First multi family property- need financing

22 Replies

Hi! My name is Kyla Floyd and I’m a young Realtor in Columbia, SC. I found the perfect first investment property and need help financing it. The problem I am facing is, I’ve only had commission based income for 1 year instead of the 2 years required for any banks to lend. Any suggestions? I don’t have the “ask a family member” option. 

Info about the property: 

Asking price is $225,000

Location: one of the top neighborhoods and will hold its value forever. Close to downtown and USC college campus.

Currently being rented and has a full year lease signed for 2020 at $2325. 

Thanks in advance!!

Originally posted by @Kyla Floyd :

Hi! My name is Kyla Floyd and I’m a young Realtor in Columbia, SC. I found the perfect first investment property and need help financing it. The problem I am facing is, I’ve only had commission based income for 1 year instead of the 2 years required for any banks to lend. Any suggestions? I don’t have the “ask a family member” option. 

Info about the property: 

Asking price is $225,000

Location: one of the top neighborhoods and will hold its value forever. Close to downtown and USC college campus.

Currently being rented and has a full year lease signed for 2020 at $2325. 

Thanks in advance!!

Many portfolio lenders right here on BP would do that property for you at 75% loan to value with a 30 year fixed rate in the 7's. 

@Kyla Floyd I'm unaware of any bank loaning more than 80% on a non-owner occupied duplex but I only use portfolio lenders. Do you have somebody you could partner with for the other 10%?

Originally posted by @Kyla Floyd :

Hey Will! I could put about 10% down

Here's your solution:

  1. Hard money with an experience partner for the acquisition and possible update/renovation.  Somebody that's done this before can get financing with high ltv's.
  2. Refinance out with a long term loan at the new appraised value (max ltv 75% of the new appraised value)

Best of luck

Stephanie

@Kyla Floyd thank you for asking that question.

I am actually on a similar situation with the only difference I don’t have more than 4% for the downpayment. I found a good deal but I am not sure I ll be able to finance it.

I thought of using hard money, but for a first time investor, I don’t think I have a lot of room for error given that I lack actual experience and the interest rate is going to be high. Also, the numbers won’t work if I don’t give a 20% downpayment.

Is there any other way to finance a deal?

Originally posted by @Kyla Floyd :

Thank you Stephanie!

 My pleasure.

Also, if you put the @ symbol in front of the name of the person you're referencing in the thread, they'll get a notification that you're responding to them.  You could also just click on the ellipses in the top right corner of the conversation that you're responding to, click "quote" and the conversation will be included in the response.  The person you're responding to will get a notification as well (I find that one to be the easiest way to do it).:)

Welcome to BP.  I hope you find it as helpful as I do.

Best of luck

Stephanie

@Kyla Floyd Have you asked if the seller would be willing to finance? If they are renting and the property is for sale there is usually a good chance they would consider financing.

You could look for a someone to act as the loan guarantor for a fee.

You could find a partner to join you in the deal if theres enough opportunity.

@Kyla Floyd call lenders around you location. If you are unable to get financing, you best option will be to partner with somebody that can bring the other half of money to the table. In this case you will be loosing potential monthly income, but gaining experience and capital to jump into next "big" opportunity.

If the property already has equity, refinance after 90 days. Instead of splitting profit, offer your partner the full share as long you can keep the property for yourself.

@Kyla Floyd I think the obvious choice that no one else will likely say is don’t buy it. Why not wait another year? Are you able to survive as a realtor now? 90 percent of realtors are done with it within 2 years. I’d focus on sales and less on this property personally

@Caleb Heimsoth thank you for the advice! I’ve actually been selling real estate for 3 years now but decided to go full time because my business has really taken off. I see the reward in multi family investments and want to start getting in the game early so I can gain the passive income and retire at a decent age!

Originally posted by @Luis Medina :

@Kyla Floyd call lenders around you location. If you are unable to get financing, you best option will be to partner with somebody that can bring the other half of money to the table. In this case you will be loosing potential monthly income, but gaining experience and capital to jump into next "big" opportunity.

If the property already has equity, refinance after 90 days. Instead of splitting profit, offer your partner the full share as long you can keep the property for yourself.

 Thank you for the advice! 

Originally posted by @Greg Dickerson :

@Kyla Floyd Have you asked if the seller would be willing to finance? If they are renting and the property is for sale there is usually a good chance they would consider financing.

You could look for a someone to act as the loan guarantor for a fee.

You could find a partner to join you in the deal if theres enough opportunity.

 Thanks @Greg Dickerson! 

Originally posted by @Kyla Floyd :

@Caleb Heimsoth thank you for the advice! I’ve actually been selling real estate for 3 years now but decided to go full time because my business has really taken off. I see the reward in multi family investments and want to start getting in the game early so I can gain the passive income and retire at a decent age!

So my previous post was off base a little, sounds like you’re succeeding as an agent, that’s great!

I’d still wait another year.  Otherwise you can do non-income loans that look at the property, not your income. Those will be expensive though  

@Kyla Floyd is the 2325 per side of the duplex or that for the entire thing?  

As getting it done, you could look at a JV partner, private money, commercial loan. What's the ROI for this? What's your coC return?

     My investing area that ratio doesn’t get it done for a investment I am assuming that your area is different for taxes and other costs.  I’d lose money on a deal like that in my area. 

I would run that thru the BP calculator or one of your own creation.  Using the standard numbers for your area.  Good luck hope you can get it done. 

@Kyla Floyd I would look into seller financing, giving the current owner monthly cash flow that requires absolutely no work. If not I’d look into a business loan, sounds different but a lot of banks will give a business loan for rental property investing. In this case they look at the property and not your income although you can back the rental cash flow with your personal income if you need to show that you can afford the loan. When I looked into it, a business loan would be 5-6% not great but better than hard money

this would be considered a small balance loan and your best bet to go to a local bank if you have strong financials and credit. Non-bank small balance CRE lenders tend to charge higher rates.

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