Shopping for lenders

12 Replies

This is my first property purchased purely as an investment.  I have done a handful of live-in flips and I have one other rental that I moved out of before putting a renter into it, but this is the first time I've picked up something that I don't ever plan to live in, purely because I ran the numbers and liked the plan.

It is a SFR in Salt Lake City that went to auction. I picked it up for $111,000 using hard money (2% up front, 12% interest, 5 months). I am doing $25k in rehab to make it a 4 bed/2 bath and then I want to refinance and hold for rental. I expect the ARV to be $160k. Market rent for a 4/2 in this neighborhood is about $1400.

My problem now is I want to get back as much of the money I've put into it as possible when I refinance. My credit is in the low 700s. The lender I've been talking to will give me 75% LTV but I want to find a lender that will give me more than that. Where do I find a lender that will give me more?

Tough to find.  On the conventional loan side where you can get a fannie or freddie insured product with a 30 year fixed mortgage, the absolute best I have ever gotten was 80% ltv and I only got it once.  Since I have more than 4, I can no longer cash out the traditional way and now seem to be capped at 70%.

I have some portfolio lenders that will go up to 85% ltv, but it is a 5 year term, 20 year amm with an adjustable rate currently around 5%. They won't loan to me directly, just to my LLC.

75% is pretty typical.  You might be able to beat it but not by much and your interest rate will be higher.

Hey Jim, I'd take the 75% LTV if it's a conventional 30 year loan. You might want more than that, but your interest rate will increase even if you get it. I'm local and can get you to my loan broker friend. Connect with me and maybe he can find you exactly what you want for your rental in Utah.

Hello Jim, I was just reviewing your needs with a colleague of mine and he thinks he can get it done for 80% LTV. If you will message me your email I will send you a bit of info and a form etc. No obligation and no promises of course.

They're offering you 75% LTV based on the ARV, right? It often takes a commercial lender in a bank that holds portfolio loans to do 75% LTV if it's under 1yr old, other brokers give 75% loan to cost until the property's seasoned.

Sounds like a decent buy, but might be a tough sell. Do you have other assets that a bank could use to back the loan? I know some investors with lots of equity that can get 100% financing by tying up more than just the subject property, using local portfolio lenders.

Thanks for the comment about the higher interest rate @Darren Eady . I will make sure I weigh all the pros and cons. I would love to talk to your broker friend.  I am happy with the broker I am using now and would only want to work with another if I can get better terms.  But I am always interested in expanding my network, especially with local professionals.  

@Jeff Schwarz I sent you a message.  Looking forward to hearing more.

@Skyler Smith thanks for the creative approach. I have some equity in another property.  Do you know specific lenders that will work with that approach?

Banks are the best place (usually) to get funding if you can. Might take longer, but, if you can't get funded from a bank you are back to square one. Either a local private funder or a broker/agent like me. Local is always your best bet if you can find one. Brokers with good funding sources are your 3rd best best and we are the one most used because for most folks I visit with the banks won't lend and they can't seem to locate local funding (IRA owners etc). I am from the old school, find someone or a place of business you enjoy working with and be loyal. Loyality seems to be a thing of the past in todays society. When I was young we were loyal to local businesses never mind the price. Example: we did not drive across town to save 1 cent per gallon on gas. We supported the local station and they gave us personal service. My suggestion is find someone you can work with and give them all your business, always and they will give you their support and best efforts. They should be are do become a part of your team. However, if they don't then ask them why not and if necessary find another. Ok, again, just my thoughts. Jeff