Loans

33 Replies

After coming up with my freedom number, realized how many units I would need to hit that number. I have 4 real estate loans currently. How is it possible to get 10, 20 or 50 loans? Are the loans considered commercial? Also, buy and hold at my price range is very difficult in my area, so I have been looking into turnkey companies in Kansas City or Indiana. Because I am going to buy turn key or quasi turnkey I will have to get a loan and wouldn't be able to do creative financing. Can anybody chime in on how to get financing for 10 + properties.  Thanks,

It's all about relationships. Larger banks will probably not give you a loan because they're just flipping the note. That's why it's important to have connections with smaller banks, many of whom keep the financing and make money off the spread. These smaller banks/credit unions would loan to you.

I offer a partnership opportunity in Phoenix, which my investors and I consider a step up from the normal turn-key/property manager model. Lets connect and chat on the phone about your situation.

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As mentioned, find a local bank who doesn't sell off the loans. Because they keep them, they have more flexibility with underwriting and other regulations. Also, there are private money lending companies for investors who will loan on rentals and they don't care how many you have. 

Thanks Mike. We are both on each of the 4 loans. I will have to look into portfolio lending. Are the interest rates and fees typically higher?

Thanks Adrien. Can I use a bank in my state to buy a property that is out of state, or do I have to use a bank in the same state as the property?

I PM'd you with a local Indianapolis credit union who will refinance in to one portfolio loan for local properries. I have seen them work with out of area investors, but they've always had local LLC's.

@Ross Denman   I am in Seymour Indiana and I would also like to see that information.

I am getting started and I have been learning all I can.  I am in the process of purchasing a second home, and I don't really understand how to obtain multiple loans for property. 

@Brian Ewell One pretty common strategy is filling up those loans in the conventional bucket and then refi into a commercial loan (blanket loan) where you can package 4-8 properties into one loan. Then rinse and repeat. Colony American Capital has a couple programs both on the individual property side and blanket loan program.  

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Originally posted by @David O. :

@Brian Ewell One pretty common strategy is filling up those loans in the conventional bucket and then refi into a commercial loan (blanket loan) where you can package 4-8 properties into one loan. Then rinse and repeat. Colony American Capital has a couple programs both on the individual property side and blanket loan program.  

 Thanks David.

I am in the process of refinancing the 4 loans with great rates. I wish I knew about this program sooner. I could possibly pull 3 of these loans. By chance do you know what the interest rate and charges would be? Do they do commercial loans for new purchases?

Brian

I just briefly looked at Colony American Capital's website and it seems like they only have terms for 5 or 10 years. This is too short of a term for me. I need 15, 20 year terms.

@Brian Ewell everyone seems to think there is some law that states you can't get more than 4 loans (or 6 or 8 or whatever the FHA mandate is now). This is simply not true. Yes, there is a limit to how many FHA backed loans you can get, but there is no limit to conventional loans. Yes, you will pay more in interest and you will have to put more money down for conventional loans, but that is the price we pay as investors.

If your lender doesn't do conventional loans on investment properties, then you need to find a new lender.  

As mentioned by others, you can also start looking at blanket loans.  These are considered commercial loans and again you will be paying more interest, but this is the way you will eventually want to go.

You really need to find a lender that can do all of this for you in such a way that you are continually buying a new property with an FHA loan and once that investment is seasoned (6 months to a year depending on your lender and a lot of other factors) you move it to your blanket loan and you are then freed up to buy your next investment with an FHA loan again.

Does this make sense?  

Originally posted by @Chris Dawson :

@Brian Ewell everyone seems to think there is some law that states you can't get more than 4 loans (or 6 or 8 or whatever the FHA mandate is now). This is simply not true. Yes, there is a limit to how many FHA backed loans you can get, but there is no limit to conventional loans. Yes, you will pay more in interest and you will have to put more money down for conventional loans, but that is the price we pay as investors.

If your lender doesn't do conventional loans on investment properties, then you need to find a new lender.  

As mentioned by others, you can also start looking at blanket loans.  These are considered commercial loans and again you will be paying more interest, but this is the way you will eventually want to go.

You really need to find a lender that can do all of this for you in such a way that you are continually buying a new property with an FHA loan and once that investment is seasoned (6 months to a year depending on your lender and a lot of other factors) you move it to your blanket loan and you are then freed up to buy your next investment with an FHA loan again.

Does this make sense?  

 Thanks Chris. This makes a lot of sense. My next question is do I need to find a lender in Kansas City or Indianapolis, if this is where I want to buy properties? Or can I go to my local small bank and see if they will lend on properties out of my state?

@Ross Denman  I've contacted the local credit unions in Indy and you either have to be a resident or work a certain time period in the state for them to consider lending to you.  Can you please forward me the contact info to this credit union?  Thank you!

Leo

I am also interested in a bank that will work the concept mentioned above. I live in the Indianapolis area. Any recommendations are greatly appreciated. Thanks!

Owner financing is the way to go if you can come to decent terms. You don't pay closing fees until the end of the last payment. Of course you'll have to show someone that they'll get much more money over time and there's a reason why banks are in business. I found some long-term hard money lenders through real estate meetups, they charge 8-12% though. I found a number of lenders through Craigslist... but I would do my homework on those guys. That might help you out while you're building relationships with smaller banks/credit unions.

Hope something there helps!