BiggerPockets

I need help looking for a lender that will do a blanket loan (commercial) for residential properties (7 already producing rental houses in Shelby County TN). My lender just changed their guidelines again making my current project undoable.

Here is the specifics of the deal. Appraised Value 350K.
Buying the homes for 285K, seller willing to carry a second for 25% of the purchase price. Debt Coverage Ration should be around 1.37 to 1.58 depending on rate and term.

Any help or leads would be greatly appreciative.

I had one, but the lender changed their guidelines to where I would need 10% down which would make me cash capital poor. Needless to say, I was about a week late on getting my deal done for them to finance the deal.

Ben,

You are correct, I wanted the seller's second to be my down payment.

The original contract had me buying each house for 35K (245K in all).
The deal that I had worked out with the seller is to carry a 7% note for 5 years then reset the note to the 5 year treasury bond + 350 basis for another 5 years, thus matching the commercial loan terms. Foreclousers in that neighborhood are selling for about 30K needing 8-12K in work. These properties need minimal work if any and were already rented at $650 a piece, about $50 less than market rate (I based my decision to buy on the $650 rate).

After I got my good faith estimate from the lender, I needed $20K to close the deal which would of put me into a cash poor situation I did not want to have.

So while trying to figure out what to do, two weeks went by. Two days ago, I came up with the idea to renogoiated the contract for $285K where the seller would pay upto 20K in closing cost and I would receive 20K in decorating/repair allowance due at closing. Seller agreed and the mortage broker said everything is ok with the concept and with the lender. So while I am waiting on the papers to come from the mortgage broker, the broker gets a fax from the lender saying lending guidelines changed stating all borrowers must have 10% down from them.

Even if this deal falls through, at least I learned something. Other deals are out there and I will find them.

Blanket Loans

Up to 80% ltv for cash out. As with all commercial loans, this is based on cash flow.

Rate is 7.0%, amortized over 20 or 25 years.

Purchase is 80% ltv, and a seller held second of 10% is allowed=90% cltv.

Minimum credit score is 650. Minimum loan amount is $500k. No maximum

Minimum value is $100k per property and may vary.

SFR and up-must be at least 5 homes or 5 units total in the loan.

Borrower must own properties for at least 8 months.

Seller concession allowed.

Debt service coverage ratio of at least 1.25.

At closing partial release will be defined in the note.

The use of the proceeds for cash out needs to be documented.

Need a complete file-3 years tax returns, personal financial statement, etc.


Douglas Wania, Real Estate Investor
Daniel Garibaldi, Real Estate Investor
Fidelity Home Buyers, USA
[REMOVED]

Terry,

Your problem is a seasoning issue. You only owned the properties for less than 6 months. I would keep trying. Kismet Mortgage in Memphis, TN, they are still closing commercial loan for SFH. However, the loans they are closing are not 100% of value. I bet, after the seasoning issue, you can get a loan from them.

Terry,

I'm so sick of this same exact thing... I just want to scream. Small banks are killing us responsible and obligated people trying to make a living.

Not too be the dummy of the room, but I just had to chime in. I've been searching for the same qualities behind a blanket mortgage. There are plenty of references and definition to the concept the loan, but not a sole to actually do one. IF everyone claims that they exist, will they please start of a list or sticky of who these lenders are?

Curt,

Sorry to hear about yoru experience with Kismet.

They have been good for me and a few friends. Back when the market freezed up, Eric saved me from a HML who lent me money for a rehab where my exit strategy was to do a cash out refi. the HML was 20 days away from foreclosing on me when I final got my loan. I had tried for 3 months prior to Kismet.

Local lenders might do a line of credit where a dollar amount of loans can be extended as a maximum. The lender would underwrite everything in the usual way but it would be a fast track to a long term relationship that would be profitable.