All Forum Posts by: Welsh Tucker

Quote from @Stephanie Medellin:

I've seen at least one or two programs that allow you to qualify with a 12 month rental history.  It has to make sense.  If the investment property is further away from your current home and job and you intend to stay where you are, underwriting may be ok with it.  The concern for most lenders is that you'll move into the property and then it becomes a "consumer" loan, rather than a "business" or investment loan.  You will typically need to sign an affidavit at closing that the loan is not being used to buy a property that you or your family members will occupy at any point the loan is outstanding.

The property is about 2 hours from our current place of residence. We intend to purchase the property through LLC if possible too, not sure if that would help. 

Quote from @Stephanie Medellin:

Yes, some do have an interest only option, which can help with cash flow the first 10 years. If you go with an I/O option, when the interest only period is over, the loan will be amortized over the remaining term. The interest rate would still be fixed.

Really the difference is in how you qualify. Commercial lenders often want to look at your net worth and other finances, but DSCR loans focus only on the rental income of the property and your down payment / credit score / reserves. Typically they do want you to own your primary residence, and may also want to see some recent landlord experience.

That's starting to make more sense. So I have recent landlord experience with single family (which we own) but I rent my current residence and sold a primary residence a little over a year ago. So does me renting my primary impact the ability to qualify for DSCR? Credit and income will not be an issue either as my wife and I are both in the upper 700s.

Quote from @Stephanie Medellin:

DSCR loans have come out in the past few years for small commercial rental properties (5-8 units, mixed use OK), and they offer 30 year fixed rate loans. Rates will vary based on LTV, credit score, etc., but low to mid-8's is a reasonable estimate.

Hi Stephanie - thanks for the reply. I keep hearing about DSCR but have heard they have periods of interest only or different terms. Is the DSCR for the 5-8 units typically comparable with a traditional 30 year fixed residential loan? What's the difference?

Quote from @Adam Bartling:

@Welsh Tucker Yes smaller properties you can get 30 year loans all day!  

Big MF can still get 30 year loans.

Commercial shopping/warehouse .. ya 10 years is normal.

If you want to relive the stress of shopping we are well connected , 100+ options.

Thank you! Where are you seeing interest rates for something like that right now? (Ball park)

I am invested in the single family space but looking to expand into 5+ unit properties. My questions are around the loan terms. Here’s an example of a property I’m looking at: $600K list price with 6 units.

With commercial loan terms being mostly around 5-10 years, I get worried about what happens at the end of that term especially with interest rates where they are. My understanding is that at the end of the 10-year term, you have a few options: refinance, sell or pay the property off.

I would prefer a 30-year fixed loan like what we see in residential - is it easy to get a product like this for a property like the one above and is the rate different? What do investors typically do for this type of property? Just get the shorter term and refinance?

I’ve always liked the idea of having the property paid for in full at the end of its term.

I am invested in the single family space but looking to expand into 5+ unit properties. My questions are around the loan terms. Here’s an example of a property I’m looking at: $600K list price with 6 units. 

With commercial loan terms being mostly around 5-10 years, I get worried about what happens at the end of that term especially with interest rates where they are. My understanding is that at the end of the 10-year term, you have a few options: refinance, sell or pay the property off.

I would prefer a 30-year fixed loan like what we see in residential - is it easy to get a product like this for a property like the one above and is the rate different?  What do investors typically do for this type of property? Just get the shorter term and refinance?

I’ve always liked the idea of having the property paid for in full at the end of its term. 

Quote from @Bjorn Ahlblad:

I have no direct experience with a nearby homeless shelter. But why would it generate anything positive for the building or the neighborhood?

I don’t really expect it to generate anything positive for the building, rather trying to determine what type of negative impacts it may cause. My assumption would be potential for higher crime and such but want to hear from someone who may have had a similar experience. 

I’m new to real estate investing getting ready to purchase my 2nd property. Previously bought and sold a single family. I found a multi-unit building and the numbers look good. However, the property is across the street from a homeless shelter. The shelter itself actually looks modern and nicely landscaped. It’s in a downtown up and coming area with new businesses being started (cafes, restaurants etc.) - this area also lacks downtown living. All units are currently occupied so vacancy doesn’t seem to be a huge concern. My questions are the following: 

1. Does anyone have experience with this type of purchase and how did this impact appreciation in your market?

2.  What type of impact would the shelter have on the multi-unit property? 

I look forward to hearing your responses and experience.