10% Down on Jumbo Loan Needed?

Question

Looking at an STR property in Santa Barbara. Estimated purchase price $4.5M. Estimated Revenue 300+ Are there any products available that would allow me to put 10% down?

Lucas Martinez · Answer

It is going to be difficult to find a lender who will offer that on an STR, as many lenders don't even allow STR income in their underwriting, and those that will typically want 20-25% down. But that's not to say it's impossible. I'm assuming you're also aware of the stringent STR laws in Santa Barbara? STRs are difficult to do legally, but it is definitely possible. I have 4 of my own here and they're great. But you definitely need to do your due diligence. I have also gone through the wringer on financing mine, so I'm happy to chat about that and offer all the local lending (commercial and residential) resources I have. Just shoot me a DM.

Spencer Cole · Answer

I can connect you with a local lender who should be able to do this.

Spencer Cole · Answer

I spoke with one of my lender friends about your situation and he said "20% down is probably as little a down payment as you can get away with, especially on a rental property with a loan amount that high. You may even need 30% down to get any kind of decent rate."He didn’t find anything even from my lenders that warehouse their loans that would do 10% down.The numbers seem tight if you have 4k a month in property taxes and probably somewhere in the neighborhood of a 24k mortgage payment every month. That’s over 300k in expenses.

You might want to consider using private money, but I'd expect there rate to be higher.

Good luck!

Lucas Martinez · Answer

Just keep in mind that it is a fluid situation. STRs are not allowed by law in the coastal zone, they are simply unregulated as of now due to the recent court ruling. Meaning the City could still impose regulations down the road that satisfy the CCC. Similar situation in the County. The only other thing I would say is that if you’re only projecting around $300k, 4.5 is way too much to spend. You can generate 300k on a property that costs less than half of that in this market.

Shoot me a DM and I can provide lender contact info.

Carl N. · Answer

Thank you. That would be great. Yes, this property is within the coastal commission zone so would qualify automatically based on that.

10% Down on Jumbo Loan Needed?

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