The Best Ways to Finance & Scale a Rental Portfolio (Even With No Job!)

[@CoachChadCarson]

Schedule a FREE 1:1 mortgage consultation with Bryan Maddex: calendar.bellomortgage.com/bryan

[@kenwheeler1327]

Absolutely one of the best videos you have shared. Thanks Coach! Scheduled a phone visit with Bryan after first 5 minutes of video!!.

[@ethanbolinger1220]

That last tip about having a close friend or family member live in the property to make it "owner occupied" is the tip ive been looking for!! So excited to learn about this and the possibilities it opens up!

[@CoachChadCarson]

that's a great tip, isn't it! Thanks for watching. Good luck with your next steps!

[@bellomortgage]

I have personally done this with a close personal family friend! Planning on purchasing a home with/for my college student son this summer for my next acquisition. Such a powerful way to grow your portfolio with less capital outlay!

[@jareddeardorff3705]

Cool to hear my actual numbers. I bought and renovated a house for 152k and have it rented for 1600/mo, Worth a little over 200k. I used cash on my first deal and a HELOC on the second. Now moving forward I can do 4 houses a year and be within seasoning requirements (6 months each.) Great info, you were the one who got me into renting vs fix and flip.

[@rob-toolsandtech2521]

Duuuuuude! I’m so glad I ran across your channel. This was great info, and I was just telling my mom yesterday “I know if I can find the right person who knows where to find loans to access my equity it would accelerate things”. Bryan sounds like exactly the person I had in mind. I clicked the link and booked a call.

[@CoachChadCarson]

Glad you found the channel! And good luck with those next steps. Bryan is a good dude who can tell you your options.

[@bellomortgage]

Looking forward to meeting with you!

[@porshacohen7941]

Bryan is my broker and you won’t find better!

[@bellomortgage]

Porsha is my client and you won't find a better client! Always enjoy working with you Porsha!

[@nickfazzio5277]

2 questions I’d like to hear you guys dive deeper into. 1. I’m shopping lenders for a DSCR cash out refi on a 4 plex I BRRR’d. HOW do you compare fees and costs amongst lenders and determine which lender to go with over another lender? 2. My small local banks only offer 5 yr commercial ARM products to scale a portfolio, so I’ve steered the DSCR route. Now that I’ve walked away from my W2 job, should I keep searching for a small local bank to scale a portfolio with or just continue on my path with DSCR (I’ve done 1 DSCR purchase so far and planning to do a cash out refi on a 4 plex as soon as I place the 4th tenant)

[@bellomortgage]

Hey @nickfazzio5277! #1. If you are doing that, it is a lot of work! Most of the fees on a loan are going to be very similar for Title, Appraisal, Credit, Closing Fee. The fees you want to shop would be Section A fees if you are getting a CD (Closing Disclosure). Those fees are what the lender is going to get. Sometimes, the lowest fees are coming with the highest rates. Sometimes the lowest rates are coming with the highest fees! When I shop lenders for you, i am balancing a few things: Lender Fees, Lender's Ability to close quickly or slowly, Rates offered by the Lender, and your situational details (does the lender allow for no ratio or low ratio, do they care about experience or reserves or rural properties, or rental styles). Cheapest is not always best! Lower rates/fees may be because they are lightly staffed or are very conservative with underwriting guidelines. If you are doing a purchase, going with a lender that can get you closed in 2 weeks can allow you to save money on the purchase price! So higher cost loan could save you far more with a competitive close date! On a refinance, if it takes and extra week or two, sometimes that is no prob so worth saving some money or having a harder underwrite. #2. Eventually, commercial banks will want you back! But for the Small & Mighty Investor (like what I did there Chad?), DSCR Lending is a great way to continue to expand your portfolio! As you mentioned, the commercial banks are not going to give you a 30 year fixed rate that is fully amortized. Commercial loans almost always come with a 5 or 7 year balloon. Ask Chad his opinion and he will tell you that you need to have at least a 10 year balloon so that your balloon does not come at the worst time (think 2008!!). 30 year fixed rate is very predictable for 30 full years! Commercial loans, what will the market be like when it is time to balloon. Slightly lower rate on commercial could cost you tremendously over time! How many people did a 5 year balloon at 3.5% in 2020 when they could have locked in 4.5% for 30 years? Looking back, was it a good idea to take that slightly lower rate with a balloon? I'll stick with my 30 year fixed rates. No best, just best for your situation!

