WEBVTT - Jumbo Mortgages & DSCR Loans, Multi-Million Dollar Mortgages EXPLAINED

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

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<v Speaker 2>typically when we're looking at jumbo mortgages, these are loan

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<v Speaker 2>amounts above what Fannie May, Freddie Mac will purchase from

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<v Speaker 2>a lender. Right so, and loan limits are about to

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<v Speaker 2>go up anyway, there's a couple of lenders that's already

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<v Speaker 2>you know, increased the loan limits for twenty twenty five.

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<v Speaker 2>So you know, a single family in twenty twenty five,

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<v Speaker 2>Fanny May will go up to eight hundred and two thousand.

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<v Speaker 2>It's not official yet, but several lenders have already put

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<v Speaker 2>it out there because we anticipate that they will in

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<v Speaker 2>November raise the loan limits again. So any loan amount

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<v Speaker 2>that is that exceeds the threshold that Fannie May and

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<v Speaker 2>Freddie Mack will buy right. And so these loans are

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<v Speaker 2>typically portfolio loans because the government is not backing them,

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<v Speaker 2>so the lender is lending pretty much their own own

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<v Speaker 2>money on this one. So the requirements to get qualified

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<v Speaker 2>for this jumbo mortgage is going to be it's gonna

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

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<v Speaker 2>Full documentation, ladies and gentlemen, is when you're providing your

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

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<v Speaker 2>full documentation loan. So your DEBTA income ratio will have

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<v Speaker 2>to be, you know, forty three percent all below, and

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<v Speaker 2>some jumbo lenders want to see forty percent all below,

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<v Speaker 2>you know, And you can get loan amounts three up

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<v Speaker 2>to three million, four million, five million, just depending on

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<v Speaker 2>that lender. So you know, this is when you're trying

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<v Speaker 2>to buy that that mega mansion, that big old dream

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

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<v Speaker 2>if you are self employed and you're looking to buy

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<v Speaker 2>your mega mansion or your dream home that maybe cost

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<v Speaker 2>you two million dollars two and a half million dollars,

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<v Speaker 2>and you don't file your taxes property and you've write

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<v Speaker 2>off everything. No't worry. There are loans out there that

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<v Speaker 2>can help you with out providing all this information, like

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<v Speaker 2>bank statement loans where we're using the down the deposits

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<v Speaker 2>that you're receiving in your business bank statements over a

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<v Speaker 2>twelve month period and the lender will average that out

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<v Speaker 2>and determine how much income that you're bringing in based

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<v Speaker 2>off of those deposits, and we can use that to

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<v Speaker 2>qualify you. This loan is extremely popular amongst entrepreneurs who write,

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<v Speaker 2>who take full advantage of the tax code. This is

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<v Speaker 2>going to come at a much higher interest rate than

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<v Speaker 2>what a paper full documentation jumbo loan is going to get,

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<v Speaker 2>but it's well worth it to pay that two percent

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<v Speaker 2>margin higher two and a half percent margin higher and

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<v Speaker 2>rate than paying probably a couple hundred thousand taxes. Right.

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<v Speaker 2>So again that's when you need to mortgage plan. If

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<v Speaker 2>you are self employed and you're looking about this luxury

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<v Speaker 2>home you need to have a mortgage plan in place

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<v Speaker 2>so you know you can weigh out the pros and

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<v Speaker 2>cons ahead of time. But there are definitely options out

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<v Speaker 2>there for all buyers in this jumbo market, whether you're

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<v Speaker 2>full documentation, whether you're going non traditional and you want

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<v Speaker 2>to get that luxurious dream home of yours.

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<v Speaker 3>So just really quick on the jumbo loan, it's usually

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<v Speaker 3>a higher interest rate prime example, if the interest rates

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<v Speaker 3>are seven, you could typically see at ten percent.

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

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<v Speaker 2>just say you're going to like a retail bank like

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<v Speaker 2>we just mentioned, honestly, the retail banks is going to

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<v Speaker 2>give you the best deal. Like a mortgage company, a

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<v Speaker 2>mortgage broker cannot compete with a retail bank like a

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<v Speaker 2>JP Mulgan because they know you got money. So if

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<v Speaker 2>you go over there and you bring over two hundred

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<v Speaker 2>and fifty three hundred thousand, the positive that they're going

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<v Speaker 2>to give you a great, a great deal. Right So

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<v Speaker 2>their rates right now might be in the files for

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<v Speaker 2>a two million dollars on a thirty ear fix right

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<v Speaker 2>now because they're letting they're making their own rules so

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

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<v Speaker 2>are a non traditional buyer, then that rate today might

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<v Speaker 2>be somewhere around seven and a half to eight percent

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<v Speaker 2>on this you know type of paper. If you're doing

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<v Speaker 2>non traditional finance and like bank statement loans, light doc loans,

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<v Speaker 2>p and L loans, you know, things of that nature.

