All Forum Posts by: Tim Braun

Im from the Rochester Area originally and i do a lot of non hard money long term rental loans in NY and around the country now. I am licensed to do business in NY of course. I can't guarantee anything but I feel confident from what you have said. You should not be limited to Hard Money loans just because you are vested in an LLC. worst case I will give you the best advice possible. ;-)

@Tim Braun thanks for the post.  Have great memories of living in Rochester...kind of miss it sometimes.  Now, the rural thing is only an issue with certain lenders.  We just need you to speak with better lenders.  Maybe I'm coming down to hard...but they make a business decision not to lend to us...so we need to make a business decision not to use them.  Read this post HERE to see some strategies on finding good lenders.  Feel free to post anything else as well. You will find a solution. 

Hi @Tim Braun

I would call as many lenders as you can and just make apples to apples comparisons. One question you need to ask is what is your rate lock policy? You want the lender to lock your rate once they get your application and credit pulled, so essentially day one. If they float your rate, I would look elsewhere. You want your rate locked for 30 days or more to avoid it changing on you during underwriting. If a full appraisal is required, you should be paying that cost directly to the Appraisal Management Company, not the lender. Some lenders use that as a profit center and up-charge you. Also, aim for a 3-year or less prepayment penalty, that will give you the flexibility to refinance when rates drop (if they do) after year 3.  Ask about a buy down to get a lower rate and if that can be rolled into the loan, there are many lenders that can offer that if you want it. Look at 40-year options with interest only periods at the front end, that can help maximize cash-flow until you potentially refinance when rates come down. Lastly, if the loan amount exceeds $150k, I wouldn't pay origination fees above 2% if you have 720+ credit. The only costs to the loan, aside from the appraisal, should be the origination fee and the underwriting/processing fee. Make sure you get full loan summaries from the broker or lender, not soft quotes. Reach out if you need any help. 

 I would be curious ro see the numbers on the refi/rent vs the sale/purchase next. I love keeping mine as rentals! 

@Tim Braun, DSCR loans are a good option to refinance out of a HML loan if you're going to keep the property as a rental. I'm a broker.

DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth.

Here's a bit more in detail about how rates are calculated for DSCR loans:

1. Credit score- the higher the best. 760+ generally gets best pricing for investment property loans with most lenders

2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.

3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.

4. Are you cash flowing the property? Is your DSCR ratio greater than 1-meaning are you cash flowing. Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit.

I've included an example below to help illustrate this.

So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.

See example below:

DSCR < 1

Principal + Interest = $1,700

Taxes = $350, Insurance = $100, Association Dues = $50

Total PITIA = $2200

Rent = $2000

DSCR = Rent/PITIA = 2000/2200 = 0.91

Since the DSCR is 0.91, we know the expenses are greater than the income of the property.

DSCR >1

Principal + Interest = $1,500

Taxes = $250, Insurance = $100, Association Dues = $25

Total PITIA = $1875 Rent = $2300

DSCR = Rent/PITIA = 2300/1875 = 1.23

DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new deals.

@Tim Braun How did you find out who has been paying the taxes? thanks

Let me know how it turns out @Tim Braun. I too got jerked around by my "lender" in Syracuse (Solvay bank, do NOT recommend) for over two months, and they still hadn't finished the appraisal on my place! So now thanks to them my back is sort of up against the wall. I decided to put the place for sale, but I've also purchased a business with financial commitments that are fast approaching. So I'm thinking of getting a quick hard money or bridge loan to fill the gap for a month or two myself. If I find someone good I will let you know, and please let me know what you come up with on your end. 

Best of luck!