b2r rental finance

47 Replies

Anybody know anything about this b2R finance? Seem to be doing a lot of ads to finance rental portfolio. Doesnt seem quite right to me Might be though. Just wondering

Hey James,

They are a newer group, definitely aggressively marketing. I have been seeing them everywhere too. I've spoken with them a few times.  They are a legit shop and I believe they will be coming out with some smaller balance loan products in the next month or so.

Best of luck,

I heard about them recently from a well-known realtor here in Chicago. They are actually the hedgefund company - Blackstone. They supposedly are starting to get into the lending business and working particularly with investors. Don't know anything else other than that.

@James Miller

I'd be happy to talk to you about what we do at B2R.  B2R was established by funds managed by Blackstone Tactical Opportunities to provide residential buy-to-rent mortgages for property investors, focused exclusively on the financing and growth capital needs of single-family home investors and entrepreneurs.

We offer portfolio financing (blanket loans) starting at $300K.  We also have several other products that are near being launched, to include lines of credit to fix and flip or buy and hold and financing down to one property.

What makes us different is we underwrite the cashflow of properties, not your personal DTI.

@Chris Urso , we need to catch up.

Originally posted by @James Miller :

Anybody know anything about this b2R finance? Seem to be doing a lot of ads to finance rental portfolio. Doesnt seem quite right to me Might be though. Just wondering

We were going to refinance a large portfolio of SFR with them, but we didn't feel like their terms were quite good enough. I've heard they've gotten a bit better of late, but I don't know exactly what they are. From everything I've heard, they're reputable and trustworthy, but we didn't go through til the end so I can't say for certain.

I looked into B2R a couple of months ago. They are legit and what they offer is amazing. But they charge really high interest rates. When I called they said somewhere around 7%.

I talked to some people from b2r  but they were from NC I'm always leary of  out of state lenders. If they are charging 7% that's not that bad, I have loans at one conventional bank charging 6 to 6.5 and calling them commercial

Thanks for posting this @james miller. I received a flyer thing from them. How they found little ol' me up here in the NW when I own most of my mulit-fams in an LLC is suspect to another thing on here I recently signed up for. I won't be blanketing anything and certainly not at 7%. The blanket may be easy to put on, but I'm much more worried about getting it off!

Originally posted by @Tim Herriage :

@James Miller

I'd be happy to talk to you about what we do at B2R.  B2R was established by funds managed by Blackstone Tactical Opportunities to provide residential buy-to-rent mortgages for property investors, focused exclusively on the financing and growth capital needs of single-family home investors and entrepreneurs.

We offer portfolio financing (blanket loans) starting at $300K.  We also have several other products that are near being launched, to include lines of credit to fix and flip or buy and hold and financing down to one property.

What makes us different is we underwrite the cashflow of properties, not your personal DTI.

@Chris Urso , we need to catch up.

Do you have to open a new LLC under yours with a joint checking account?

@James Miller

 I liked the marketing flyers and called B2R when I was refinancing property into a pool loan.  I found a local lender with better terms.


Frank

@Steven Picker , no.  I believe you are referencing cash management, which is only applicable on larger loans, or those with special circumstances.

@James Miller

 I normally never do this, but I feel the need to here.  I have absolutely no affiliation with B2R finance whatsoever and haven't heard of them since this post but when you come on a public forum (one that appears at the top of a lot of real estate related google searches) and are skeptical of a lender with no direct or indirect experience with them it is just not right to do in my opinion to just throw things out there with no basis.

When the gentleman from B2R finance responded to your post you responded with a response not addressing the B2R rep and gave some vague skepticism of out of state lenders and their interest rates compared to your local lender.

Not sure what your angle is here, but if you could clarify what your issue with B2R is we would all like to hear it.  Because you didn't write in your title or post about being "leary" of out of state lenders, you mentioned a company in particular which I think carries some responsibility of explaining things in a little more detail.