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<v Speaker 2>We're not showing traditional documentation. You're going to pay a

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<v Speaker 2>premium for it, right, but you're going to get into

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<v Speaker 2>the house. And that's most important for these self employed

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<v Speaker 2>barbers because they can afford that payment. If they're buying

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<v Speaker 2>at that level, they're not really too concerned about that

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<v Speaker 2>payment shot, because they'd rather have a payment that's five

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<v Speaker 2>hundred or one thousand dollars higher, so that way they

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<v Speaker 2>don't have to pay one hundred thousand, two hundred thousand

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<v Speaker 2>in taxes, so it balances itself out. So the interest

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<v Speaker 2>rate is important, but it's not as equally as important

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<v Speaker 2>and looking at the full spectrum from a holistic point

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<v Speaker 2>of view of where you stand. Sure.

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<v Speaker 4>So all right, so let's get into this investing before

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<v Speaker 4>we leave. So now let's talk about the.

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<v Speaker 2>Yeah, So the d TR loan, So the ds CR

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<v Speaker 2>loan stands for debt service coverage ratio, so commercial loans,

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<v Speaker 2>commercial loans, So all right, let me start off like this.

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<v Speaker 2>So in residential we have DTI, right, your debt to

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

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<v Speaker 2>DSCR debt service coverage ratio. That is the DTI of

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<v Speaker 2>the property. Right now, lenders have now started allowing over

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<v Speaker 2>the past couple of years, investors who want to buy

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<v Speaker 2>residential real estate use the same formula and calculation to

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<v Speaker 2>how we underwrite investment commercial properties. We can now use

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<v Speaker 2>it in the residential investments space as well. Right, So

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<v Speaker 2>when you're looking to do a true investment property, now,

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

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<v Speaker 2>looking at your W two's, your taxoo turns, your pay stubs.

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

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<v Speaker 2>All of that stuff is irrelevant. The only thing the

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<v Speaker 2>lender is really going to do from your personal side

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<v Speaker 2>is run your credit to make sure your credit is

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<v Speaker 2>above a six to twenty credit score. Right, and as

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<v Speaker 2>long as you're above a six twenty credit score, depending

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<v Speaker 2>on how big the deal is, in most cases, you

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

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<v Speaker 2>and we're looking at dscrs. So the bottom line is

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<v Speaker 2>is the property cash flowing? If the property is cash flowing,

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<v Speaker 2>then the lender will lend on this property. So when

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<v Speaker 2>you're looking at an investment property, do you need to

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<v Speaker 2>know how to analyze that property and underwrite it not

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<v Speaker 2>just as an investor, but also from a funding perspective,

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<v Speaker 2>because we need to know what you're operating cost sold?

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<v Speaker 2>What are the expenses of the property? Right? We already

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<v Speaker 2>know property taxes and assurance, but what other expenses are there?

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<v Speaker 2>Do you have to pay for? You know, your utilities.

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<v Speaker 2>Do you have to pay the light, build the gas,

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<v Speaker 2>the water, the sewage? Right? What is all these expenses?

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

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<v Speaker 2>how much is that percentage? Then you have to save

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<v Speaker 2>for your cap ex expenses, which is your capital expenditures

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<v Speaker 2>if anything breaks, right, We're going to put all of

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<v Speaker 2>this into the calculator to see exactly what those expenses

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

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<v Speaker 2>at the bottom line is we're looking at to make

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<v Speaker 2>a long story short and to put this whole the

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

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<v Speaker 2>want to make sure that the property is paying for

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<v Speaker 2>itself and the owners of that LLC are making at

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<v Speaker 2>least a twenty percent profit after all the expenses. That

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<v Speaker 2>is a one point too that DSCR ratio that the

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<v Speaker 2>lender is looking for, and if it does meet this requirement,

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<v Speaker 2>then the lender will lend on that property. Right So, lenders,

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

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<v Speaker 2>it is much easier to get approved and get funding

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<v Speaker 2>for investment properties than it is for your first home.

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<v Speaker 2>Much easier. There's not as much paperwork, there's not a

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<v Speaker 2>lot of hassle with it, as long as you know

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<v Speaker 2>how to present the numbers to the lender properly and

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<v Speaker 2>not over exaggerating them to try to make the deal work,

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<v Speaker 2>because we're going to do our own due diligence and

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<v Speaker 2>if that deal cash flows, and a cash flows property

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

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<v Speaker 2>DSc ALL loan, this is going to require at a

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<v Speaker 2>very minimum, a minimum down payment of twenty percent if

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<v Speaker 2>it meets the DSR requirement of one point two or percent.

