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Speaker 1: This episode is brought to you by P and C Bank.

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Speaker 1: A lot of people think podcasts about work are boring,

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Speaker 1: National Association Member FDIC Erness What's Up? You ever walk

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Speaker 1: pushing your vision forward.

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Speaker 2: Jumbo mortgages. What's that? I love it? So jumbo mortgages. Right, So,

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Speaker 2: typically when we're looking at jumbo mortgages, these are loan

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Speaker 2: amounts above what Fannie May, Freddie Mac will purchase from

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Speaker 2: a lender. Right so, and loan limits are about to

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Speaker 2: go up anyway, there's a couple of lenders that's already

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Speaker 2: you know, increased the loan limits for twenty twenty five.

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Speaker 2: So you know, a single family in twenty twenty five,

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Speaker 2: Fanny May will go up to eight hundred and two thousand.

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Speaker 2: It's not official yet, but several lenders have already put

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Speaker 2: it out there because we anticipate that they will in

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Speaker 2: November raise the loan limits again. So any loan amount

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Speaker 2: that is that exceeds the threshold that Fannie May and

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Speaker 2: Freddie Mack will buy right. And so these loans are

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Speaker 2: typically portfolio loans because the government is not backing them,

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Speaker 2: so the lender is lending pretty much their own own

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Speaker 2: money on this one. So the requirements to get qualified

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Speaker 2: for this jumbo mortgage is going to be it's gonna

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Speaker 2: be a lot tougher, especially if you're going full documentation.

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Speaker 2: Full documentation, ladies and gentlemen, is when you're providing your

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Speaker 2: W two's pay stuffs, bank statements, taxi turns. That's a

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Speaker 2: full documentation loan. So your DEBTA income ratio will have

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Speaker 2: to be, you know, forty three percent all below, and

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Speaker 2: some jumbo lenders want to see forty percent all below,

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Speaker 2: you know, And you can get loan amounts three up

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Speaker 2: to three million, four million, five million, just depending on

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Speaker 2: that lender. So you know, this is when you're trying

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Speaker 2: to buy that that mega mansion, that big old dream

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Speaker 2: house of yours, you're going to use a jumbo mortgage. Now,

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Speaker 2: if you are self employed and you're looking to buy

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Speaker 2: your mega mansion or your dream home that maybe cost

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Speaker 2: you two million dollars two and a half million dollars,

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Speaker 2: and you don't file your taxes property and you've write

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Speaker 2: off everything. No't worry. There are loans out there that

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Speaker 2: can help you with out providing all this information, like

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Speaker 2: bank statement loans where we're using the down the deposits

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Speaker 2: that you're receiving in your business bank statements over a

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Speaker 2: twelve month period and the lender will average that out

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Speaker 2: and determine how much income that you're bringing in based

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Speaker 2: off of those deposits, and we can use that to

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Speaker 2: qualify you. This loan is extremely popular amongst entrepreneurs who write,

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Speaker 2: who take full advantage of the tax code. This is

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Speaker 2: going to come at a much higher interest rate than

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Speaker 2: what a paper full documentation jumbo loan is going to get,

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Speaker 2: but it's well worth it to pay that two percent

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Speaker 2: margin higher two and a half percent margin higher and

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Speaker 2: rate than paying probably a couple hundred thousand taxes. Right.

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Speaker 2: So again that's when you need to mortgage plan. If

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Speaker 2: you are self employed and you're looking about this luxury

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Speaker 2: home you need to have a mortgage plan in place

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Speaker 2: so you know you can weigh out the pros and

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Speaker 2: cons ahead of time. But there are definitely options out

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Speaker 2: there for all buyers in this jumbo market, whether you're

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Speaker 2: full documentation, whether you're going non traditional and you want

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Speaker 2: to get that luxurious dream home of yours.

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Speaker 3: So just really quick on the jumbo loan, it's usually

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Speaker 3: a higher interest rate prime example, if the interest rates

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Speaker 3: are seven, you could typically see at ten percent.

