Lending for the Real Estate Investor During the Pandemic

An In-Depth Discussion of Lending For the Real Estate Investor During the Pandemic

Lending Tools Available in the Lifestyles Unlimited Vendor Program

Private/Hard Money Lending

Portfolio Lending

Conventional Lending

"So, you do conventional financing, the longer-term loans. Can you tell us where that fits into the Lifestyles Unlimited model? "
Andy Webb
Lifestyles Unlimited Radio Host
Real Estate Investor

Sure, in general, 80% of Lifestyles Unlimited members take advantage of hard money lenders that will lend up to 75% of after repair value. Typically, for a conventional loan if you’re going to buy a property you put 20% down plus closing costs and repairs out of pocket. This product, the hard money loan, allows you to lend on future value. At 75% of after repair value, in many cases, you’re only spending 5-10 thousand dollars out of pocket to acquire a $200,000 property and fix it up. So, if you come to us to get pre-approved, we can set you up with a hard money lender and will facilitate the conventional loan on the back end. It’s easier this way because you’ll only need one pre-approval.

Will Fitts
Loan Officer
First Imperial Mortgage
Official Lifestyles Unlimited Vendor
"What sort of information are you looking at in order to judge if I'm qualified for a loan with you? "
Andy Webb
Lifestyles Unlimited Radio Host
Real Estate Investor

We are looking at your credit score and income, specifically your debt to income ratio. We are also looking to see if you have enough money in the bank for the purchase/refinance, as well as your reserves left over. Basically, you need to have enough money for the actual project, plus a little bit extra.

Will Fitts
Loan Officer
First Imperial Mortgage
Official Lifestyles Unlimited Vendor
"What kind of credit score do you need to see? "
Andy Webb
Lifestyles Unlimited Radio Host
Real Estate Investor

This is a great time to dispel common myths right now. You only need a 660. One of our changes since the Covid-19 crisis is that we did bump up our minimum score from 640 to 660. But, that’s a far cry from the 740+ scores people believe is necessary.

Will Fitts
Loan Officer
First Imperial Mortgage
Official Lifestyles Unlimited Vendor
"What other overlays do you commonly run into and can you define what overlays are? "
Andy Webb
Lifestyles Unlimited Radio Host
Real Estate Investor

Every lender has their own overlays, or financing conditions they put on top of what Fannie Mae requires for their own underwriting needs. These overlays differ from bank to bank. For example, big banks have a lot of their own overlays. Basically, this means if you’re told no from one lender, keep trying.

Will Fitts
Loan Officer
First Imperial Mortgage
Official Lifestyles Unlimited Vendor
"How many loans can you do? "
Andy Webb
Lifestyles Unlimited Radio Host
Real Estate Investor

With us, you can have up to 10 loans in your name. If both spouses are creating income and possibly qualify individually, then it’s better to apply separately, in which case you can get 20 loans instead of 10.

Will Fitts
Loan Officer
First Imperial Mortgage
Official Lifestyles Unlimited Vendor
"Shouldn't I have an LLC for asset protection? And how does that play together with Fannie Mae? "
Andy Webb
Lifestyles Unlimited Radio Host
Real Estate Investor

OK. Good question. We’ll talk about benefits and LLC in terms of lending. When it comes to Fannie Mae lending, we do not lend to LLC’s directly. What I do in many cases is if someone did buy the property with an LLC, and they want to do a refinance through me, we can bring that title from the LLC into their personal names and then get them approved.

Will Fitts
Loan Officer
First Imperial Mortgage
Official Lifestyles Unlimited Vendor
"At Lifestyles Unlimited members can also put a liability policy across all of their properties - it's called umbrella insurance. That's a good form of asset protection as well.

