Not Lending to Out of State Investors...

Private Lending & Conventional Mortgage Advice
10yFollow

Not Lending to Out of State Investors...

Ivory Hayes
Investor · Lancaster, CA · Member since 2015 · 111 posts · 38 votes

I own a few single family homes in the Saint Louis, MO area that I'd like to either pull equity out or leverage in order to positively progress with my real state investing. I paid cash for e properties so there are no mortgages. I've heard you must wait at least a year before refinancing using loan to value. It'll be almost 2 years that I've had the investments, which have tenants occupying them, and all I keep running in to is financial institutions telling me that either they don't lend on properties out of state or they don't lend to out of state residents. At his point I'm confused... Why is this the case? Not only why is this so but how do I get over his hurdle? I've considered hard money but the terms are short with extremely high rates. I've thought about selling but that would defeat the purpose at this point with he proper appreciation involved in he situation. How do I use these properties to continue purchasing more income producing properties? Please help, any and all advice is welcome...

0Reply
83 views

Most Popular Reply

Narmina G.
Private Money Lender · San Francisco, CA · Member since 2015 · 113 posts · 28 votes
10y

Hi @Ivory Hayes ! Some private money lenders have 30 yr fully amortized loans. Let me know if I can help.

1Reply
See this reply in the discussion

31 Replies

Jump to latestLatest
  • Michael Aromando
    Real Estate Professional · Saint Louis, MO · Member since 2015 · 22 posts · 8 votes
    10y

    One of my Lenders has mentioned they will refinance rental properties for out-of-state investors.  I'll figure out which one it was.

    The small banks are great to work with and they seem to change their criteria.  We are always on the look out for new Lenders.

    0Reply
  • Upen PatelPro Member
    Lender · Nationwide Lender · Member since 2015 · 1k+ posts · 814 votes
    10y
    @Ivory Hayes You need to find a national lender that is investor friendly and has minimal internal overlays. They will lend to you anywhere and follow the Fannie/Freddie guidelines. Don't go to the big banks. You will not have much luck there.

    Yon only need 6 month seasoning to be able to do a refi based on new appraisal.
    [email protected]571-200-6180
    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    10y

    Contact @Upen Patel. He is a national lender. Very knowledgeable...and what he says is legitimate. If you are familiar with getting information from a mortgage broker, then to have it go to underwriting and eventually get denied...if that has ever happened to you....you can be confident that doesnt happen with Upen.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    0Reply
  • Narmina G.
    Private Money Lender · San Francisco, CA · Member since 2015 · 113 posts · 28 votes
    10y

    Hi @Ivory Hayes ! Some private money lenders have 30 yr fully amortized loans. Let me know if I can help.

    1Reply
  • Athol Dickson
    Investor · Keller, TX · Member since 2015 · 11 posts · 6 votes
    10y

    @Ivory Hayes Google "B2R Finance" and check out their "Portfolio Pro" program. Or if you need less than $300k check out their "Dwell Finance" division, which has a program that lends as little as $60k. Good luck!

    1Reply
  • Ivory Hayes
    OP
    Investor · Lancaster, CA · Member since 2015 · 111 posts · 38 votes
    10y

    Thank you to each and every one of you! I truly appreciate your time and efforts. I will give the information provided a try. For those who can personally offer assistance in regards to the situation, I will certainly pm you... I would love to speak further about the opportunities available.

    Thanks Again

    0Reply
  • Maggie L.
    Property Manager · Saint Louis, MO · Member since 2015 · 186 posts · 76 votes
    10y

    @Ivory Hayes let us know how it goes.  I'd agree with the advice of small banks or national lenders who are investor friendly rather than the typical big banks, and would love to hear who gave you the best experience.  I'm always looking for good lenders for my clients.

    0Reply
  • Glen Erickson
    Lacey, WA · Member since 2015 · 49 posts · 4 votes
    10y

    So what did you find out?
    Also do you have a LLC set up in state? Wonder if that would make a difference?

