I need help and advice for financing rentals
Maybe you can try using Bigger Pockets calculators. It can help you justify if your investment is worth to keep or sell it.
maybe look for a mortgage broker to help shop good rates for you?
@Charles Wilkes Where are you located?
Check with traditional lenders - local banks, national banks, credit unions.
Find out what their requirements are and how you qualify.
Most banks will loan up to 10 rental properties and it's the cheapest long term money you will find.
Good luck to you!
@Charles Wilkes without income you will have to use a portfolio loan or Hard Money(not recommended). Portfolio lenders will use the rental income to qualify. I would expect to put down 25% and stating rates a couple of points higher than conventional
Have you read much on the forum/blog here? Have you learned about BRRRR?? Good way to keep your money working for you. Also, I feel like the main issue you will run into is a lack of income. From my experience that is a pretty big deal for the lenders.
Originally posted by @Charles Wilkes:
Hello, I need some advice on how and where to look for financing my rental properties while still keeping them profitable with good cash flow. Me, great credit over 800, shows very little income over the last 6-7 years and has about 250k to work with. I'm trying to figure out how, and where, to finance my rental purchases with very little income on the books and how to keep my mortgage payments down so I can still make a monthly profit of each of my properties. Thank you in advance for you advice.
Local banks is one option. Commercial or hard money as others have said. Don't know too much about commercial. I know HML sometimes have interest only loans 3 to 5 years which can help cash flow a little better.
#2 General Landlording & Rental Properties Contributor
Best option is to partner with someone that has a high paying W2 to qualify for financing. Or, to go it alone, the logical solution is to get a job yourself.
@Charles Wilkes if you are purchasing an investment property you would qualify on the rental income of the property you are purchasing. The appraiser would come up with a proposed rent on the property and that would be used to qualify. The lender would want the rental payments to be higher than the mortgage payments.
Charles here is what I have setup and is working amazing for me over the last 3.4 years specifically. We are similar in that I started a homebuilding company in 2009 and have been a residential developer for nearly 20 years . Far and away I favor investing in SFR over all other facets of our companies .
1.) Shop a commercial lender preferably a community bank or similar with assets of under 1B as they have more flexibility. I recommend minimum 2/3 although you may already have contacts from your previous experience which if this is the case a no brainer to reestablish those relationships.
2.) Obtain 2 lines of credit - first one is for cash purchases only.Eg... I went under contract on a SFR Friday after T giving for 65k which I close this Thursday. Bank giving me the entire 65k . I put in 8-10k myself take me about 2 weeks all cosmetic work.
3.) Obtain 2nd LOC for 5-7 year commercial loans. In the case above the home will appraise for 90k . I pay the 65 off the first LOC, get 7k back out of my 8-10 k and then repeat. Rarely do I not get all my rehab money back as bank gives me 80% of appraised value or 100% of my costs whichever is lower. In this case deal way too ez to pass up.
Important to know a few things IMHO about myself and other posts on this thread. Charles I disagree with the partner approach as you already have funds and skillset .Next its' Way way too difficult to obtain secondary market money in my situation and it sounds like where you wish to be by scaling. Several reasons for this - low W-2 / AGI vs commercial lenders add back in depreciation -giving etc...Unsure about secondary market financing. Next is the speed of which you wish to scale. If your wanting 1/2 props / year than secondary market may work. If not then commercial loans ignore the 6 month waiting period for you to get your rehab funds back -
Simply put apply 1-3 and then repeat. We now have purchased about 35 over the last few years sold a small amount and now are sitting around 30. Avg cash flow / door is $300/ month. All loans are on now 6/13 fully amortized loans. All bc props no section 8 props. I also am now building on duplex lots I purchased during the correction from a lender and am developing 4 family rentals. Again a no brainer with your skillset and background IMHO.
Let me know how it works out - best wishes moving forward.
Charles my pleasure. Keep me posted and let me know if I can help moving forward just PM me and we can converse!
as a rule of thumb. If I am not making $1000.00 per $100,000.00 I am not making any money. It is a good rule of thumb and will get you ahead as well. Look at what you can improve in order to get those deals and prices as well to get to that value. I always make sure I am making at least that.