[@oneilguzman8912]

Wow, Carson, I like all the Inf Bryan said in this video, and thanks to you for making all this content that helps me to learn a lot from your content 🙏🙏🙏

[@FlyingJournalism]

This was a great video Carson! I am DTI capped with most banks (primary res. Is too high) one thing that DSCR doesn't cover: DSCR less than 100k? =rare .... DSCR 75k-100k? = close to impossible.... DSCR less than 75k? = non existant.... this is a challenge. My RE company gets me sellers and wholesalers throwing houses at me for 20k - 50k, worth 100k+ ARV... none of these lenders or hard money lenders touch these... however, I have found collateral loans at commercial banks offering 10 yr loans at 7% based on the purchase price but the commercial banks take almost 2 months to get closed and funded.... Also, are there any banks offering RE investors business line of credits (rare since 2008)

[@bellomortgage]

I have a small handful of DSCR lenders that will finance less than $100k! Under $75k I would go to a small commercial bank (the less branches the better). You may not get 30 years fully amortized, but usually they will have a 15 or 20 year option for you. Other option is doing a 2nd mortgage on another property and buying those small properties with cash, or finding a private lender is really where those loan sizes could work for many investors with small self directed IRAs.

[@FlyingJournalism]

@bellomortgage wow! Thank you for the insight! You are THE mortgage person to go to. Literally no one has this knowledge that you provided. You did great on this video as well! Thank you

[@bellomortgage]

@@FlyingJournalism My pleasure! I am not a "lazy lender" and deep dive into guidelines so i can say "yes, i can help" more often than my loan officer counterparts :)

[@cindyfriesen3770]

Super informative interview! I plan on scheduling an appt with Bryan soon. Thanks coach!

[@bellomortgage]

I look forward to meeting with you! My calendar is a bit crazy, but worth the wait hopefully

[@Jollydespair]

I'd like to see more strategic examples of the agreements for the "bonus tip" 37:10 with buying partners living in property

[@bellomortgage]

I am buying one with my son this spring/summer. I bought one using this strategy with a close personal family friend. She lived in the property for 12 months, then we converted to short term. We came up with the down payment and closing costs. She manages the property with out help if needed. We will split the profits and equity when/if we sell, minus our initial cash outlay. We pay for repairs out of our joint account. nothing formal, but again a close personal family friend! A good operating agreement is advised, the more details ironed out the better for all parties!

[@Brain0andMore]

DSCR loan approval does sometimes require funds / savings / 401k to support approximately 6 mo - 12 mo mortgage payments if rental income doesn't pan out.

[@bellomortgage]

Most DSCR loans have some type of reserve requirements. 6 months is a very common one across many lenders. Lenders want you to survive vacancies and the unknow!

[@Brain0andMore]

@bellomortgage true! We weren't aware at the beginning if the dscr loan, we learned so much through this first dcsr loan! Great content from you! Thx!!

[@Rene-i3n]

I don't understand why banks are so conservative when they are allowed to lend 10 to 1 ration on other people's money. You would think they will be more flexible

[@CoachChadCarson]

Traditionally banks are conservative. Kind of funny given that many were NOT conservative in 2008-2009 and it almost brought the economy down. So, I think they've gone back to their conservative ways overall.

[@mathehack1]

They also have the Fed to bail them out #ToBigToFail.

[@evanobrien2429]

Love the X Files moment at 22 minutes! 😂 Great interview, thanks for all of the information.

[@CoachChadCarson]

gotta give my editor credit for that!! It made me laugh (and the timing was perfect). Thanks for watching!

[@bellomortgage]

@@CoachChadCarson that came out on youtube much better than on the podcast! Props to your editor!

[@deanbranson517]

Another Excellent video. First, let me say I have my consultation scheduled for next week. Second, I like it when you wade out into the weeds. Since your video on hard money lenders I have worked with two different companies and they immediately put me into one of their categories. I really look forward to exploring the options Brian has. Definitely want to talk about purchasing for family members. I rent to one of my children and will rent to a second in the spring. Mind blown at all the info.

[@CoachChadCarson]

@@deanbranson517 thanks for the feedback and for watching! And I'm glad you got a call scheduled with Bryan. He can definitely explore a variety of options as a broker that a more focused lender (like hard money lenders) can't. Good luck!

[@bellomortgage]

I look forward to our meeting!

[@ttorimoto]

Would love to see a flow chart with all the possible scenarios that shows what financing options there are and the pros and cons of each 😬 (Great meeting you at FinCon, Chad!)

[@CoachChadCarson]

Great idea! Hopefully Bryan can see this and maybe we can work on something like that down the road. Great to see you at FinCon too!

[@bellomortgage]

Very interesting idea! You wouldn't believe the spreadsheets I keep to track all of this info for so many different lenders! That is the true blessing (and curse) of being a broker with 220+ lending partners, soooo many options!

[@anthonysafo473]

Time to take notes on all of the videos see you in 4 business days

[@CoachChadCarson]

Nice! Thanks for watching.

