Portfolio lender, Conventional loan

[Catherine Javier]

I am new to BP and trying to dive into Real Estate. This will be our first Rental hopefully!

My spouse and I offered on a Duplex that we think would cashflow (based on the computations used in BP).

We both just started our W2 jobs as travel nurses last Nov 2021. The lender that we spoke to said that usually lenders would need atleast 12 mos on that certain job. We have been Staff nurses for over a year but only 2 mos as travel nurses. This lender said that 1 option is to use a Portfolio lender which will not check our Salary and Debt to income ratio, (If we understood Correctly). The interest were higher and gives us less cash flow. Also this lender said that we can buy it under our LLC.

Certain things I want to clarify since We are new to this:

1. Can we really purchase the Duplex under an LLC using a Portfolio Lender?

2. Is 7% a good interest rate if using a Portfolio Lender?

3. If we go ahead and use a portfolio lender, put this duplex under the LLC and eventually refinance, can we refi using conventional?

4. And will conventional loan allow that it is under LLC during refi?

Thank you very much!

[Blake A. Rivers]

@CatherineJavier 

1. I think a private lender is more of what your previous lender is intending to say. A portfolio lender is going to lend on multiple properties and not a single duplex. Most private lenders are also portfolio lenders.

Private lenders like Civic, LendingHome, LendingOne & FOA look at the properties DSCR (rental amount/PITIA) and your current rental holdings to qualify you for a rental loan.

2. Most private lenders are offering rates between 4%- 5.5% on long term rental loans but require ownership of a rental before being able to utilize the loan.

3. When you put a loan in your LLC you can refinance into a conventional loan in your personal name. You may have to pay transfer taxes on each closing. I did not answer 4 as I only know the perspective of the private lending industry and I don't want to give you misinformation.

Hope this helps.