I am looking into purchasing a second investment property within the next month and am interested in some advice on the method of finance. The first property was paid for with cash (close in Aug) and have since transferred it to my LLC. My credit is great and mortgage approval should not be an issue (currently have one mortgage on my personal residence). I was hoping to place down as small amount of cash as possible on the loan. Also, would likely add $5-10k in renovations into the house before renting and was unsure if options were available to add this amount to the mortgage total. Purchase price in low $40k, appraisal $60s, monthly rent $850.
Any thoughts/comments on the best approach for #2 is GREATLY appreciated.
@Brandon McCraney You're going to have to keep your LTV around 75 - 80%. You could try to get an FHA with 5% down. That's about as low as you're going to get through most banks. It sounds like you will be looking to grow you portfolio. My best recommendation is that you find a small, local portfolio lender now, while you're still under the number of mortgages that start to create issue. Start building those relationships now. Get to know those guys. Remember, you're looking for small banks or credit unions who are going to keep your loan on their books and not package & sell it. These are the guys who are going to help you get past 4 mortgages and then 10. Build those relationships now, and it will pay off in spades later on.
@ Hattie Dizmond - Thank you for the comment. I am investing in properties in another State. Would you recommend building relationship locally or in the State where the property is located?
I would build them locally. In my opinion, there is little value to trying to work with a lender who is in another area. You will have an easier time meeting with them and building that relationship, if you're where you can take them to lunch. :)
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