What's the best way to obtain a loan

[Jonathan Buckelew]

Hey All- 

I'm currently talking with a lender at a large multi-national bank regarding resi properties (2-5 units) and his covenant seems a bit high. As I will be purchasing property through an LLC, the lender stated that the main threshold is to have an in-place DSCR of at least 1.4x and the spread will be L + 170 (which compared to deals at work is actually not a bad rate).

My question is this: What are people seeing out in the marketplace for loans (very general question and aware that a lot of different variables exist but I'm assuming some commonalities must exist throughout the country) and where have people been finding the best loans/how are they finding them (e.g. mortgage broker, personal connections, etc). 

I hear a lot about FHA loans on BP so maybe that's the right route but would love to hear everyone's opinion.

Thanks,

Jon

[Chase Louderback]

Consider contacting local banks/credit unions and attending local meetups to network with other investors and get referrals on a great mortgage broker. 

If you want to do an FHA loan on a property, keep in mind it will have to be 4 units or less, you will have to live in the property for 1 year and you will have to pay mortgage insurance until your equity position is at least 20%.

1.4x in-place DSCR is high. Should 1.25x is the standard, but some will go to 1.3x.