All Forum Posts by: Timothy Hero

Refi the rental, keep the rate on the primary.

You can maybe get 20-35 bps lower on the primary, but not worth it, unless you're talking a $750k+ mortgage.

Like mentioned above, rental loans right now are low 7's for 75% LTV. I know of a lender doing it at 6.8% with no buy down if your credit is good.

Quote from @Kevin Jo:

My opinion is these are not good investments. $19k potential profit on 4 houses if nothing goes wrong?? One multi family should net more or the same with less headaches. You have cash to get into something safer with better upside and better financing options which will help mitigate risk.

Something always goes wrong in RE, lol. One hiccup and there goes that profit and it quickly becomes a "I hope I can break even on the deal".

How much are you willing to put down? As pointed out by almost every comment, the space is in pretty close competition right now; 10-15% down with 100% of rehab funded on a draw process.

The difference with lenders for these fix and flip deals isn't usually the LTV, but the length of the loan, the rate, and closing costs.

One may offer 90% of the purchase price, but require 3% origination. So it's really 87%.

"they have plenty of time" would piss me off, lol. When I start a file for my clients, if an appraiser hasn't reached out within 3 days of them paying the invoice, I start making calls, lol.

Quote from @Patrick Roberts:

This is the trap of low ARV properties that I was discussing in a different forum the other day. Financing is difficult to find when the loan amount is under $100k. There are some DSCR lenders who will fund loan amounts of $75k, but you'll likely need ARVs around $100k to make those work. If youre trying to get a portfolio (blanket) loan on these, that will likely be even harder.

What youre currently being offered are true commercial loans - they rarely have tenors longer than 5-7 years. Might be as good as it gets. Maybe some other lenders familiar with the Michigan area have some other ideas. 

Another thing to check into early on is title insurance - many title companies wont issue policies for properties that are obtained via tax foreclosure. Id ask about this up front before you pay for appraisals and everything else to find out a week before closing that they cant lend because of title issues. 

Nailed it. Harsh reality is, no money is made on loans under $100k in the real estate lending space, let alone properties with an ARV of $100k.

The numbers may pencil out for you, as the investor, but from a lending perspective, it takes the same time, effort, and cost to underwrite a $60k loan as it does a $600k loan. Difference is the profit is 10x more for the lender if they focus on the $600k.

Quote from @Sandra McEwan:

Quote from @Timothy Hero:

I'm a DSCR broker, so of course I'm biased, but the DSCR space has come a long way. Sure, some lenders are incredibly high on rates, but overall, rates aren't much higher for an investment property than going conventional.

I've quoted investors 20 bps higher than conventional and they end up going with me, simply because the loan is low doc, not reported on credit, and they can close in an entity.

It's a case-by-case thing, of course.

But they aren't looked down upon. Some of my highest net worth clients only do DSCR.

Expect terms to change with 5+ units compared to the 1-4 unit loans.

Hey Timothy, How do you the terms change with DSCR loans with 5+ units?

Hey Sandra,

LTV is usually reduced by 5% on purchases, so max of 75%. Some lenders still offer 30-year fixed for 5+ unit deals.

Well hello there, Facebook friend.

Most DSCR/hard money lenders that provide commercial loans won't lend for a construction project if you already own the land. They typically want the land included in the deal.

People will always need a place to live. People won't always use crypto. Hell, it's 15 years old and less than 1% of transactions are with it.

Every time a crypto fanatic attacks me for my views on it, I ask the same question each time and they can't answer it: aside from the day trading aspect, when do you use crypto? Did you make your car payment with it? Do you buy gas with it?

It's been 15 years and less than 1% of business world wide accept it as a form of payment. It's a complete guessing game of an "investment".

Newbies dive at these deals from time-to-time. Higher risk due to unit count and higher dollar size, but if you underwriter properly, you can absolutely do it.