    0Reply
  • Ivory Hayes
    OP
    Investor · Lancaster, CA · Member since 2015 · 111 posts · 38 votes
    10y

    A national lender is the route I chose to take. I got nowhere with local lenders. A corporation might have made a difference in order to qualify for a commercial loan but I believe I would have still been in the same position as local banks have a bit more control over lending policies. So it wouldn't have made a difference if I applied as an individual or corporation once they inquire about the primary residence of the owner of that company I believe I would have been right back in the same position. I'm still in the process with the refi through imortgage. It's become a bit of a drawn out process but I can let you know how it works out if you would like to keep in contact.

    0Reply
  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    10y

    > all I keep running in to is financial institutions telling me that either they don't lend on properties out of state or they don't lend to out of state residents. At his point I'm confused... Why is this the case?

    The license to broker mortgages is state-by-state. So I can't help you if the subject property is not in CA for example. You can be out of state and I could do it if the property were in state, however. "Local" means local to the subject property. 

    Big banks managed to exclude themselves from this new regulation following the recession, however, so anyone at B of A or Wells can help you.

    Makes no logical sense, but there it is.

    Fun fact:

    One of my lender buddies used to be at Wells before she was licensed (at the big banks, you need only be "registered," not "licensed"), and at the time they had better rates for CA branches than most of the midwest because of our larger loan amounts here. So she actually would do a lot of loans for properties in the midwest, because her branch being in CA had better rates than the branches in the midwest at the exact same institution. 

    0Reply
  • Richard Scholtz
    Lender · Greater Seattle Area, WA · Member since 2015 · 80 posts · 57 votes
    10y
    Originally posted by @Athol Dickson:

    @Ivory Hayes Google "B2R Finance" and check out their "Portfolio Pro" program. Or if you need less than $300k check out their "Dwell Finance" division, which has a program that lends as little as $60k. Good luck!

    I want to 2nd this advice --- I am in Seattle and just put together a 8 property purchase and Refinance combination portfolio through B2R in Milwaukee....Stated Income Loan to a new LLC...

    1Reply
  • Josh Norris
    Investor · Seattle, WA · Member since 2013 · 77 posts · 9 votes
    10y

    @Richard Scholtz

    Can you provide some info on LTV requirements and rates?

    0Reply
  • Richard Scholtz
    Lender · Greater Seattle Area, WA · Member since 2015 · 80 posts · 57 votes
    10y
    Originally posted by @Josh Norris:

    @Richard Scholtz

    Can you provide some info on LTV requirements and rates?

     The B2R portfolio program minimum loan size is $300,000 which is not a problem for Seattle but in Detroit and Milwaukee.....you need a dozen homes to get there :-)

    LTV's were 75%

    30 year Am - 5 year fixed rate - low 7%

    30 year fixed 10 year rate - mid 7%

    Fees at only 1%

    Normal 1.2X DSCR

    What I did not like ---

    1) Once the portfolio put together hard to sell individual properties as no provision for deed releases...

    2) Insurance requirements are high so that bumps the cost of the Home Owners Insurance - Blackstone has since cut a deal with AON for a new blanket homeowners policy to mitigate that.

    3) Attorney Legal Review...a cost of about $800 =  Junk fee....I.M.H.O.

    What I liked

    Accepted pure stated income,..No income or rent history required.

    Used proceeds to pay off massively past due property taxes and liens. :-)

    Was able to acquire more property and simultaneous close the purchase and refinacne as part of the refinancing using the existing equity as a down payment

    ----------------------My Two Bits....

