Financing Angles
I'm looking at some multis in Phoenix - 6 to 12 unit properties ranging from $250k to $500k.
I can come up with about $50k down, but it would be from my HELOC. I would think this money would be viewed as part of the loan term in any LTV calculation.
I could also get a hard money loan for up to $130k, but I would want to refinance that as quickly as possible.
So, I guess I've got two questions:
1 - Would money from my HELOC be considered legitimate down payment money, or just another loan?
2 - How quickly can I refinance the property to settle a hard money loan?
Any neat financing shell games you can recommend?
OK here is our $.02 when you are seeking financing on 6-12 units (We believe a commercial category) the group of lenders quickly shrinks for the SFH tier.
The HELOC is actual cash yet will count against servicable debt to income and impact the reserves available category.
So if refinancing is included in the strategy keep in mind the pool of lenders may require significant title seasoning. Have you uncovered the options available of owner financing?
Talk to the seller.
Eric & Rosa
[addsig]
Quote:
On 2004-06-28 15:17, classimg wrote:
OK here is our $.02 when you are seeking financing on 6-12 units (We believe a commercial category) the group of lenders quickly shrinks for the SFH tier.
The HELOC is actual cash yet will count against servicable debt to income and impact the reserves available category.
So if refinancing is included in the strategy keep in mind the pool of lenders may require significant title seasoning. Have you uncovered the options available of owner financing?
Talk to the seller.
Eric & Rosa
Thanks for the reply. No, I haven't looked into seller financing yet. I want a feel of what conventional options are available.
What makes lenders required seasoning? Is it that I am using HELOC money as a down, or is that just common commercial lending rules?
What percent of NOI is considered against debt service?
since it's 5+ units, they look at the debt coverage ratio. typically 1.25+.
As for the HELOC advance:
Yes it is a source for the down
yes it does increase the outstanding balance of yur "loans"
If the apt is sufficently cash flow positive, that's what you need.
the ltvs that I have seen are 70-80%