Hi,
I am looking into setting up 5 or 6 adult congregate living facilities in the Northern VA area. These are typically houses in the 400K - 800K range. With some modifications to meet code I expect to house up to 8 elderly adults in these homes. This will typically generate a rent roll in the $20K range, each house/ each month. The net (after ADL costs and piti) will be +10K mo per house. My delima is this.
I have a fico score around mid 600 range. I need to get a 95-100% LTV with no income for a NOO. I have a job/income but I do not think I can qualify with my current mortgage and debt ratio
Additionally, I have about 35K to stand the first one up but with carrying costs and the work to bring up to code I cannot make it work with a 90% LTV loan.
Anyone have a program that will fit this scenario.
First thing I would do is check out your CA dept of Social Services or Dept on Aging. these are the people (at least in VA) that license these things. You will get an idea of the requirements to get licensed. Here you have to take some classes and show responsibility.
Really the best thing to do is find some of these places in existance and call the owners. Every one of them I have talked to has been very helpful. There is not a feeling of competition because, at least here, they are turning people away.
Let me know how it goes. you can send me a private email if you want to keep in touch on your progress.
Some basic concerns I see with your post are that 100% NOO loans are getting harder and harder to find. (they are still out there, but with delinquency rates starting to show, guidelines are tightening up) Even if you are going full doc (which you said you can not) you should expect to have 680-700+ credit scores to qualify.
My other concern is that your goal is to take a residential loan for what will end up being a commercial property. Be cautious with this, as if you disclose your intentions to a residential lender, you will most surely be turned down. On the other hand, if you attempt to go commercial with your funding, the main factor will be the properties cash flow, but you should then be prepared to put 20% down (or 10% with a seller held 10% second).
I don’t mean to sound like a wet blanket, just jotting down my reactions to your inquiry.
Thanks for the feedback PA.
If I go commercial and it is decided on the rent roll will they be looking to lend based on 20% of the value of the rent roll. If that were the case I could more than finance the home cost. I would think that would be unlikely without a commercial history for them to pull from.
If I go as a investment/rental I’m back at 90%. I could manage 5% down but getting that combo with a no doc seems to be the problem.
Even a 95% NOO lno doc oan with the score you stated might be a stretch. However, there is a lender out there called Novastar who may be able to help you. What they do is average your three scores together. So this may help bring your score up high enough to qualify for the funding you are looking for. I think your plan makes sense though. I am doing a NOO condo loan this month where the buyer is doing the exact same thing. He buys it from HUD as a repo. Refurbishes it to VA standards for assisted living and the VA rents it back from him for a disabled veteran. He has several of these and makes tons of money.
thanks chistopher.
I’ll check them out. The market here is changing and sellers may be willing to hold a 2nd. For a long time they had the upper hand and you couldn’t get creative at all.
After reading your posting; if I am reading it correctly you are saying that you have access to a 100% LTV Stated Income NOO loan. For the benefit of everyone out there reading this site can you let us know what lender offers this product? Thanks in advance.
the no doc was the debt ratio issue. My income is good and debt low but it doesnt’ cover 2 mortgages. I was under the impression that untill the property was filled the income from the rental wound not count for the loan.
Anyway, if you have a resource for this loan that would be great. Post here or email me.
The investor clearly notes that they will have too high of a dti to qualify, especially seeing that the property will be vacant. Oh yeah, don’t forget about the negative cash flow restrictions that may come up with some lenders.
How is it that you will get a stated income program to work?
Thanks for all the info everyone. I really appreciate it. Just a couple of things
I’m not big on lying on legal documents. I’d rather pay a little higher rate on a no doc and refi in a year with the income from the property.
My income is steady and good +6fig, but I dont’ think it will support 2 mortgages in the 500k range.
I have the cash to carry for 6mo - yr and could go more but in this area 2-3 month is max. Also, after the first couple of patients are in place you have expenses covered. The problem comes in when I have to put 50K down. Then I don’t have the funds to carry the finance over 6mo or so.
I’m not real comfortable with that.
I’ll check with these guys and see what they can do. I don’t mind don’t ask dont’ tell but if they ask I don’t like lying. But that’s just my thing
Again, thanks for all the help. I really appreciate it.
Attention Investors - Please do not follow this advice. Putting something on your application that is not true is clearly fraud. Because a broker tells you it’s ok, doesn’t make it so. Same for brokers, if a lender’s account executive tells you to do it, that may not me the same advice their underwriter gives you.
An AE is just trying to get your client’s loan in and will never back you up if you got caught lying.
If you’re in office that you’ve seen hundreds of these then I’d suggest finding a new office.
Stated income programs are to reduce the amount of documentation needed, not to FUDGE a little.
No Doc loans do not list employment, income, or assets so there is nothing to misrepresent.