I want to shift gears now and talk about some of the impacts of the coronavirus. The big myth out there that I've heard is that lenders are not lending. Clearly you still are, right?
Andy Webb
Lifestyles Unlimited Radio Host
Real Estate Investor

Correct, we still are, but there are many lenders who are not. Luckily for us, we are looking at the bright side and we see this as a blip, so the changes to our lending requirements have been very minimal.

Will Fitts
Loan Officer
First Imperial Mortgage
Official Lifestyles Unlimited Vendor
"It's a great time to lock in that fixed rate mortgage for 30 years. That's where you need to talk with a guy like Will. What about appraisals? Are they not doing appraisals anymore? I've heard rumblings of that."
Andy Webb
Lifestyles Unlimited Radio Host
Real Estate Investor

That’s not true, what people are probably referring to is that because of the coronavirus, Fannie Mae has allowed us to accept exterior-only appraisals more often than they did before. But, I do want to point out that our appraisers are typically going into the property for these investment deals, and we have a system for this, because that is helping your property’s value. This is important because it can help you reduce your out of pocket costs or possibly get more money out in a refinance.

Will Fitts
Loan Officer
First Imperial Mortgage
Official Lifestyles Unlimited Vendor
"Now, what kind of impact are we anticipating on home values in the foreseeable future?"
Andy Webb
Lifestyles Unlimited Radio Host
Real Estate Investor

I’m hearing everything from no impact at all to maybe a 15 % decline. Of course, that’s going to be many, many months down the road because appraisals are based on looking at the last six months. I would say, plan for values to be fairly stable, maybe a little bit of a dip. I think there will be a lot of great opportunities to really pick up some steals.

Will Fitts
Loan Officer
First Imperial Mortgage
Official Lifestyles Unlimited Vendor
"Ya, absolutely. I want be ready and I want our readers to be ready for that opportunity. Whether we go into a prolonged depression, recession, or have that kind of V-shaped recovery, there will be some opportunity there.

If you are concerned about values, I do want to stress that good landlords held on straight through the Great Recession. Values might have dipped, but they came back and renters kept renting right on through.

I'm curious, what are your thoughts on longer term rates or inflation?
Andy Webb
Lifestyles Unlimited Radio Host
Real Estate Investor

Before all of this happened, we were already heading towards a recession. I still believe we’re heading that way. I predict very aggressive, low rates for a while. Get ready, this should be a very, very good year for investing.

Will Fitts
Loan Officer
First Imperial Mortgage
Official Lifestyles Unlimited Vendor
"With the notion of getting ready to buy, you have to ask yourself if you have the finances. Do you have the cash reserves in place now to pounce when that deal gets presented to you? If you don't, where can you go to get that?

If you're already an investor and you have some rental properties, look at your equity.

What about personal residences? Is it advisable to tap into the equity there? "
Andy Webb
Lifestyles Unlimited Radio Host
Real Estate Investor

Most definitely. That should be a first resource that you have. For primary residents, we can go up to 80% loan to value for cash out. If you have the equity there, that should be your first thing to pull from. Rates for your primary residence are around 3% on a 30-year fixed right now and below 3% in a 15 year. It’s almost free money.

Will Fitts
Loan Officer
First Imperial Mortgage
Official Lifestyles Unlimited Vendor
"What's the typical timeline on a refinance these days?"
Andy Webb
Lifestyles Unlimited Radio Host
Real Estate Investor

For us, it’s about three weeks, so you should plan for about a month between calling me and getting that money in your pocket. A lot of people are trying to minimize their debt right now, but it’s important to understand that income-producing debt is a different beast entirely.

Will Fitts
Loan Officer
First Imperial Mortgage
Official Lifestyles Unlimited Vendor
"You see a lot of investors in your line of work. How do Lifestyles Unlimited members stack up against the others out there?"
Andy Webb
Lifestyles Unlimited Radio Host
Real Estate Investor

They’re awesome because the resources you get through your membership, you can’t get anywhere else.

Will Fitts
Loan Officer
First Imperial Mortgage
Official Lifestyles Unlimited Vendor

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