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100% LTV ACQUIISITION and RENOVATION COMMERCIAL LOANS
NEXA Mortgage LLC now offers 100% acquisition and renovation investment property loans. Needs to have a after improved value of 65% LTV.
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This discussion was modified 1 year ago by
Gustan.
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This discussion was modified 1 year ago by
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11 Replies
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This is a terrific product! OPMs (Other People’s Money) is the fast track to wealth creation… Here’s the play to turn yourself into a mega investor:
1. Credit: You should always strive to have “very good” or “excellent credit”… So try to be at least a 661 FICO score or higher… This is save you thousands in interest paid over time!
2. Liquidity: Just because you’re using OPMs, doesn’t mean you should have “$h!t happens” money… What if the repairs comes out to be more than you expected? What if there are delays during the renovation process due to the weather? What if finding a quality tenant takes a little longer? Be prepared to weather the storm! My recommendation? Have at least $40k-$50k in an easily accessible cash-value account (i.e. checking, savings, money market, stocks, etc.). Thank me later
3. BUILD YOUR TEAM: Trying to find a good deal is tough! All the calls & letters talking to homeowners that will just waste your time is discouraging. Enter “Wholesalers, Bird-dogs, etc.”, these people will go hunting for potential properties for you! Of course you need to make sure that they understand that you need to be at 65%ARV (After Repair Value), and that they need to factor their cut into the deal (Purchase Price + Wholesaler fee + Repairs = 65%ARV)… FYI – you can do a dual closing to leverage this product!
4. EVALUTE YOUR DEAL!: Make sure the number works for your investing risk: cashflow, ROIs, whatever is important to you… Not great at figuring out what needs to be repair? Hire a quality home inspector (or if you REALLY want to know what needs to be done to a property, maybe even get a HUD-consultant, FYI their way more expense, so it may not make sense)…
5. FIND THE MONEY: Contact us! Knowing a good deal is one thing! Knowing where to get the money is a completely different challenge! We created this forum to help guide ANYONE that’s looking for REAL answers from REAL professionals! There’s no bad questions, except the ones you’re too afraid to ask
6. TAKE ACTION: Be consistent at doing the EFFECTIVE work! Don’t fall into the treat of analysis paralysis. You’re not going to know everything until you’ve start doing something. Trying to be efficient or innovative means nothing if you aren’t being effective
-Nelson Thompson aka Mortgage Sensei
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This is great news. The no money down payment on the purchase and renovation on investment properties on one to four unit properties is a brand new product that I have never heard of in my 30 years in the residential and commercial real estate brokerage career. How can we inquire more about this product and how do we get assigned to a commercial loan officer for the 100% LTV investment property purchase and acquisition loan?
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Hey Lisa! To get started is easy! Just book an appointment with me for a free commerical/business lending consultation: https://calendar.app.google/EkxQUtHF1cw6tKkj8
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100% loan-to-value purchase and renovation property loans? Never known such a mortgage loan option existed before on investment properties.
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It’s a portfolio product… The investors are high net-worth individuals looking to park their money… My partner combed the US finding these individuals and created this product from scratch with them! We’re so excited to bring this to market
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Phenomenal great product
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Nelson, can you please get together with Felix later today concerning a $1.2 billion development real estate deal in Costa Rica 🇨🇷. Ocean front and waterfront 600 acre deal.
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Will do!
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Loans on Commercial Real Estate without a Down Payment
The 100 percent loan-to-value, also known as the 100 percent financing LTV, is geared towards real estate investors looking forward to acquiring and rehabilitating commercial real estate without needing any down payment.
Here’s a detailed overview:
Highlights:
No Down Payment Requirement:
The entire acquisition price and any cost needed for asset enhancement are lent. Therefore, investors can utilize maximum leverage.
Property Eligibility:
This category can be used for various properties, including multi-family buildings, office buildings, and retail centers.
Loan Types:
The renovation allowance is usually embedded in the commercial loan. It can be used to cover repair works, renewals, and other improvement activities.
Loan Duration:
Such short—to medium-term credit facilities and their terms can vary between 6 months and 5 years, per the loan requirements and the lender’s policies.
Upfront Cost:
- Such loans are usually very expensive.
- The cost varies based on the owner’s property or cash flow capability and from lender to lender.
