BiggerPockets

No, after trying fairly hard earlier this year. Can we expand the question to houses under $50k?

$27,800 on a 5 year balloon @ 5%, 20 year amortization. Very small, very local bank.

Most of the lenders I have done loans with have either a $50k or $75k minimum loan amount. However, I recently spoke with Union Bank and they advised that they do portfolio loans and do not have a minimum loan amount. You might check with them to see if they do loans in your area.

OK, thanks, I'm not looking for a bank referral, just interested in small bank practices across the land. These local banks just loan in their own market areas, so referrals from other markets don't work. The rule of thumb now is that local banks only lend in their market area, and only lend to area residents.

@Ryan B. has a good lender, as I recalled from his prior posts, and he confirmed that. In fact, I wasn't sure if ANYONE besides him would respond that they were getting these loans. @Chris Martin is getting blanket loans with small properties, though with very low LTV.

Brad mentioned a Fannie Mae lender that could do smaller loans, but for this survey I was only interested in local bank and CU portfolio lenders. I know that Citimortgage has told me that they'll do up to 10 investor loans with no minimum.

So just a couple of examples of true bank portfolio lending on cheaper homes. That's about what I expected. If anyone else replies they've had success, has anyone been able to "sell" this concept to a bank that otherwise had policies in place that didn't accommodate this type of lending?

Originally posted by Chris L.:
Hi David,
I just purchased 42 homes for 1.1M. Borrowed 750K, 4.875%, 15 yr AM, 5 yr balloon.
Local bank.
Only one bank in our area doing these kinds of loans that I have found.
Chris

Chris, do you have a history with this bank?

Originally posted by Steve Babiak:
Chris Martin - when you do these blanket loans, do you have the agreement set up where there is some amount that will release a single piece of collateral (so that if a good offer comes in you can sell)?

The first time, we didn't. It is set up as a true collateralize pool over about a dozen properties. Implementation wise it is a single D-T w/ Future Advance Clause, secured by tracts (exhibits) in a similar setup as you might see for a developer (even though we aren't a developer). We could potentially release single parcels if we want, but there is no explicit "agreement" per the D-T that the lender do so. Instead, we take draws (to acquire), fix, lease and stabilize properties, then group up a tranche (for lack of a better word) and "backfill" the pool from proceeds of the tranche.

From the outside, some may say this tranche stuff just looks like a cash-out refi. Nothing special. But not really. First, no cash is involved. Effectively, we convert Short Term Debt (from the pool) to LT Debt (5 or 7 yr.) by creating (originating) a set of new single parcel D-Ts for each stabilized property. Also, there was no real initial financing (no D-T) since funds came from "in-house" via the collateralized pool. The net effect is we look like "cash" buyers even though the acquisition is 100% financed.

Originally posted by Chris L.:
Hi John,
Only on the sell side. I routinely coach people into the rental business. (At no charge by the way.) These people normally have money for the down payment but do not have money to purchase and rehab. So, it makes sense for them to purchase our rehabbed homes with tenants. We usually only make about 10% on these deals but it helps our friends get started. The 10% is really the minimum I need to make in order to buy a new property, rehab it, and put in a renter. That just covers the down time that I have in selling and buying until the new renter is paying.
Chris

You are a good benevolent guy to sell these houses for that. Most "turnkey operators" that I've come across in this price range like to buy/rehab for 15K-20K, and sell for a 10-15K profit, a bit more than your 10% margin.

But you're dead-on that the ability to get full up-front financing on an already rehabbed property is a huge help in this financing environment that frowns on cash-out refi's and such. It is one of the chief benefits of the turnkey vs DIY model of acquiring rental properties.

Hi David,
These properties were rehabbed and rented. I bought them from a retiring landlord couple.
The bank did partial appraisals on these properties. Cost me $5500.
They will also do cash out refi's. However, this bank will only loan in the NE Indiana area and you actually have to live here. About 3yrs ago, a BP member was going to buy 5 of our properties. I was coordinating everything and he was just about to buy a ticket to fly in and my banker caught that he did not live here. You not only have to buy here but you have to live here. I do not understand that criteria at all.

As far as helping others, I really enjoy doing that. If I can create a win scenario for them and a break even for me then I am all for that. My most recent student was a 21 yr old friend of my son. He bought 3 of our properties for 87K. He is a college student but has saved his money and had almost 25K in the bank. He was making about $10 per month in interest from the bank. After everything is calculated, he now makes about $500 per month from the rental properties.

Chris

And local banks want the full relationship with the local investor. They are thinking long term depository relationships.

Hey Bryce,
I will have the loan paid for in less than 5 yrs most likely within one year. However, should that not come together I will refi the loan.
Chris