Rental Property Investor · Acworth, GA · Member since 2020 · 70 posts · 25 votes
I am currently trying to find lenders that offer better than a 15 to 20% down payment for a conventional loan on two investment properties new build SFH in North Atlanta area.
So far I have been using the preferred lenders since they offer $2k from the lender and $2k from the builder towards closing costs, but it’s a 20% down payment.
I don’t close on these properties until June or July 2022 so please let me know if you know of any lenders that I could possibly use.
Investor · Saint Louis, MO · Member since 2014 · 25 posts · 7 votes
4y
Hey Kevin,
I'm in a different market, but have developed a relationship with a small local bank that only lends in their immediate area and they keep everything in house (portfolio loans). I pay a higher rate, but they will lend with 10% down and very easy process each time we want to purchase another one. I'd encourage you to look for small local banks or credit unions that might do something similar in your area.
Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
4y
Conventional loan guidelines are minimum 15% down payment on SFR investment properties. It is impossible for a 'conventional' loan to be less DP than that since at that point it is no longer a conventional loan.
Fort Lauderdale, FL · Member since 2018 · 289 posts · 342 votes
4y
@Kevin Lanphear hey Kevin, depends on what your goals are for the new builds and the exact loan product. Currently I’m building a 4/3 new build in Cape Coral. Total all in cost is about $265k and I financed It at around 3.6% with 10% down. I managed this through a 2nd home loan (vacation home loan) but there are rules. Technically speaking, there is a second home rider (a document/rule that you sign at closing) that states something the nature of “the home must be used and available to the borrower as a second home at least 14 days out of the year, For AT LEAST ONE YEAR from the date of execution of this rider. The way my loan product was setup, I did a construction to perm close on the front end back in July and the build is expected to be complete around next July, so 1 year. I spoke with my REA and according to the rider I’ve met the requirements. Rents right now are at about $2300 and climbing. Currently post construction appraisals are coming back at $340k-$410k depending on location of the property. If I play my cards right I will be able to do a cash out refi, still cash flow decently and take all my equity out to do it again. Probably planning to either rent as is or sell to get a nice chunk of capital and buy some other properties! I’d be happy to connect to share experiences. Good luck!
Rental Property Investor · Acworth, GA · Member since 2020 · 70 posts · 25 votes
4y
@Patrick Bavaro thanks. Yeah I’m fully aware of the 10% with a ‘second home’ aka vacation home. But these homes I want will be investment properties and won’t be considered as second homes, or else I would do that every time lol
Fort Lauderdale, FL · Member since 2018 · 289 posts · 342 votes
4y
@Kevin Lanphear and if you’re not, depending on the loan product if you close on the front end and it’s a year until your build is complete you also meet the requirements to rent LTR. I’d speak to your REA regardless.
Rental Property Investor · Acworth, GA · Member since 2020 · 70 posts · 25 votes
4y
@Patrick Bavaro yeah unfortunately the properties won't qualify under a STR. Not near any bodies of water or mountains or theme parks. Underwriting won't approve my locations as a second home aka STR.
That’s why I need some references to a lender that can offer 15% down for each of my new builds.
Fort Lauderdale, FL · Member since 2018 · 289 posts · 342 votes
4y
@Kevin Lanphear underwriting does need to know any plans for an STR as a 2nd home, plus there wouldn't be a qualification anyways. At the end of the build you can also just refi and potentially have the extra 10% of appreciation in this market to avoid PMI and therefore get out of the 2nd home mortgage. Just giving some different options that are outside the box
Rental Property Investor · Acworth, GA · Member since 2020 · 70 posts · 25 votes
4y
@Patrick Bavaro yeah I see what you’re saying but the 2 lenders I have been using told me I wouldn’t pass underwriting on them for a second home. I know that there’s gotta be some lenders out there that can offer 15% down with a conventional loan for investment properties.
Investor · Saint Louis, MO · Member since 2014 · 25 posts · 7 votes
4y
Hey Kevin,
I'm in a different market, but have developed a relationship with a small local bank that only lends in their immediate area and they keep everything in house (portfolio loans). I pay a higher rate, but they will lend with 10% down and very easy process each time we want to purchase another one. I'd encourage you to look for small local banks or credit unions that might do something similar in your area.
Did 20% down on the first one and then 10% on everything since then. Also I knew people in the bank personally, it’s been amazingly powerful for us to scale and only need 10% down to purchase. I’d bet others could develop this with smaller banks and developing a strong history with a property or two first.
Realtor · Cumming, GA · Member since 2018 · 158 posts · 127 votes
4y
Hey Kevin! Sounds like we operate in a similar area so we should connect. I do a portion of my agent business in Forsyth County area and then most of my business in the north Georgia STR markets.
I’m currently working on trying to answer the same lending question for myself and clients so please let us know if you find something.
I’m also in the process of networking with local banks to find lower down payment funding. Just takes one yes