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<v Speaker 2>If it doesn't meet that requirement, then the lenda will

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<v Speaker 2>require you to put more money down. So this type

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<v Speaker 2>of loan is strictly for live men, not for freshmen.

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<v Speaker 2>If you ain't got the money, say hell.

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<v Speaker 4>No, they're gonna want their money rain sleep hell So

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<v Speaker 4>that's a no rest in peace all these rules.

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<v Speaker 2>Man, it's a biggie okay, refinancing.

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<v Speaker 4>Want to talk about that, yeah.

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<v Speaker 2>I mean we could, we could talk. We could talk

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<v Speaker 2>about that, or we can. We want to take some

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<v Speaker 2>questions about this cause I saw a thousand and one questions.

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<v Speaker 3>Yeah, I mean you saw some if you want, yeah,

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<v Speaker 3>go ahead, man, all right, questions please.

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<v Speaker 2>So already and so somebody asks, Rashida says, the minimum

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<v Speaker 2>down payment of twenty percent. Yes, it's twenty percent, And

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<v Speaker 2>I want to be clear again on that, only if

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<v Speaker 2>it meets the one point two DSR requirement. So just

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<v Speaker 2>because the minimum down payment is there, it doesn't mean

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<v Speaker 2>that that property will cash flow out of it, right,

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<v Speaker 2>So you might have to put twenty five percent, you

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<v Speaker 2>might have to put thirty percent. Whatever it takes to

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<v Speaker 2>get that property to DNCR and the cash flow then

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

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<v Speaker 2>to talk about DSCR because I saw this question come

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<v Speaker 2>up earlier is about the LLC. The LLC does not

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<v Speaker 2>have to be established for two years. The LLC does

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<v Speaker 2>not need business credit. The LLC could be a brand

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<v Speaker 2>new LLC. You can open up the LLC on Monday

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<v Speaker 2>and get into a contract on Friday with that brand

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<v Speaker 2>new LLC. Okay, let's be very clear. It could be

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<v Speaker 2>a brand new LLC because lenders know investors will will

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<v Speaker 2>use multiple different LLCs for each investment property they buy.

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<v Speaker 2>So you have to understand that that you do not

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<v Speaker 2>need to established business credit. It doesn't need to be

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<v Speaker 2>something that's been in the long standard because I get

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<v Speaker 2>that question all the time, so I just want to

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<v Speaker 2>throw that out there real quick. What else you said

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<v Speaker 2>something about refinancing, right shotty, I think that real quick.

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<v Speaker 3>Before we go to refinance. Somebody was asking, is there

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<v Speaker 3>a difference between this and a hard money loan? Because

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<v Speaker 3>it sounds like the similarities.

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<v Speaker 2>Can we draw a similar difference. It's it's a big difference.

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<v Speaker 2>It's it's nothing. It's separated apart from hard money. Right,

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<v Speaker 2>hard money is one thing. Ds CR is one thing. Right.

0:13:39.280 --> 0:13:43.080
<v Speaker 2>DNCR loans doesn't have rehab money attached to it. The

0:13:43.200 --> 0:13:48.800
<v Speaker 2>ds CR loan is for rental stable rental properties. It's

0:13:48.840 --> 0:13:52.080
<v Speaker 2>not for rehabbing. When you want to buy a rehab

0:13:52.200 --> 0:13:58.520
<v Speaker 2>and you do your bird strategy right, buy, renovate, refinance, rent,

0:13:59.080 --> 0:14:03.680
<v Speaker 2>repeat right. The DSc loan, the DSCR loan is used

0:14:03.679 --> 0:14:06.800
<v Speaker 2>to refinance out of your hard money loan, the hard

0:14:06.840 --> 0:14:10.679
<v Speaker 2>money loan, and again that's different forms and calculations. Some

0:14:11.160 --> 0:14:14.960
<v Speaker 2>you need to be at sixty five seventy percent max ARV.

0:14:15.480 --> 0:14:18.400
<v Speaker 2>ARV is your after renovated value. But you know, I

0:14:18.400 --> 0:14:21.280
<v Speaker 2>would recommend if you can get fifty five sixty percent

0:14:21.520 --> 0:14:24.000
<v Speaker 2>ARV on your on your hard money deal, it's going

0:14:24.080 --> 0:14:26.040
<v Speaker 2>to make it easier for you to exit out of

0:14:26.040 --> 0:14:30.000
<v Speaker 2>that hard money and go into your refinance. Because when

0:14:30.000 --> 0:14:33.400
<v Speaker 2>you're doing a refinance on the DSCR loan, your loan

0:14:33.440 --> 0:14:37.960
<v Speaker 2>to value, your loan to value your LTV drops to

0:14:38.200 --> 0:14:42.600
<v Speaker 2>seventy percent. In some cases maybe seventy five percent LTV,

