Hello, I'm looking at purchasing an investment property home and the lender indicated that they need to structure the loan with me renting out the property.

This post will explore the sponsor underwriting process, utilizing a structured and practical approach for assessing potential sponsors.Sponsor Screening ProcessThe sponsor screening process can be divided into several key steps, each crucial for a thorough evaluation.

Deed fraud and mortgage fraud - be carefulWe just got some mortgages that were non performing that were part of this mess - was not something I wanted to get involved inhttps://www.justice.gov/usao-wdok/pr/former-president-first-mortgage-company-sentenced-serve-104-months-federal-prison-and

Here’s a great article that walks you through how to qualify for REPS status.https://www.aicpa.org/resources/article/tax-rules-for-real-estate-professionalsEntity Structure ComparisonBe sure to consult with a CPA or tax attorney as the entity structure you select can have a significant tax impact.

Velocity of money, or speed in which you can complete a BRRRR investment and repeat, is key to success, and refinancing with the shortest seasoning requirements is highly important.Loan terms and interest: Cash flow is also an important consideration for a refinanced rental property, so attaining a low interest rate, as well as other aspects of loan structure (term, amortization, or interest only, etc.), plays a big role.Generally, there are three main refinance options for BRRRR method investors: Conventional loansBank/credit union loansDSCR loansConventional loans are generally defined as loans originated under GSE (Fannie Mae/Freddie Mac) rules and guidelines and securitized.

Structural repairs are not allowed, such as room additions, foundation repairs, etc.

This is easier for someone who earns a fixed salary, no overtime, no complicated pay structures, not a business owner, etc.   

We structure equity with IRRs in the 15%-20% range. 

Do your research to find places where you can get a good return on your investment.Legacy Planning: If passing on your investment to your kids is important, consider how you can structure your investments to make that process easier, whether through trusts, wills, or other estate planning tools.With the right strategy, you can absolutely build a successful real estate portfolio at this stage of your life.

DSCR loans will be structured off the rent versus expenses on the property and don't consider your personal income or DTI.