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Speaker 2: So if you're doing a full documentation loan, and let's

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Speaker 2: just say you're going to like a retail bank like

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Speaker 2: we just mentioned, honestly, the retail banks is going to

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Speaker 2: give you the best deal. Like a mortgage company, a

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Speaker 2: mortgage broker cannot compete with a retail bank like a

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Speaker 2: JP Mulgan because they know you got money. So if

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Speaker 2: you go over there and you bring over two hundred

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Speaker 2: and fifty three hundred thousand, the positive that they're going

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Speaker 2: to give you a great, a great deal. Right So

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Speaker 2: their rates right now might be in the files for

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Speaker 2: a two million dollars on a thirty ear fix right

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Speaker 2: now because they're letting they're making their own rules so

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Speaker 2: to speak. Right it's their portfolio money. Now, if you

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Speaker 2: are a non traditional buyer, then that rate today might

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Speaker 2: be somewhere around seven and a half to eight percent

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Speaker 2: on this you know type of paper. If you're doing

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Speaker 2: non traditional finance and like bank statement loans, light doc loans,

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Speaker 2: p and L loans, you know, things of that nature.

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Speaker 2: We're not showing traditional documentation. You're going to pay a

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Speaker 2: premium for it, right, but you're going to get into

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Speaker 2: the house. And that's most important for these self employed

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Speaker 2: barbers because they can afford that payment. If they're buying

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Speaker 2: at that level, they're not really too concerned about that

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Speaker 2: payment shot, because they'd rather have a payment that's five

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Speaker 2: hundred or one thousand dollars higher, so that way they

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Speaker 2: don't have to pay one hundred thousand, two hundred thousand

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Speaker 2: in taxes, so it balances itself out. So the interest

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Speaker 2: rate is important, but it's not as equally as important

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Speaker 2: and looking at the full spectrum from a holistic point

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Speaker 2: of view of where you stand. Sure.

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Speaker 4: So all right, so let's get into this investing before

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Speaker 4: we leave. So now let's talk about the.

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Speaker 2: Yeah, So the d TR loan, So the ds CR

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Speaker 2: loan stands for debt service coverage ratio, so commercial loans,

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Speaker 2: commercial loans, So all right, let me start off like this.

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Speaker 2: So in residential we have DTI, right, your debt to

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Speaker 2: income ratio. When you're dealing with commercial lending, we have

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Speaker 2: DSCR debt service coverage ratio. That is the DTI of

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Speaker 2: the property. Right now, lenders have now started allowing over

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Speaker 2: the past couple of years, investors who want to buy

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Speaker 2: residential real estate use the same formula and calculation to

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Speaker 2: how we underwrite investment commercial properties. We can now use

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Speaker 2: it in the residential investments space as well. Right, So

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Speaker 2: when you're looking to do a true investment property, now,

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Speaker 2: this is when you use your LLC. Okay, we're not

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Speaker 2: looking at your W two's, your taxoo turns, your pay stubs.

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Speaker 2: We don't want to know where your large deposits came from.

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Speaker 2: All of that stuff is irrelevant. The only thing the

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Speaker 2: lender is really going to do from your personal side

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Speaker 2: is run your credit to make sure your credit is

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Speaker 2: above a six to twenty credit score. Right, and as

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Speaker 2: long as you're above a six twenty credit score, depending

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Speaker 2: on how big the deal is, in most cases, you

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Speaker 2: should be. Okay. Now we're looking at the property itself,

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Speaker 2: and we're looking at dscrs. So the bottom line is

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Speaker 2: is the property cash flowing? If the property is cash flowing,

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Speaker 2: then the lender will lend on this property. So when

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Speaker 2: you're looking at an investment property, do you need to

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Speaker 2: know how to analyze that property and underwrite it not

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Speaker 2: just as an investor, but also from a funding perspective,

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Speaker 2: because we need to know what you're operating cost sold?

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Speaker 2: What are the expenses of the property? Right? We already

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Speaker 2: know property taxes and assurance, but what other expenses are there?

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Speaker 2: Do you have to pay for? You know, your utilities.

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Speaker 2: Do you have to pay the light, build the gas,

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Speaker 2: the water, the sewage? Right? What is all these expenses?

