South Jersey, NJ · Member since 2014 · 104 posts · 9 votes
Hello everyone,
recently upgraded to Pro as I'm beginning to jump in on a full-time basis. I'm currently looking at 2-3-4plexes but I'm having a hard time securing financing as my previous career was more of a freelance type and didn't generate much/accurate/consistent paperwork.
Has anyone had similar experiences and could recommend lenders in the South Jersey area, or that don't mind lending there, that aren't as stringent when it comes to paperwok/income verification/tax docs? I've been told that the first loan is the hardest to acquire... the proverbial "catch 22".
I appreciate all suggestions and look forward to getting started!
Apartment Syndication · Southern California · Member since 2015 · 71 posts · 194 votes
10y
@Manuel Savorelli, what kind of leverage are you looking for? Once you get down to 65% LTV options open up a little bit. Also, you might want to consider upping your deal size. If you were looking at a 10 unit apartment deal, it's a commercial loan and the lender cares more about the cash flow of the asset, the net worth of the sponsor(s), and NOT your personal income. If you don't think you can take down a bigger deal on your own, consider finding a partner.
FWIW, I can understand the frustration. Because of the way I'm structured and the depreciation from apartments, I show very little taxable income. So, while I can easily get a $10 million commercial loan, I couldn't qualify for a $200k loan on a duplex!
Wholesaler · Brevard Co. Florida · Member since 2016 · 395 posts · 76 votes
10y
@Manuel Savorelli I am currently going through the process of getting approved for a quadplex and I want to share some of the information that I have received a long the way. I know you say your W-2 situation is less than desirable and I am not in that position so I can't speak to it, sorry.
I would recommend going to a small community bank and offer them the opportunity to add a multi-family property to their portfolio (the small banks love it). This is what a tiny little bank in Elmer, NJ (recommended by SJREI) has sent me on my deal.
If you qualify and the loan gets approved we could look at it as follows. Construction to permanent loan. Initial advance would be 75% of the lesser of the purchase price ($366,000) or “as is” appraised value. Then provide $50,000 (My estimated repairs) in construction funds which could be drawn for work in place that is confirmed by a third party inspector. We could then look to advance up to the $360,000 loan amount you listed when the project is complete as long as the “as complete” appraised value and your cash flow supports those numbers. Max loan to value is 75%.
I would recommend reaching out to Tim Anderson @ The First National Bank of Elmer and let him know what it is you're looking to do and establish a relationship. He is out of the office this up coming week. I tried to share his contact info but it wouldn't let me post if I did so you can message me if you want.
South Jersey, NJ · Member since 2014 · 104 posts · 9 votes
10y
thanks everyone...
Does anyone have any thoughts re using a HELOC to finance 1st multi deal?
@Kurt Kwart - Thanks for the connect, I'll consider HML. BTW, I look forward to meeting you in August in AC.
@Andrew Cushman - Depending on the purchase price and/or rehab needed, I'd be willing to put down anywhere from 20-40% and finance the rest. Ideally, I'd prefer to use more of their capital vs mine as I'd like to be able to work on multiple projects simultaneously.
Re 5+ unit properties, I've recently been shopping around to finance a 7 unit small apt and I was under the same impression as you are. I also thought that they'd be less interested in one's personal and rather, be more concerned with the properties numbers and if they worked. To my surprise, however, after speaking to multiple "local" lenders, they were also interested in my last two years W2 as well as my personal financial statement. Grant it, they seemed a bit less stringent as non-commercial lenders, but still concerned. They mentioned that they needed my info due to my inexperience, both in terms of it being my 1st commercial deal, as well as my years on the job (or lack thereof).
@Jp Kilduff - Thanks for sharing. There's plenty of useful information in your post and I'm very appreciative of you taking the time to reach out. The bank you mention seems like they are very investor friendly so I'll reach out to them asap.
Another issue that I've run into with other lenders is that some were reluctant to lend beyond a certain distance. From your profile, I see you're in Cape May, which makes me a bit more confident as they're willing to lend that far south.
Commercial Loan Officer · Southern Maine, ME · Member since 2009 · 782 posts · 415 votes
10y
Check out Velocity. Robert Grant, who is an AE there, has already responded to this post. He's a standup guy and they're a legit lender who don't require tax returns.
Specialist · Plainville, CT · Member since 2015 · 478 posts · 389 votes
10y
@Manuel Savorelli- Consider this too... Nobody cares about funding a smaller deal because they don't make any $ off of it. Get your hands on an apartment deal that is >50 units and people will be throwing $ at you.