In this episode Holly talks with top 200 lender Ken Starks. Ken has been in the mortgage and real estate fields for over 14 years, he has been featured in USA Today and The Wall Street Journal, he is a flipper with an investor mindset with 80 flip properties under his belt.
Ken has joined House Flip Masters to share his money strategies as well as to help us make sense of the various terms used regarding the money needed for your next investment.
Starks is a lender who deals with many types of loan options and he describes to us what hard money is all about. Hard money is high level loan backed by the asset and current market value or purchase price, whichever is lower. Although the name suggests otherwise hard money is easy to get but it has to do with the asset value.
Someone who is a hard moneylender might nor care about your credit score or your debt to income ratio (DTI) but you can expect a high interest rate on this type of loan. Some hard moneylenders will be able to help you acquire properties or even help you renovate them depending on their skills and the relationship that you have with them.
Holly and Ken discuss points on a hard money loan; points per loan can vary by lender and if you get a line of credit but they average around 2 points per loan. Starks advises that a way to void points is to go with a loan that has a higher interest rate if that fits for your property.
There are many types of loans that Ken deals with but the most noted is the niche program he has created to help someone who has more than 10 properties to acquire unlimited loans. Conventional loans with Fanny Mae, Freddy Mack, or FHA have limitations on the amount of properties that can be financed per investor. Ken’s advice to investors is that the right loan and the right lender will depend on the circumstance and you want a lender who is going to strategize with you.
When talking about getting another loan when you need a co-buyer Holly and Ken both agree that you need to partner up with people who have good credit and want to be passive to help you have more purchase power. But they remind us that before you put your name on a loan and lend your credit you need to know who you are doing business with, knowing their ethics and knowing that you can trust them is vitally important. Open communication is even more important because if the buyer misses a mortgage payment you are also responsible for that money. A co-borrower’s credit is affected if any good or bad circumstances occur within the life of that loan. Stark advises more over less control because it is your destiny.
Ken is not your typical lender; he is able to find the best way to find money for your investment. When searching for a new lender you need to ask questions of the lender and of yourself; what kind of volume do they do, what loan programs do they specialize in, what is their experience with investors, and most importantly are they the right choice for you.
If you are looking to refinance a property for whatever reason these are the actions steps that Starks advises you to keep in mind: how long have you been in your loan and what are your goals? If you have a high interest rate (4%+) on a 30-year primary now might be the time to have a refinance conversation.
To get in touch with Ken