a full year now and I'm looking to refinance.

At what point should I move the STR into an llc?

Should I do this before I refinance my home or after I refinance?

Is there a length of time that lenders like to see before they lend to an llc?

I've also filed my personal 2023 tax returns and have those available with the STR income included.

You can just move title into an LLC at closing. Title will just do it with a deed of transfer, super easy and we do it all the time. Also there is no seasoning for time needed to move into an LLC, there are just seasoning requirements on cash out refinances, but most lenders have no restrictions on these after 6 months.

Quote from @Chris Kersey:

@Tanner Lewis, 

Can you confirm if flood insurance is required on a new construction build with no garage? Meaning no part of the structure would be in the flood plain, rather built up to the current building code. 

 Yeah if we pull the parcel on a Floodcert and it comes back with the letters A or V then it requires flood insurance. It is more based on the location of the property than how it is built. 

Quote from @Byron Paille:

I currently own 2 homes free and clear. One older I bought at an auction  and a new build. I have a large lot and approval to build a duplex. I am done spending my money and am looking to scale. 

Do yall do a refi for this or get a heloc? With rates at this level I an not sure places will cash flow at 80% loan value. 

One home is worth 125k and new build is hitting the 230-250k mark.

I would cash out refinance with a DSCR loan. You don't have to do 80% LTV, you can do less. Just leverage enough so your cash flow is comfortable.

The biggest catch I see is financing. Due to the high foreclosure rates, many lenders will not consider a deal with less than a $100k loan amount. In my opinion, it is best to buy deals valued at less than $100k in all cash, but if you want to scale faster with leverage, you need to find higher value section 8 deals. The low valuation also makes it more difficult to sell if needed since you would need to sell to an all-cash buyer. A lot less market liquidity increases the risk profile for these deals. 

Happy to connect on the lending side! I'll shoot you a DM

Hey Garrett, you could do a low-leverage cash-out refinance. It would give you the best of both worlds: You would pull out some cash to use on another deal and have a strong base of cash flow.

I would do it as a construction/hard money ground-up loan. You must be VERY careful when building cabin-style homes to STR, as they may be difficult to refinance. I would work with an STR lender before construction to verify that a deal will be eligible for refinancing. If it is not eligible for one lender, it will likely not be eligible for most lenders. At a bare minimum, I suggest reviewing the Fannie/Freddie guidelines.

Quote from @Deonte Hill:

Quote from @Tanner Lewis:

I would avoid the flood zone. As a lender, we require flood insurance if the property is in a flood zone, which can eat into your cash flow if you want to hold the deal. 

Thanks for your comment Tanner, 

for the flood insurance, is there a minimum coverage amount that you would require?

 I believe it is at replacement cost, but I am not 100% confident.

Quote from @Gino Prestia:

Hello everyone, as I start my real estate journey I really hope on connecting and partnering with the right lenders. I would appreciate any advice on the vetting processes you used to help find the right person to start your journey with. Totally understand it depends on what kind of investment strategy you want to use, but I feel main concepts still apply ( maybe I am wrong!). Ultimately the goal is to build a great, creative relationship with the right lender whose in my corner and I can trust. Thanks for taking the time to read this and help a guy out! Side Note: Up front capital from my side is not an issue for down payments, and leaning towards the fix and flip strategy to build some cash and roll into a 1031 to ultimately get into the multi family space.  I come from a background of contractors so its something I feel pretty comfortable facilitating. Thanks again!  

I would vet lenders by how much they BS you. If someone tells you that they can do your deal with no problem and are smashing all of your other quotes out of the park, something is fishy. I would double-check what numbers they are using to quote you (credit score, cash flow, valuation). I always approach deals by tearing them apart and trying to find holes in them before issues arise during underwriting. It is better to get out in front of these potential issues so you don't waste time and money. 

Ask them if they are a direct lender or a broker. I am a direct lender and still can't tell if some "lenders" are brokers. Many try to dodge these questions. Direct lenders control their guidelines (and can make underwriting exceptions) and only have access to certain lending products. Therefore, they understand those very well. Brokers can access multiple products from different lenders but often don't fully understand the underwriting guidelines. There are pros and cons to each, but the way I see it, if you have a set strategy you plan on implementing over and over again, then you need to find a direct lender who specializes in that investing strategy. If you are doing a one-off deal that is very special (ex., rural quadplex STR) and no direct lender can do the deal, then it makes sense to reach out to a broker and cut them their fee, as they can help you navigate the market more easily to find funding for your deal. 

Quote from @Ryan Davies:

I feel a good lending partner also invests themselves and understands all different types of strategies.

 I disagree; you can't be a jack-of-all-trades. A lender needs to know what problems their loan products solve and what they don't.