Typical lending rates

34 Replies

I just want to chime in because I broker a lot deals with investors, and you can do better... but it is important to note that is consistent with where the market is right now for many investors and your relationship and experience with the lender is important as well... might not be worth burning a bridge or hard feelings over a quarter percent... just my thoughts.

I'd also pay attention to the posts by Jay H. as well, as he makes great points. It's not all about the rate... sometime it is actually more about what the loan costs. Big difference between in rate if you have $0 lender fees or $5000 in lender fees

Originally posted by @Shayne Whittington :

@Bo Kim

Thank you Bo,

ARV is one of my main focuses when looking at properties. But trying to find deals where the rents are also 1%+ of the ARV has been difficult. Are you finding that difficult too? And even when I do, it doesn't seem to cashflow well. I've Been trying to find 1.25% or high in rents.

 Hey Shayne,

In my markets of KC, IN, AR, meeting the 1% rule has been fairly easy in B class neighborhoods. In C class it can get high as 1.5 RV.

Originally posted by @Jay Hinrichs :
Originally posted by @Joe Splitrock:

@Shayne Whittington I just locked in a rate yesterday on a non-owner occupied conventional mortgage, 30 year fixed. My rate is 4.875 with no points and very low closing costs. I know others are getting a little lower with commercial loans, but they are only fixed for 5-7 years. I much prefer the security of 30 year fixed, but that may not be an option for some due to quantity of properties or unit quantity.

Rates are lower right now. I paid over 5% back in December. The interesting thing is that rates are lower now even though prime has not decreased. This signals that banks don't see rate hikes in the near future, which is based on what the fed stated.

I know many predict higher rates in the future, but I am not convinced. I think we are in a new age where fed manipulation of interest rates is used to stimulate the economy. For that reason, I don't see us returning to 6, 7 or 8% rates in the future. That being said, I like locking in long term, just to eliminate risk of loans coming due at a bad time.

ya I really do cringe when folks are buying rentals on 5 7 10 year balloons.. that did not end well in the GFC.

when U have all these fence sitters waiting for the crash to happen.. been waiting now what 3 plus years.. what they don't realize is when it does crash or we hit a recession period.. credit will be very tough.. most of those waiting wont be able to get a loan anyway as credit will be very very tough.. just like 09 to 2011 it was near impossible to get an investor loan.. so really all the fence sitters better be sitting on a boat load of cash if they think they are going to swoop in..  

I posted above that on the HUDS I see come through my desk.. buyers buying rentals  fee's are usually a point or 2 but it always adds up to about 4 to 6k per loan..  brokers and lenders cant stay in business on 1 point and no fees.. other wise they are getting paid on the back end in service release premiums that are build into your rate.. no way to run a lending business if you only bring in 1 points.. mean on a 100k loan that's 1k.. that no cut it..  

 It's really a matter of economy of scale. And what we're scaling is dollars. CFPB/Dodd-Frank compliance costs are the same several thousand dollars if it's a $100k loan or a $700k loan, but gross revenue is based just on loan amount. Since I left the banking world and started brokering (where I control the margins, etc), I've been defaulting to eating all lender fees aside from the appraisal (since that must be paid even if you back out of the deal) for loan amounts over $400k, and capped revenue at $600k (so if you borrow $900k then you're borrowing $300k for 'free'). $300k to $399k I'll eat some of them. By contrast, don't call me if you're fee sensitive for loan amounts below $100k, I'd be paying to do the loan if I ate the fees.

I am closing on a triplex soon, in Sonoma County, CA. Conventional 30 year is at 4.35% with a 2.25% points. There was an option of a 7/1 ARM at 4.2% also with 2.25% points. Unfortunately all other rates were higher. Good Luck

I am closing on a triplex soon, in Sonoma County, CA. 25% down Conventional 30 year with 25% down is at 4.35% with a 2.25% points. There was an option of a 7/1 ARM at 4.2% also with 2.25% points. Unfortunately all other rates were higher. Good Luck

Feel free to PM me there are multiple lenders offering these kind of rates at least to the Chicago market. 

@Shayne Whittington . Highly recommend AIM loan. They are based out of California but loan across the US. They are are great because they post their rates and give multiple options so you can choose rates vs points/charges for each loan type. You can also always check online on bankrate if you are going with long term rates in your personal name just to get an idea of where rates are. Obviously going with a commercial loan you would need to talk to local banks.

For the typical up to 10 limit residential loans, I used to go through a couple of local banks or large mortgage lenders in my city. Online lenders would have saved me 1/8-1/4 of a point per loan. If you want to scale up these differences can add up because what you buy now will be on future credit reports. Good luck.

Justin, What is you are planning on doing? 

Is your goal to live in one and rent the other 3? 

I am going to say something here that everyone will disagree with. I have been in the business for 35 Years. I have made tens of millions of dollars in real estate and lost 10s of millions of dollars in real estate when the market crashed in 2007 in Las Vegas. One of the things I learned through that extremely painful experience is that buy and hold investing is a high risk strategy. If you do not believe me ask those who bought to hold in Vegas back in 2005 and 2006.

The reason I mention this is that I am a big fan of two strategies. Flipping and Lending. In all of my 35+/- years of experience, I have seen the up and down cycles to real estate investing. If a market collapses. You DO NOT want to be holding assets. 

My two cents. I work with exclusive lenders all day long and we have many clients that are heavily involved in real estate. Let me know if you need any more adverse advice. LOL.

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