    In Washington a local community bank will do the same loan portfolio with cross collateralize multiple properties -- multiple 1-4 family with a $250,000 minimum

    30 year amortized

    Rates between 4.75% to 5.375%

    5 year or a 7 year term commercial loan

    Fees under 1.75% - No junk fees --No legal review --No jacked up insurance requirements

    Normal 1.20X DSCR

    What I like

    1) I know the banker well ....so getting him on speed dial on a Sunday helps

    2) Insurance is normal --No extra LLC policy - No legal review fees

    3) Deed releases  and per property sale figures and required principle reductions figured in upfront....and written into the loan so selling properties are easy

    -------------------------------

    I would go there first....if you file any kind of taxes (4506 needed)  as the underwriting is based on rental cash flow 

    My two bits discounted for inflation is now only a penny for my thoughts...

    Richard Scholtz

    0Reply
  • Josh Norris
    Investor · Seattle, WA · Member since 2013 · 77 posts · 9 votes
    10y

    @Richard Scholtz Thank you for the info.  If you don't mind could you PM me with the local bankers info you use.  I have a couple guys I go to but it is nice to have other options especially on the portfolio lending side of things.  

    0Reply
  • Richard Scholtz
    Lender · Greater Seattle Area, WA · Member since 2015 · 80 posts · 57 votes
    10y
    Originally posted by @Josh Norris:

    @Richard Scholtz Thank you for the info.  If you don't mind could you PM me with the local bankers info you use.  I have a couple guys I go to but it is nice to have other options especially on the portfolio lending side of things.  

     Why not I just hand you our licenses and sign over our company and my livelihood.....and come to work for you for $3.oo per hour......

    1Reply
  • Josh Norris
    Investor · Seattle, WA · Member since 2013 · 77 posts · 9 votes
    10y

    @Richard Scholtz Huh?  Not quite sure what that means.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Josh Norris @Richard Scholtz   I think ( and I could be wrong) that Richard is a Mortgage broker and makes his money placing loans for folks.. and he is saying he is not going to just refer you to his  wholesale sources...

    I think that is what he is saying

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    0Reply
  • Josh Norris
    Investor · Seattle, WA · Member since 2013 · 77 posts · 9 votes
    10y

    @Jay Hinrichs  Thank.

    @Richard Scholtz  I guess I should have noticed that you were a lender, got caught up in the conversation and didn't look.  Would have been interested in your services had I known.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Josh Norris  not speaking for the OP just the way I read it as I glanced through the thread.

    I have been a community bank client in the northwest going on 25 years... I would say getting loans in this environment from a community bank is a little tougher than what one might think as they are very much relationship based type lenders. .IE they lend to those in the community that have a good community presense..

    Although most will get pretty aggressive on cash flow type deals.. but I see folks wanting fix and flip loans from them and those are VERY hard to get.. IE why HML are pretty much the only option for fix and flip.

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    0Reply
  • Josh Norris
    Investor · Seattle, WA · Member since 2013 · 77 posts · 9 votes
    10y

    @Jay Hinrichs  Makes sense once I looked at the profile.  

    Are you talking about credit unions when you are talking community banks?  I am looking at rolling my rentals into a portfolio loan but haven't been real proactive on it yet.  What are your thoughts on why or why not hold them in a portfolio loan?  Diversity never seems like a bad thing by going with a  few different banks, then again the bank relationship could be stronger if you allow them more of your business.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Josh Norris  I am probably in the minority here because you won't ever see a community banker on BP...

    Commuinty banks are just that they are small regional 1 to 5 or 10 branch banks that were started by someone in the community... credit unions are much the same but I don't personally do anything with them.

    You find a banker like I have .. we have been together doing deals for 24 years here in the Northwest.. Every thing from a credit line to buy standing timber ( try to get that from anyone but a GREAT community banker) to 8 figure LOC's to buy foreclosures at courthouse steps. To what they do for me now which is give me vertical construction loans at 90% of cost and 6.5 % apr which is about as good as one can do these days.

    But I don't rate shop them.. even if I get approached from another bank.. its not worth it to me.. I want the relationship first rates second. B/C when things don't go well as the OP said you can call your banker.. I needed help like many in the industry in 08 to 2010. without my community bank sticking with me I would have BK'd just like so many others who had significant HML portfolios and Real estate that was bought for short term purposes.