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Speaker 2: And then also we're going to look at property management, right,

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Speaker 2: how much is that percentage? Then you have to save

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Speaker 2: for your cap ex expenses, which is your capital expenditures

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Speaker 2: if anything breaks, right, We're going to put all of

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Speaker 2: this into the calculator to see exactly what those expenses

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Speaker 2: come up, and then also what's the gross income. So

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Speaker 2: at the bottom line is we're looking at to make

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Speaker 2: a long story short and to put this whole the

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Speaker 2: layman's terms, because I want to go nobody's had. We

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Speaker 2: want to make sure that the property is paying for

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Speaker 2: itself and the owners of that LLC are making at

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Speaker 2: least a twenty percent profit after all the expenses. That

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Speaker 2: is a one point too that DSCR ratio that the

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Speaker 2: lender is looking for, and if it does meet this requirement,

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Speaker 2: then the lender will lend on that property. Right So, lenders,

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Speaker 2: and let's be I'm going to be very clear right now,

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Speaker 2: it is much easier to get approved and get funding

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Speaker 2: for investment properties than it is for your first home.

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Speaker 2: Much easier. There's not as much paperwork, there's not a

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Speaker 2: lot of hassle with it, as long as you know

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Speaker 2: how to present the numbers to the lender properly and

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Speaker 2: not over exaggerating them to try to make the deal work,

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Speaker 2: because we're going to do our own due diligence and

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Speaker 2: if that deal cash flows, and a cash flows property

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Speaker 2: is going to close. Now, typically when you're doing a

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Speaker 2: DSc ALL loan, this is going to require at a

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Speaker 2: very minimum, a minimum down payment of twenty percent if

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Speaker 2: it meets the DSR requirement of one point two or percent.

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Speaker 2: If it doesn't meet that requirement, then the lenda will

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Speaker 2: require you to put more money down. So this type

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Speaker 2: of loan is strictly for live men, not for freshmen.

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Speaker 2: If you ain't got the money, say hell.

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Speaker 4: No, they're gonna want their money rain sleep hell So

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Speaker 4: that's a no rest in peace all these rules.

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Speaker 2: Man, it's a biggie okay, refinancing.

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Speaker 4: Want to talk about that, yeah.

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Speaker 2: I mean we could, we could talk. We could talk

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Speaker 2: about that, or we can. We want to take some

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Speaker 2: questions about this cause I saw a thousand and one questions.

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Speaker 3: Yeah, I mean you saw some if you want, yeah,

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Speaker 3: go ahead, man, all right, questions please.

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Speaker 2: So already and so somebody asks, Rashida says, the minimum

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Speaker 2: down payment of twenty percent. Yes, it's twenty percent, And

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Speaker 2: I want to be clear again on that, only if

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Speaker 2: it meets the one point two DSR requirement. So just

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Speaker 2: because the minimum down payment is there, it doesn't mean

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Speaker 2: that that property will cash flow out of it, right,

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Speaker 2: So you might have to put twenty five percent, you

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Speaker 2: might have to put thirty percent. Whatever it takes to

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Speaker 2: get that property to DNCR and the cash flow then

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Speaker 2: you have to do it. Now, another thing, I'm going

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Speaker 2: to talk about DSCR because I saw this question come

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Speaker 2: up earlier is about the LLC. The LLC does not

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Speaker 2: have to be established for two years. The LLC does

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Speaker 2: not need business credit. The LLC could be a brand

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Speaker 2: new LLC. You can open up the LLC on Monday

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Speaker 2: and get into a contract on Friday with that brand

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Speaker 2: new LLC. Okay, let's be very clear. It could be

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Speaker 2: a brand new LLC because lenders know investors will will

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Speaker 2: use multiple different LLCs for each investment property they buy.

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Speaker 2: So you have to understand that that you do not

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Speaker 2: need to established business credit. It doesn't need to be

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Speaker 2: something that's been in the long standard because I get

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Speaker 2: that question all the time, so I just want to

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Speaker 2: throw that out there real quick. What else you said

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Speaker 2: something about refinancing, right shotty, I think that real quick.