[@franksanchez8556]

When it comes to refinancing out of a DSCR or a HML loan and trying to get into a traditional loan, does the bank still look into your credit and income and taxes? Or as long as I have enough equity they'll give me 70-75% of my value without asking for financials and taxes?

[@bellomortgage]

Unfortunately, every time you do a loan it is looked at from scratch. If I pull your credit for a transaction, i can reuse the same report with multiple lenders for up to 4 months! if i have all of your financials, i can resubmit to different lenders for different transactions. You do not have to start from scratch when you use me and my team! There may be some docs we need updated (bank statements, paystubs...) but taxes and W2s only expire once per year...

[@kylefordinvest]

Great insights!

[@CoachChadCarson]

thanks for watching!

[@nickfazzio5277]

Bryan, in the DSCR space, is it common practice for loan officers to quote a higher interest rate to the borrower to profit from a spread they receive the loan for and the rate they pass along to the borrower? Just trying to figure out how to choose lenders since there are soo many companies doing DSCR but like you said, they all probably have access to the same 200ish products.

[@bellomortgage]

Yes, there is profit to the Loan Officer / Mortgage Company when we help you get a mortgage. With many lenders, you have the option of paying it up front with closing costs, or over time with a higher rate. Some lenders have "premium pricing", or higher rates that offers a lender credit. Some lenders do not have that option. When I'm quoting rates to a client, I like to see if their situation suggests that a higher rate with lower closing costs is better or if a lower rate and higher closing costs are better. If you are borrowing $500,000 and we think rates are going to be lower in a year, you would be financially better off by taking a higher rate and letting the lender pay the brokerage commission. If you are borrowing $150,000, it is unlikely that rates will drop enough in order to justify the closing costs to do a refinance, so you would be better off to take a lower rate and pay points (1 point is 1% of the loan size). On average, you will break even in around 30 months by paying points. If you want the best rate on a DSCR loan, a 5 year prepayment penalty is usually going to offer you the lowest payment. Since you are likely to have this loan for more than 30 months, it typically is a good option to finance in those points into your loan. At the end of the day, your renters end up paying the brokerage commissions over time as they make your payments. Same exact thing happens when you get a conventional mortgage! In this instance, the loan officer / brokerage company / mortgage company / bank's commission is baked into your rate! It just so happens that most companies do not provide you the option or are just not transparent with their disclosures to let you see that a commission is being paid inside the rate you get! At the end of the day, you don't have access to the rates a broker has access to so most clients are going to save money by letting me shop 220 lenders to find the best lender for their situation. Odds are, you will save more than I will make when helping you get your traditional or dscr mortgage! Most companies are I work with will not speak to you as they only work with brokers. Most other companies offer me wholesale rates vs offering you retail rates which have higher profit baked in so they can pay for their staffs benefits and licensing and building and support staff..... Shopping at Walmart or Sam's club has the same goods... I get access to Sam's pricing, you would get access to Walmart pricing. I'm not going to get paid more or less, depending on which lender I take you to, so let me shot 80 lenders in 5 minutes and almost aways find access to the best lender in your situation vs you shopping 5 or 10 lenders over a few days /hours/weeks and then maybe not having that lender be able to get you to the finish line making you start all over. If the lender I take you to cannot get us closed, I'm not starting from scratch to move you to another lender! I'll save you time and money!

[@nickfazzio5277]

@@bellomortgage this reply is so insightful, thank you greatly for your time and honesty in your answer. I’ll get a call booked with you this upcoming week. I’m looking forward to it. Thanks!!!

[@krisplacek7292]

again. beautiful vid coach. so much easier than uk! yo have no idea... Coach, just a thought.. have you consider vid , that you talk about how to start from zero? debt free, some cash , and knowledge.. that would be very interesting. how would you start over with your knowledge, but from lets say zero. anyway, thank you for this one, it was great. i think ill move to US now!😊

[@melodyn6419]

You could only get 10 maximum DSCR loans correct?

[@CoachChadCarson]

@@melodyn6419 DSCR has no cap. Conventional loans have a 10 mortgage limit.

[@bellomortgage]

Thankfully, not correct! You can have an unlimited amount of DSCR Loans! Some lenders may have limits to how many they will give you, but there are tons of DSCR lenders now! Conventional financing (Fannie/Freddie) limits you to purchasing or refinanced investment properties and you cannot exceed 10 financed property unless you are buying an owner occupied home!

[@kunaldatt4830]

Bryan/Chad--Can income from Real Estate syndications count towards your debt-to-income ratio for qualifying for a conventional loan? Obviously, the income would be shown on tax returns on the K-1s.

[@bellomortgage]

Yes! We take a 2 year average of your K1 income!

