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🔥 Delayed Financing, Defined:🔥

Delayed financing is a method for getting a mortgage after you’ve purchased a piece of real estate using cash. It provides a way for investors to remain liquid and allows owner-occupants to finance a home purchase. Put simply, delayed financing offers a means of purchasing a home in which you pay cash up-front, then quickly obtain a cash-out refinance to mortgage the property. Doing so effectively returns a large portion of the sums you paid to acquire a home to you, which you then can use for other purposes (e.g., savings, investments, renovations, etc.).

Under the terms of a delayed financing transaction, you basically buy a home for cash, then immediately take on a mortgage as a way to reclaim most of the purchase price. This method of financing allows you to both make a more attractive all-cash offer to home sellers (giving them the confidence that a transaction will close), then put money right back in your pocket. Via delayed financing, you can use a cash-out refinance as a means to obtain a mortgage and enjoy the flexibility of making long-term payments over a period of time so as to avoid tying up all your savings in the home.

Cash buyers should be advised: If you’re seeking to obtain delayed financing on a property purchased in the last 6 months, you can take out cash immediately without waiting. Otherwise, if you buy a home using a mortgage instead of paying with cash, your name is required to be on the property’s title for a minimum of 6 months before you can take out cash and refinance your home.

⚠️ An important tool in real estate investors’ arsenal, just over one-third of all home purchases are now all-cash deals, as these transactions help keep investors more liquid so that they can buy more properties.

Rehabbers: Some buyers are interested in purchasing properties that are currently uninhabitable or in need of extensive work with an eye toward rehabbing them either to live in themselves or rent out at a profit. These individuals are known as rehabbers. Note that financial lending institutions will not offer a mortgage on an uninhabitable home, no matter its potential, making rehabbers among the most frequent cash buyers.

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Podcast: Download (Duration: 7:40 — 7.8MB)

🔴 The floodgates have opened for construction funding. With a shortage of existing housing stock, the private mortgage debt funds are now actively pursuing construction deals.

✨ Get in now, while you can! ✨

⚠️ Construction Loans offer:

✔️ No Red Tape, No Income, No Assets, No Reserves
✔️ Single-family, 1-4 Units, Townhomes
✔️ Up to $2M with Rates Starting at 8%
✔️ Up to 90% LTC and Up to 75% LTARV
✔️ 12-24 Month Terms
✔️ Purchase Transactions
✔️ LLCs, LPs and Corporations ONLY
✔️ Nationwide Lending
There has never been a better time to get a ground-up construction loan.

Podcast: Download (Duration: 12:53 — 12.5MB)

💰 In this episode, we talk about residential financing vs commercial financing. Specifically, how to move from one- to four-unit deals to larger five-plus unit deals.

💡 What are the basics to know before you call your commercial mortgage broker?

🏠 We also cover these types of debt/loans:

– Agency
– Bank/Credit Union
– Bridge Loans

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💡 Can Rental Income Generated from Short-term Rentals (i.e., Airbnb) Be Used to Qualify for a Loan?

The short answer is “yes.”

🏡 Rental income derived from the subject property is acceptable on a two- to four-unit principal residence in which the borrower occupies one of the units, or a one- to four-unit investment property. If the transaction is a purchase money transaction, information on Forms 1007/1025 may be used to derive rental income (including short-term rental income) for qualifying purposes. If the transaction is a refinance, rental income may be used when reported on the borrower’s individual tax returns (Schedule E). The alternative to the tax returns is a lease agreement; however, since short-term rental occupants usually execute a terms and conditions agreement (not a lease agreement), this alternative would not meet our requirements and therefore the income would not be eligible.

💰 Rental income derived from other property (not the subject property) must be documented either by a lease agreement or the most recent year's tax returns. A lease agreement is usually not an option in the case of short-term rentals since the occupants do not execute a lease agreement. However, if the borrower is reporting rental income (including short-term rental income) on the most recent year's tax returns, then rental income may be considered as qualifying income.

🏠 The Single Family Comparable Rent Schedule Form 1007 is intended to provide an appraiser with a familiar format to estimate the market rent of a property. Adjustments should be made only for those items of significant difference between the comparables and the subject property.

📈 The Small Residential Income Property Appraisal Report (FHLMC 72/FNMA 1025) is for the appraisal of two- to four-unit properties, including properties in PUD, condo or co-op projects. … Data indicating physical characteristics of the subject property such as age, materials and condition.

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🏦 The biggest differentiator between bank and agency apartment financing is whether the loan is recourse or non-recourse. Fannie Mae and Freddie Mac (agency) loans used to buy or refinance apartment buildings are non-recourse, meaning that the debt is secured only by the loan collateral (e.g. the apartment community). If you default on a non-recourse loan, the lender can only recoup the pledged collateral. They can’t go after your personal assets. One of the biggest benefits of working with non-recourse lenders is that your personal liability is protected.

✱ The other major factor is if the property or the sponsors don't meet the requirements for agency debt such as net-worth, experience and occupancy standards. This is when you want to look at bank options. Additionally, if your plan is to refinance or sell quickly credit unions are sometimes the best because often times they don't have prepayment penalties.

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