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Speaker 3: Before we go to refinance. Somebody was asking, is there

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Speaker 3: a difference between this and a hard money loan? Because

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Speaker 3: it sounds like the similarities.

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Speaker 2: Can we draw a similar difference. It's it's a big difference.

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Speaker 2: It's it's nothing. It's separated apart from hard money. Right,

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Speaker 2: hard money is one thing. Ds CR is one thing. Right.

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Speaker 2: DNCR loans doesn't have rehab money attached to it. The

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Speaker 2: ds CR loan is for rental stable rental properties. It's

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Speaker 2: not for rehabbing. When you want to buy a rehab

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Speaker 2: and you do your bird strategy right, buy, renovate, refinance, rent,

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Speaker 2: repeat right. The DSc loan, the DSCR loan is used

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Speaker 2: to refinance out of your hard money loan, the hard

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Speaker 2: money loan, and again that's different forms and calculations. Some

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Speaker 2: you need to be at sixty five seventy percent max ARV.

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Speaker 2: ARV is your after renovated value. But you know, I

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Speaker 2: would recommend if you can get fifty five sixty percent

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Speaker 2: ARV on your on your hard money deal, it's going

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Speaker 2: to make it easier for you to exit out of

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Speaker 2: that hard money and go into your refinance. Because when

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Speaker 2: you're doing a refinance on the DSCR loan, your loan

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Speaker 2: to value, your loan to value your LTV drops to

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Speaker 2: seventy percent. In some cases maybe seventy five percent LTV,

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Speaker 2: but most you most of the time I tell my

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Speaker 2: people my mentors use seventy percent ARV because you need

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Speaker 2: to be able to I mean seventy percent as your

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Speaker 2: max period because if you at seventy five, you only

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Speaker 2: have a five and cushion to get out of that

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Speaker 2: hard money to refinance. So if you start off at

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Speaker 2: fifty five sixty percent ARV on your on your your

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Speaker 2: rehab project, now you have a ten to fifteen percent

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Speaker 2: margin buffer that you can now refinance, maybe pull a

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Speaker 2: little capital out of it too, and now go into

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Speaker 2: your permanent finance and with the DsCl low. So your

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Speaker 2: hard money loan is going to be used to fix

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Speaker 2: buy the property and fix it up. But remember hard money,

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Speaker 2: the terms are going to be typically twelve months. You

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Speaker 2: can get past twelve months, but then it's going to

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Speaker 2: get more expensive what you're gonna have to pay to

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Speaker 2: keep extending that hard money loan. Right, but again this

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Speaker 2: is strictly for live men, not for freshmen. Flips flop

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Speaker 2: every day, b every single day. So it's very important

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Speaker 2: that you know your numbers, you know exactly what the

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Speaker 2: hell you're doing, because these construction costs can add up

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Speaker 2: quickly fast, in a hurry.

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Speaker 4: Like flop flips flop every day you live.

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Speaker 2: Every day day.

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Speaker 1: You said, like, it's definitely look uppable.

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Speaker 2: Everything is figure outable.

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Speaker 5: Figure outable, that's what it was. An illegal alien from

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Speaker 5: Guatemala charged with raping a child in Massachusetts, an MS

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Speaker 5: thirteen gang member from Al Salvador accused of murdering a

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Speaker 5: Texas man of Venezuelan charged with filming and selling child

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Speaker 5: pornography in Michigan. These are just some of the heinous

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Speaker 5: migrant criminals caught because of President Donald J. Trump's leadership.

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Speaker 5: I'm Christy Noman, the United States Secretary of Homeland Security.

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Speaker 5: Under President Trump, attempted illegal border crossings are at the

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Speaker 5: lowest levels ever recorded, and over one hundred thousand illegal

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Speaker 5: aliens have been arrested. If you are here illegally, your

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Speaker 5: next you will be fine nearly one thousand dollars a day, imprisoned,

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Speaker 5: and deported. You will never return. But if you register

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Speaker 5: using our CBP home app and leave now, you could

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Speaker 5: be allowed to return legally. Do what's right. Leave now.

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Speaker 5: Under President Trump, America's laws, border and families will be protected.

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Speaker 2: Sponsored by the United States Department of Homeland Security,