I've also checked out B2R and there's another similar one operating under almost the same constructs - firstkey lending. 

I think they're both exactly what you'd think they'd be. They let you do cash out refi's up to 75% and blanket properties. Definitely a value there. They amortize the loans over 30 years. Again, thats a nice value.  They do 5 and 10 yr balloons - 10 years is nice to extend.

But here's the turnoffs to both their programs.
1) Rates are high - 6.5% to 7% (firstkey lets you pay 3 points to buy down rate to 6.25% or something like that which seems really price).

2) Entity creation is required.  Any properties that you want to put under the loan has to be put into a separate/distinct entity that you only put these properties under. So even if you have an entity today, you have to create another one just for the loan. Gotta do tax returns for the new entity. Need bank accounts for the new entity. Need to have rents deposited into new entity's accounts, etc, etc.

3) Escrow of taxes, insurance and cap-ex. So how do they calculate capex escrow payments? Who knows? Seemed pretty vague to me though.

But to pay an additional 1 to 2% more for an interest than most local/portfolio lenders AND deal with all the separate entity headache stuff just doesn't make sense to me. 

According to their sales guys though, they are very busy. And if they went down to 5.5% or 6%, they'd be so swamped, they couldn't handle it.

I'm getting 4.5% to 5.5% on my portfolio loans today. And amortization from 20 to 30 years. Just closed on two loans last week that were 4.75% and 30 yr am. 5 yr balloon as they were still portfolio but those are much better terms and the bank doesn't have me to any nonsensical entity game.

To me, I think they need to come in at 5.5% to 5.75% if they want an investor to deal with the separate entity stuff and all the escrows.

I'm just wondering who they're getting business from today at those rates? 

Maybe somebody looking to pull out a bunch of cash from their portfolio all at once? 

Otherwise, I just don't see the value there.

Keep in mind, though, when b2r first started, they told me the up front fees were over 15k to do a blanket loan. They said that fee was for a bunch of legal and other stuff. And they had a couple other crazy items in their terms as well which they've also dropped. So maybe they'll realize that if they really want to be in the sweet spot for small investors like myself, they have to do better on the rate given the crazy entity stuff they're asking me to do.

Mr. Noto . If you look at the first post I asked if anybody had any info about b2R. I figured someone on here knew of the company and could tell me something about them. I never mentioned any other company by name. I am always leary of out of state lenders and companies I have no knowledge of . Too many scam artist out there nowdays

@Tim Herriage

 " to include lines of credit to fix and flip or buy and hold and financing down to one property. "

Question : single property financing available  versus minimum 5 properties?

IF you look at the first post I asked if anyone knew of the company and had any info about them. I never mentioned any other company by name at any time. I figured someone one the forum had had some knowledge of the company and could give me some insight into their programs. I am always leary of out of state lenders who contact you out of the blue. Too many scam artist out there nowdays. Just trying to get some information

Hi @Tim Herriage I'm curious how blanket loans work and wondering about this is example

The assumption is that the DSCR, credit, etc all meet B2R requirements.

Sample Numbers:

Current portfolio numbers

Could these properties be financed into one loan with a new purchase that would make the numbers look like this? 

1st property and new purchase now have a 75% LTV. Overall portfolio has 72% LTV. The money from the equity of properties 1-5 would be the down payment on the $300k purchase.

Does this make sense?

@Tim Herriage

  Nice to see you doing well not sure if you remember me we met at the Andrew Waite event in Atlanta... He of course has gone on to do other things.

I have passed your program on to a few of my clients and the feedback was tough underwriting ,, and valuations.. so for me it probably depends on your particular market .. some local portfolio lenders are going to be much more aggressive than other markets.

I would think the B2R target borrower is not a newbie type investor. but a older investor which has owned their portfolio for years has 50 to 500 homes and wants to pull cash and is fine with a very very low LTV loan I could be wrong but that is my sense.