0:14:43.160 --> 0:14:46.160
<v Speaker 2>but most you most of the time I tell my

0:14:46.240 --> 0:14:52.720
<v Speaker 2>people my mentors use seventy percent ARV because you need

0:14:52.760 --> 0:14:55.440
<v Speaker 2>to be able to I mean seventy percent as your

0:14:55.600 --> 0:14:59.440
<v Speaker 2>max period because if you at seventy five, you only

0:14:59.480 --> 0:15:01.240
<v Speaker 2>have a five and cushion to get out of that

0:15:01.640 --> 0:15:03.800
<v Speaker 2>hard money to refinance. So if you start off at

0:15:03.800 --> 0:15:07.760
<v Speaker 2>fifty five sixty percent ARV on your on your your

0:15:07.800 --> 0:15:11.000
<v Speaker 2>rehab project, now you have a ten to fifteen percent

0:15:11.160 --> 0:15:14.760
<v Speaker 2>margin buffer that you can now refinance, maybe pull a

0:15:14.800 --> 0:15:17.200
<v Speaker 2>little capital out of it too, and now go into

0:15:17.200 --> 0:15:20.400
<v Speaker 2>your permanent finance and with the DsCl low. So your

0:15:20.440 --> 0:15:22.520
<v Speaker 2>hard money loan is going to be used to fix

0:15:22.600 --> 0:15:25.560
<v Speaker 2>buy the property and fix it up. But remember hard money,

0:15:25.600 --> 0:15:28.720
<v Speaker 2>the terms are going to be typically twelve months. You

0:15:28.760 --> 0:15:30.920
<v Speaker 2>can get past twelve months, but then it's going to

0:15:31.000 --> 0:15:33.600
<v Speaker 2>get more expensive what you're gonna have to pay to

0:15:33.680 --> 0:15:37.760
<v Speaker 2>keep extending that hard money loan. Right, but again this

0:15:37.840 --> 0:15:41.480
<v Speaker 2>is strictly for live men, not for freshmen. Flips flop

0:15:41.600 --> 0:15:45.640
<v Speaker 2>every day, b every single day. So it's very important

0:15:45.680 --> 0:15:48.280
<v Speaker 2>that you know your numbers, you know exactly what the

0:15:48.320 --> 0:15:52.440
<v Speaker 2>hell you're doing, because these construction costs can add up

0:15:53.000 --> 0:15:57.400
<v Speaker 2>quickly fast, in a hurry.

0:15:57.200 --> 0:16:01.760
<v Speaker 4>Like flop flips flop every day you live.

0:16:02.360 --> 0:16:03.320
<v Speaker 2>Every day day.

0:16:05.600 --> 0:16:08.320
<v Speaker 1>You said, like, it's definitely look uppable.

0:16:09.600 --> 0:16:11.680
<v Speaker 2>Everything is figure outable.

0:16:11.920 --> 0:16:15.200
<v Speaker 5>Figure outable, that's what it was. An illegal alien from

0:16:15.200 --> 0:16:19.520
<v Speaker 5>Guatemala charged with raping a child in Massachusetts, an MS

0:16:19.600 --> 0:16:23.200
<v Speaker 5>thirteen gang member from Al Salvador accused of murdering a

0:16:23.240 --> 0:16:27.360
<v Speaker 5>Texas man of Venezuelan charged with filming and selling child

0:16:27.440 --> 0:16:31.160
<v Speaker 5>pornography in Michigan. These are just some of the heinous

0:16:31.240 --> 0:16:35.280
<v Speaker 5>migrant criminals caught because of President Donald J. Trump's leadership.

0:16:35.600 --> 0:16:39.200
<v Speaker 5>I'm Christy Noman, the United States Secretary of Homeland Security.

0:16:39.520 --> 0:16:43.280
<v Speaker 5>Under President Trump, attempted illegal border crossings are at the

0:16:43.320 --> 0:16:47.200
<v Speaker 5>lowest levels ever recorded, and over one hundred thousand illegal

0:16:47.240 --> 0:16:51.040
<v Speaker 5>aliens have been arrested. If you are here illegally, your

0:16:51.160 --> 0:16:55.280
<v Speaker 5>next you will be fine nearly one thousand dollars a day, imprisoned,

0:16:55.560 --> 0:16:59.240
<v Speaker 5>and deported. You will never return. But if you register

0:16:59.520 --> 0:17:02.680
<v Speaker 5>using our CBP home app and leave now, you could

0:17:02.680 --> 0:17:06.840
<v Speaker 5>be allowed to return legally. Do what's right. Leave now.

0:17:07.119 --> 0:17:11.920
<v Speaker 5>Under President Trump, America's laws, border and families will be protected.

0:17:12.040 --> 0:17:14.159
<v Speaker 2>Sponsored by the United States Department of Homeland Security,