    Although community banks will usually only lend in their footprint especially after the GFC. I My banker was so cool.. I drug him to Detroit with me and he approved a 1 mil LOC for me to do HML in Detroit of all places ( again pre the melt down). and they would never do it today.

    But you get the idea its far more than shopping for money or dialing for dollars.. At Christmas I took my gift to my banker sat down and had coffee with the bank pres the head credit officer and my banker we chatted for 45 minutes that's what I call banking

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    1Reply
  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    10y
    Originally posted by @Ivory Hayes:

    I own a few single family homes in the Saint Louis, MO area that I'd like to either pull equity out or leverage in order to positively progress with my real state investing. I paid cash for e properties so there are no mortgages. I've heard you must wait at least a year before refinancing using loan to value. It'll be almost 2 years that I've had the investments, which have tenants occupying them, and all I keep running in to is financial institutions telling me that either they don't lend on properties out of state or they don't lend to out of state residents. At his point I'm confused... Why is this the case? Not only why is this so but how do I get over his hurdle? I've considered hard money but the terms are short with extremely high rates. I've thought about selling but that would defeat the purpose at this point with he proper appreciation involved in he situation. How do I use these properties to continue purchasing more income producing properties? Please help, any and all advice is welcome...

     It is not easy.  I live less than 90 miles from my properties yet it is across state lines and I run into this problem.  What I did is spent a day on google calling/emailing every bank I could find in the area.  I would prepare a PFS and a document showing your track record of profits for 2 years.  You might not find a residential bank, but I am sure you can find a commercial one

    Podcast Guest on Show #132
    Second City Real Estate4.821 Reviews
    WebsiteView Page
    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Brie Schmidt  many banks I know in the Midwest have the 100 mile rule... IE they won't loan to anyone who does not live within 100 miles of the rentals...

    their reasoning is long distance landlording is more risky than if there borrower lives there.

    your right on the cusp...

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    0Reply
  • Glen Erickson
    Lacey, WA · Member since 2015 · 49 posts · 4 votes
    10y

    @Ivory Hayes
    A Few Ideas, They may not work but maybe lead you to an idea.

    Have you tried a local California bank? Talk to your bank and see what they say. You are already established with them so they may be more willing to work with you than another bank.

    If you do the LLC in the state that you own the property, then it would be a local LLC. You would need someone there as a repersentitive. I can't remember what it is called. but they would be the mailing address where all the business stuff is sent and they would forward it to you. The business would have a local address. I know a company that sets that stuff up. I have gone through them and it cost me almost 600.00 a year for their help but it may be worth it for you. A bit more for the initial set up I think but they give help in how to protect your properties etc. Now that I know more I have had more questions to ask them.

    One other idea is if you have someone managing your properties, do an LLC with them with a buy out clause, that would allow you to pay them for services but buy them out after 3 years. Not sure that would work but talk to a lawyer and see.
    As an example  if you paid them 100.00 a month to manage your properties your buy out clause would be 1200.00. For that 1200.00 they would continue to manage the properties for 1 year. Not sure that would work but again it never hurts to ask a lawyer if it will.

    The last thought is talk to national lenders and see if they will give you a Mortgage, Or maybe a line of credit on your properties. A bit higher interest rates but since you own them outright there should be no real issue to it. I don't know if they do that type of thing but it never hurts to check into some of the people that probably are sending you information about lowering mortgage payments.

    0Reply
  • Josh Norris
    Investor · Seattle, WA · Member since 2013 · 77 posts · 9 votes
    10y

    @Jay Hinrichs Wow, thanks for sharing Jay.  I will have to say that is a true relationship with you banker.  For them to stick by you through the economic problems says a lot.  I'm sure there were many that thought they had a "banker friend" only to watch them disappear when times got tough.  Off to search for a community bank up here near Seattle:)

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free