Trying to find a lender for a challenging property

8 Replies

Ok, so I've been working on acquiring this property for a while and I'm finally to the point of needing a lender. The challenge is that the property is over 20 acres, which rules out lots of conventional lenders, AND there are two residences on the property, which seems to rule out most other non-portfolio lenders.

I'm talking to a couple farm style banks in Oregon where the property is, but they're moving way too slow for what the seller wants to happen, and I don't want to lose this property just because I couldn't get a mortgage in time!

So, where should I look to find a lender on this property?

Thanks!!

-Joe

@Joe Bourguignon Fannie Mae will go 85% as a duplex on an owner occupied. Less than 40 acres there is no problems. Once its 40 acres and above, we then need to contact underwriting for a decision. No overlays in this area?

If the property is a non-owner occupied, the LTV would be 75%

@Joe Bourguignon @Kevin R. makes a good point here with the land size.  I do feel that the appraisal will be challenging in a conventional setting though.  It might be really hard to find similar property types with 2 units on them.  Kevin, what do you feel on that?  Looks like you are at least in the same part of the country.  Maybe there's more of these in that section of the country than our section of the country.  I still feel buying with hard money (if it's a non-owner occupied property) and refinancing might be the best solution.  

Andrew Postell, Lender in Texas (#392627)
817-873-0621

Depending on the location of the property, as you push out from Portland you get bigger tracts of land around here. It will be harder to find comps, but no matter what type of loan you do, that will be the case. 

I would just go forward with a Fannie Mae type loan and cross the appraisal bridge when its that time. 

@Andrew Postell and @Kevin R., thanks for the quick responses!  I and my friend who is applying for the mortgage with me want it to be owner occ;  I should have mentioned that.  I'll try for a Fannie Mae pre-approval for sure!  I like the idea of getting pre-approved and then purchase with hard money while waiting on underwriters, etc.  

Appraisal is going to be tough but luckily the property next door sold recently for a similar price, and it's similar size, etc.  Not sure if it has 2 residences though.

If it's going to be owner-occ, would you suggest against the hard money > refi route?  

Thanks!

I would only go hard money if you don't have the time to close using a conventional loan. If you do that, you can only get a 85% refi based on the appraised value or the purchase price, and you would have closing costs twice. Not the best use of your money? 

Originally posted by @Kevin R.:

I would only go hard money if you don't have the time to close using a conventional loan. If you do that, you can only get a 85% refi based on the appraised value or the purchase price, and you would have closing costs twice. Not the best use of your money? 

 Great point, Kevin!  Maybe I won't do it for this property, but man, that's a great technique that I've never thought of.

@Joe Bourguignon thank you for clarifying. You will not be able to do a Hard Money loan if it is a primary residence. There are very strict limits on the amount of fees that can be placed on a primary residence and a HML will violate those rules. HML don't loan on owner occupied properties for that reason. I would suggest to do the conventional route first but interview some banks that will lend a "portfolio" type of loan that might be more forgiving on the appraisal. Expect to just risk that appraisal fee to find out - $500 or so. Make sure in your purchase contract you have an out for the loan being approved and the appraisal coming in on value too. Good luck!

Andrew Postell, Lender in Texas (#392627)
817-873-0621

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