[@ClarisNdoroRealEstate]

You can also put 5 percent for the second home too.

[@bellomortgage]

Fannie/Freddie guidelines require at least 10% down on a 2nd home! There could be some portfolio loans from small banks or credit unions that may have this program, but they usually require more down not less. If you do know of a program that allows for 5% down, I would love to know!

[@ereckharrison]

I wonder if I can do this owner occupied thing with my VA loan? Say me and my sister go on mortgage and title? Thanks for the information. I need to schedule a call with Bryan.

[@bellomortgage]

VA loans are tough for non-married couples. Each borrower has to qualify for their own half of the mortgage and the non vet has to put 25% down on their 1/2 of the home. Also, you cannot have a "non occupying coborrower" on a VA mortgage. This hack is specific with a Conventional Loan!

[@ywang1645]

Does Bryan do loan for New Jersey property?

[@bellomortgage]

I can do business purpose loans in NJ and I have a coworker that I work with to do personal mortgages in NJ. My team will act as the assistant to my counterpart so we will stay as your main contact, our counterpart will jump on a call with us any time we have to do something that requires a license (locking rate, negotiating terms, going over closing costs). Here to help!

[@ClarisNdoroRealEstate]

Can you do a DCSR loan on a BRRR

[@CoachChadCarson]

Yes, you can. A lot of investors do BRRRRs this way

[@police994]

DSCR!!!! ❤🎉

[@CoachChadCarson]

it's a good program!

[@bellomortgage]

When new clients ask if I have DSCR loans, I tell them "DSCR options for days!"

[@jacobheraldes8087]

My 1st house was payed off so I borrowed against my 1st house. Using a business loan to buy my 2nd home in full. Same year bought another smaller one cash I saved up. Now I’m using a home equity line of credit against the second one which I know live in to buy my 4th one. Couldn’t I just keep finding BRRRR properties and keep borrowing against them?

[@bellomortgage]

You can if you can keep finding properties that you can purchase under market value! You can also do a Fix and Keep loan to reduce your cash outlay if you can build your equity with a rehab.

[@soundsnags2001]

That xfiles drop 😂

[@CoachChadCarson]

yeah - my editor surprised me with that one. Lol. I laughed too.

[@danielzibenberg2869]

Is the DSCR loan available for foreigners?

[@CoachChadCarson]

yes, there are DSCR loans for foreigners.

[@Easyservice-x8q]

The video is very beautiful

[@Easyservice-x8q]

Thank you for giving me Love I like your video very much

[@Easyservice-x8q]

When will you give the video again?

[@dustinbutzler1031]

Go into all the dscr weeds

[@FlyingJournalism]

Your right, There's a lot more to it.. the cons of dscr are existant but the weeds are needed lol

[@bellomortgage]

Sometimes it is fun to pick apart different programs, DSCR lenders all differ so much in what they do. Before becoming a mortgage broker, I had to tell a lot of people "that doesn't work". Since becoming a broker, I have a better understanding that there are options for most situations! There is no "normal" in DSCR guidelines, so I have to have a massive spreadsheet to track all the differences!

[@56TheAnimal]

Is it 10 loans per person or 10 loans per married couple for conventional financing?

[@CoachChadCarson]

Per person if you do loans separately. But you have to be careful that each spouse can qualify on their own with income (like if one spouse makes a lot more money than the other). This is a good question for Bryan because he'll know more details.

[@bellomortgage]

@@CoachChadCarson Chad got this one right (as is usual)! Whenever someone applies for a mortgage we ask "how many financed properties do you have". If there are 2 borrowers, combined you can only have 10 financed properties when purchasing a 2nd home or Investment property. You can ALWAYS purchase a new primary home, even if you have 10 or more mortgaged properties!

[@Joemart424]

5% owner occupied rates? How?

[@bellomortgage]

5% DOWN PAYMENT at owner occupied rates. That may not have been super clear. One borrower must live in the house for at least 12 months, be on the loan, and be on title for the home. That makes it an "owner occupied mortgage". That person does not need income or credit! The other person can be a "non occupying coborrower", so they do not live in the home. They can bring all of the income and credit to qualify. Just keep in mind, the coborrower cannot use rental income to help qualify to purchase this home! They have to have enough income to pay their current obligations as well as this new home.

[@jacobheraldes8087]

Why can’t you barrow against your house do the Brrrr strategy. Then barrow against that Brrrr for the next one. Keep it going till you reach your first five or so?

[@CoachChadCarson]

@@jacobheraldes8087 if you have enough equity and income in the first one that can work. The more equity you start with the more you can get.

[@FlyingJournalism]

Agreed

[@SuperDebu123]

Bru😂 😂😂😂