Dallas, TX · Member since 2014 · 650 posts · 53 votes
I have a relatively small rental portfolio by properties, but have come across an amazing multi-family.
I'm typically very conservative in my investments, but to make the 20 or 25% downpayment, I don't want to sell stocks or borrow from my 401k.
1) have you ever taken a "personal loan" from a bank to help fund a downpayment? Typically the interest rates are around 7% for a 36 month term.
2) if you've done this, have you taken out multiple? Banks offer maximum amounts sometimes in the $35,000 range or $50,000 range depending on the bank, maybe more. Could I, for example, take $35,000 from one bank and take out another loan of $50,000 from another bank to make up $85,000 of the 25% downpayment?
My credit score is will over 820 and i have a 7 figure portfolio and could pay the $85,000 back in probably 10 months pretty easily without having to sell stocks or refinance properties to quickly get into this multi family investment.
@Steve S. Yes that would work but is will affect your credit score and of course pay with debt to income. A better way is to do a blanket loan; assuming you have equity in your other properties.
On Mondy, call you bank you deal with and ask them if they would give a loan to 75% for the new property and take a second mortgage for the down payment as a blanket loan on your other properties?
@Steve S. Yes that would work but is will affect your credit score and of course pay with debt to income. A better way is to do a blanket loan; assuming you have equity in your other properties.
On Mondy, call you bank you deal with and ask them if they would give a loan to 75% for the new property and take a second mortgage for the down payment as a blanket loan on your other properties?
@Steve S. Yes that would work but is will affect your credit score and of course pay with debt to income. A better way is to do a blanket loan; assuming you have equity in your other properties.
On Mondy, call you bank you deal with and ask them if they would give a loan to 75% for the new property and take a second mortgage for the down payment as a blanket loan on your other properties?
This is very common in the banking industry.
My other properties have 30-40% equity inn them so I don't think the blanket loan is much of an option.
@Steve S. what is the total equity over all the properties? If it is greater than $85,000 then the bank will do the loan. Let me know after you talk to a least three local banks who do commercial loans.
Steve S. , go talk to a local bank that does portfolio lending (i.e will not sell mortgage your mortgage to Fannie/Freddie) and speak to someone in their residential dept.
You may need someone in the commercial dept who can do a
commercial line of credit across the other properties.
If that fails, seek a private lender.
There are also some brokerages (e.g Merrill Lynch) who will give you a loan against your non-retirement stock portfolio.
Since I've never done that, if I say YES to that, will that likely mean I won't be approved for the loan?
Saying NO, but actually using borrowed funds to fund part of the deal is lying but it seems like something that it is commonly done. Don't think I would be comfortable doing that.
@Steve S. why won't you borrow aginst your 401K? Now that I think about it, that might be the easiest way. 7% is not bad, remember you can write that interest off aginst the income you will produce with your property. This makes the most sense. Please let us know what happens.
@Steve S. why won't you borrow aginst your 401K? Now that I think about it, that might be the easiest way. 7% is not bad, remember you can write that interest off aginst the income you will produce with your property. This makes the most sense. Please let us know what happens.
Thank you,
I need to run the numbers but while I would be paying myself the interest on at most $50,000 (the max they allow you to borrow), I'd also be missing out on some company match $$
I'm also curious as to how a "Yes" answer is treated by Lenders. From other postings, it seems that using a Home (or other) Line of Credit is an extremely popular way of coming up with the deposit needed to keep investing. I'm guessing that "secured" borrowings (against OTHER property) don't raise any flags, but "unsecured" loans of any description do? But are those unsecured loans automatically disallowed to be part of ones deposit - or does it depend on how the customer's relationship is with the Bank? ie. "Nudge nudge, wink wink, say no more"...
Brent, it looks like you're repeating back to me what I've said in 100 other posts on here. :)
Yup, borrowed funds secured by some other real estate (like a 2nd mortgage) are fine.
Unsecured borrowed funds (or down payment gifts on non-owner occupied homes) are a no-no.
Or, if the borrowed funds are enough to buy the whole house and you don't need an Agency 30YF mortgage, then of course the mortgage rules don't matter at all.
@Steve S. why won't you borrow aginst your 401K? Now that I think about it, that might be the easiest way. 7% is not bad, remember you can write that interest off aginst the income you will produce with your property. This makes the most sense. Please let us know what happens.
Thank you,
I need to run the numbers but while I would be paying myself the interest on at most $50,000 (the max they allow you to borrow), I'd also be missing out on some company match $$
If you are missing out on company match then that's a deal killer, but you should still be able to contribute to 401K and in return receive the match. Please make sure that is the case.
Brent, it looks like you're repeating back to me what I've said in 100 other posts on here. :)
Yup, borrowed funds secured by some other real estate (like a 2nd mortgage) are fine.
Unsecured borrowed funds (or down payment gifts on non-owner occupied homes) are a no-no.
Or, if the borrowed funds are enough to buy the whole house and you don't need an Agency 30YF mortgage, then of course the mortgage rules don't matter at all.
Yeah - sometimes it takes more than 100 posts before enough BP folk get the message.
Mind you, given the secured vs unsecured differentiation, I reckon the "Is any part of the down payment borrowed?" question is far too generic - unless a "Yes" response is clarified further down the Application. Is it? Or does it THEN become a personal inquisition with the Loan Officer?...
Brent, it looks like you're repeating back to me what I've said in 100 other posts on here. :)
Yup, borrowed funds secured by some other real estate (like a 2nd mortgage) are fine.
Unsecured borrowed funds (or down payment gifts on non-owner occupied homes) are a no-no.
Or, if the borrowed funds are enough to buy the whole house and you don't need an Agency 30YF mortgage, then of course the mortgage rules don't matter at all.
Yeah - sometimes it takes more than 100 posts before enough BP folk get the message.
Mind you, given the secured vs unsecured differentiation, I reckon the "Is any part of the down payment borrowed?" question is far too generic - unless a "Yes" response is clarified further down the Application. Is it? Or does it THEN become a personal inquisition with the Loan Officer?...
Secured borrowed funds, we're going to ask for the note and deed of trust, and want to see that it's recorded with the county. We will hit your DTI with the payment.
Unsecured borrowed funds, if we know about it, yup inquisition time and very possibly a deal-breaker. Underwriters are going to start doing silly things like pretend money is not fungible, back the borrowed funds out of your assets to see if you still have enough money without using the borrowed funds, etc. It becomes a can of worms really quick.