I had some of my vendors ( I do short term HML for turn key companies nationwide) and they were trying to finance AU buyers through B2R and could never get it done. I ended up placing those loans elsewhere

But lastly I find it humorous  that some of the responses are ( Hey the rate was 6% or 7% that is highway robbery) these are obviously post from those who have short lives in RE investing.. 6 to 7% fixed non recourse financing historically is fabulous . And if you can do better load up now !!!

This might be worth a separate thread, but since people are reading this one --  my rentals are meant for retirement income, and that's probably 10-15 years away.  If a goal is to have at least some paid-off properties by then, does it make any sense to bundle all the loans up into one re-fi?  Is it even possible to extract a property from a loan, or would that entail an entirely new loan?  I'm hitting the conventional loan limit soon, and am wondering what my other options might be.  Thanks!

@Anna Watkins

  Anna it would be customary to get a " release clause " written into a blanket mortgage.

some will specify exact dollars to release a particular property... or a % of the loan .. it becomes a negotiation if you will with your lender

I would agree that the 6.5% rate isn't bad historically speaking. But in today's world, its simply not competitive.  I don't know of a single local bank/portfolio lender that has rates over 5.5% right now. Most seem to be coming in around 5% or less right now. And I tend to spread my loans around quite a bit so its not just 3 or 4 banks.

Its also interesting that they're so tough on valuations and deals aren't getting done. They seem to like to push that 75% LTV number as being so great but if they're dinging you 5 to 10% on the appraisals, then what are you really getting out of them?

1) Crazy high rate (comparatively speaking in today's market anyway) of 6.5 to 7%.
2) LTV with the low valuations of more like 65 to 70%
3) And a huge headache with having to create and deal with all their entity stuff. Plus their unique/arbitrary cap ex escrows which even they don't really have a specific number they will give you for how much that is per house per month.  "It Varies" was the response I got.

Again, its a relatively new product and they actually had terms that were far worse than what they are today. And I guess if they're getting loans from people, then there really is no reason for them to improve their terms.  But I just don't think their current terms are anywhere near competitive to the rest of the lending programs out there. 

@Mike H.

  you are very fortunate to have those lenders.. I Portland you would not have those choice's... there are no banks that are going to lend long term and portfolio.. typical would be 20 due in 5  6 to 6.5%  with one point.

There are no absolute with lenders.

That is why there are many types of loans out there.

Some investors care more about fixed rate, some about the length of the rate, LTV, amortization, recourse or non-recourse, any prepay penalty, cash management agreement and on and on.

It's just not about the rate only. You could have a lower rate but also have full recourse against you and a low amort. schedule. Different loans work for investors varying situations. I would personally not care about non-recourse when the LTV has to be 60% or 65%. The non-recourse isn't as valuable then to justify the higher rate versus getting non-recourse at 75% to 80% because my COC will be better. So everything is weighted and calculated whether that loan is a good fit or not with your property or properties.

re: Portland.

Wow. Thats interesting. I tend to think of portland as having a much more stable housing market with ever increasing prices.  I would think the local lenders would be more generous given their layers of risk would be better there given the market.

The lenders must be making a killing on the spread then if they're getting those rates AND a point.  The local banks I'm getting loans with don't charge any points.  On a couple of em, my closing costs are under 1k even. :-)

And here I thought Illinois had one of the lesser lending environments. Who knew? :-)

Thats why BP is so nice. Learn something every day.

But now I can see why those blanket lenders (b2r, firstkey) can say they're doing ok on their lending.  I'd much rather take 6.5% amortized over 30 than 6 or 6.5% amortized over 20.  In that case, they would be the no brainer. :-)

@Mike H.

we have completely different housing stock than you have there in Chicago duplex tri plex are relatively rare.. its either SFR's or 20 to 400 unit apartment complex's .

there are probably more 2 flats in a 10 square block of South Chicago than in all of Oregon.

and less than 10% of our SFR's are rentals.. unlike many parts of the mid west were that number could be 35 to 50%

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