- This is often the case because the potential risks with such options are significantly greater than traditional ones.
Payment Plans:
Depending on the type of loan taken out, there will either be a total amortizing repayment payment plan or an interest-only payment plan when the asset is still under renovation, with an amortizing payment plan when the renovation is complete.
Minimum Requirements:
For lenders to process your request, typical requirements include a history of solid financing and a credit score 680+, which is considered good.
Experience:
Borrowers who have previously invested in real estate or have operated a property management business tend to be favored.
Property Appraisal:
A post-construction or renovation appraisal is usually required to establish the property’s worth.
Business Plan:
In this case, a comprehensive business plan is most often required, which describes the scope of the renovation, the cost of the renewal, the time it would take, and the expected returns.
Cash Flow Projections:
For example, lenders may use projections to determine the potential income from the property and whether it is sufficient to meet the loan repayments.
Potential Lenders
Commercial Banks: Some banks offer specialized products to investors willing to fund 100% of their investment.
Credit Unions: Commercial loans from local credit unions can be at reasonable rates.
Private Lenders: Many hard money lenders and private investors are also involved. They charge higher interest rates but seem to have more lenient conditions.
Non-QM Lenders: Certain lenders offer loans to real estate investors who do not meet qualified mortgage requirements.
Advantages and Disadvantages
Pros Cons
- It doesn’t require a down payment.
- Higher rates of interest
- The total amount is funded, which covers purchases and spending.
- There are quite minimal periods for repayment.
- Ever-expanding chances of benefitting maximized leverage might demand excellent credit rating and experience.
Obtaining leverage for other projects
- Higher risk because of full funding.
- For investors interested in expanding their capital and performing renovations on a rental property, a 100% LTV acquisition and renovation commercial loan can be very useful.
- Still, these types of loans are higher risk and higher cost loans that need some consideration and planning.
- Always engage the services of a finance consultant or a mortgage specialist to consider other possibilities and what’s appropriate to use in your investment plan.
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What are typical appraisal requirements for these loans?
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While seeking thinking that instead of covering up titles loans for purchasing properties, a person is instead applying for 100% LTV acquisition and renovation commercial loan, it can be assumed that the lender is fully aware of appraisal and claims that they have been using in the business to determine the worth of the real estate that should fall under the criteria set by the lender. So, what are the common appraisal requirements:
Typical Appraisal Requirements
Property Appraisal:
Before purchasing the property, it is important to carry out a professional appraisal to determine its current market value. This means hiring an appraiser who is licensed and has experience in dealing with commercial properties.
As-Is Value:
The appraisal will contain the ‘as-is’ value, which is the property’s condition before renovations occur. This value is of great importance since it will give the lenders an idea of the value prior to any changes.
After-Repair Value (ARV):
When estimating the property’s value, lenders are often bound to state the ARV, or after-repair value, which is what the property is estimated to be worth after renovations have taken place. This gives the lenders an idea of the property’s future potential worth.
Comparative Market Analysis (CMA):
In most situations, the appraiser will also do a CMA, meaning the appraisal will consider the property and other properties that have been sold recently at a similar standard to help determine the market value of the evaluated property.
introduction
The evaluators receive a significant amount of information, including:
- General observation of the property (Place of residence, area, classification).
- The existing state of the property, alongside potential development aspects.
- Real estate ecology, including economic indicators and acquisition expectations.
- Analytical assessment of similar properties in the market
Cost Approach:
Certain lenders might also specify and mandate a cost approach in which the property evaluation is based on the expense incurred while purchasing, similar to the one being evaluated while incorporating the depreciation.
Income Approach:
An income approach can be used to determine the value of the property based on income cash flow, considering income-producing properties where outgoing and incoming cash values are calculated.
Requirement by the lenders:
When applying for a loan, each lender might have their requirement list or a set of primary appraisers, who should remain in contact with the lender for any conditions they might have.
final remarks
When applying for a commercial loan focused on acquisition and renovation with a loan-to-value ratio of 100 percent, it is crucial that the appraiser understands the instructions clearly throughout and that the assessments made meet the lender’s standards. Constant communication between the lender, the appraiser, and the purpose of the loan application enhances the likelihood of meeting the outlined specifications.
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