Reston, VA · Member since 2014 · 74 posts · 24 votes
Hi all! Total RE newbie here. I've been reading articles and around the forums regarding funding options for RE investments, and me and my father(partner) are interested in acquiring some SFR units in the future.
My father has mentioned that he has a good relationship with a local banker in town that he could pull 30% down payment for another RE investment. Reading around the forums it seems many have be able to land a 20% down payment. My question is, when I'm calling around the banks and asking about RE investment financing and the down payment that would be required, is it as simple as asking what they require for down payments or do i need a good relationship with a bank before I can ask for those terms(for 20% specifically)? I would obviously much rather find us a banker that could work with a 20% down payment rather than 30%. I have no experience in how these things work so I need advice please. Thanks!
@Aaron Hall you will have better luck with small banks than the big banks (in my opinion). Where are you looking to invest outside of Nashville, is it Murfreesboro? If so good choice, Amazon and Nissan are in the area so the jobs are stable. Here are a few to check out......
Hi all! Total RE newbie here. I've been reading articles and around the forums regarding funding options for RE investments, and me and my father(partner) are interested in acquiring some SFR units in the future.
My father has mentioned that he has a good relationship with a local banker in town that he could pull 30% down payment for another RE investment. Reading around the forums it seems many have be able to land a 20% down payment. My question is, when I'm calling around the banks and asking about RE investment financing and the down payment that would be required, is it as simple as asking what they require for down payments or do i need a good relationship with a bank before I can ask for those terms(for 20% specifically)? I would obviously much rather find us a banker that could work with a 20% down payment rather than 30%. I have no experience in how these things work so I need advice please. Thanks!
Fannie LTV Matrix, Freddie LTV Matrix. Assuming you want 30YF residential 1-4 unit financing, it's not going to get better than that, so just call around until you find a lender you like that does not have restrictive overlays.
Hint: for non owner occ, it's 15% down minimum SFR, 25% down minimum 2-4 unit.
I would just call every bank that you can and ask them what the minimum downpayment is for most of their loans... Then just work with the people who tell you 20%.
@Antoine Martel I will be looking to buy properties in a smaller up and coming town outside of Nashville, TN. I guess I was trying to get at, when I call these banks do relationships usually play a role in the terms? Say if I call the local bank in town and ask if they accept 20% down payment, would having a well established relationship possibly sway what would originally be a 30% down payment to a 20%(example, obviously)?
@Antoine Martel I will be looking to buy properties in a smaller up and coming town outside of Nashville, TN. I guess I was trying to get at, when I call these banks do relationships usually play a role in the terms? Say if I call the local bank in town and ask if they accept 20% down payment, would having a well established relationship possibly sway what would originally be a 30% down payment to a 20%(example, obviously)?
Of course it could. But there are banks out there which will do 20%. I have a bank in Memphis that will do 20% downpayment.
Have you thought about investing in Memphis instead of Nashville? The cash flow in Memphis is a little bit better than Nashville. Although I really do like both markets.
@Antoine Martel It is certainly a possibility. We are simply looking in the local area (Nashville outer banks) initially since we have family interested in doing the property management for us. Memphis is certainly possible and after you've mentioned the cash flow being better on that side, we will definitely look into that market as well! Thank you for your help.
@Aaron Hall you will have better luck with small banks than the big banks (in my opinion). Where are you looking to invest outside of Nashville, is it Murfreesboro? If so good choice, Amazon and Nissan are in the area so the jobs are stable. Here are a few to check out......
@Aaron Hall call local banks and ask about speaking to a loan officer about the types of products they offer for investment properties. A loan for an investment can come in many different forms and the down payment is only one aspect of a loan.
For example, i just got a loan that you may consider "10% down" but it actually was a 89% Loan-to-value. The reason they gave me that high of an LTV was because the product is only a 5 year fixed interest rate period with a 20 year amortization period. But also because It isn't a typical 30 year fixed consumer mortgage loan, I have very very low closing costs.
TL;DR if you want to sound like you know what you're doing, call around and ask about residential investment loan products and listen carefully. Maybe ask if they will send you some product term sheets and read them carefully. Some may only require 20% equity, which is what you are after.
@Jason Hopkins Thanks for that info. Its actually a very small town, Ashland City. Murfreesboro is definitely possible as its only an hour or so drive if I remember correctly. Thanks again I'll have a look into those banks and get to work.
@Ryan Stahr This was excellent advice and information, thank you. Congrats on that 89% Loan-to-value. That sounds amazing! Being that I'm so new I'll definitely take your advice on requesting info regarding residential investment loan products. I'm just looking for as many avenues as possible to find "normal" loan terms
@Antoine Martel It is certainly a possibility. We are simply looking in the local area (Nashville outer banks) initially since we have family interested in doing the property management for us. Memphis is certainly possible and after you've mentioned the cash flow being better on that side, we will definitely look into that market as well! Thank you for your help.
Congrats on getting started on your REI. I'm a local Realtor in Nashville, TN. My parents actually live in Ashland City and I know the market back and forth having lived in that city for 20years. Its a gem with exponential growth IMO and based off the numbers. Cheatham County has seen double the growth in population in the last year alone! Crazy.
Anyways, I have good relationships with local lenders here in the area That can easily do the 20%, and I would be more than happy to connect you with. Feel free to reach out to me anytime 6155982585. Especially with any questions about AC, or Cheatham. Will help any way I can.
You will find lenders who can offer you 20% down for your first 4 properties with fairly little hassle. Most of them after that are going to be 25% down. The closer you get to the 10 property count, it gets a little harder. Try Primelending if they are available in your area.
I would say that instead of doing the work of calling every bank in the area, just make one call to a good local mortgage broker. They will have access to lots of different banks and lenders loan programs, or have their own. Their rates will be about the same as or better than anything you find on your own, and you will have an easier time forming a relationship for future deals than you will with a bank. just my 2 cents :)
I use a local commercial lender in the outer Banks and they have funded 25% of the appraised value or purchase price, whichever is lower. I have also doe 20% down deals with non-commercial lenders.
I live on the Outer Banks and have several investment properties. If you ever want a 2nd opinion on a purchase price or anything REI related on the Outer Banks just holler!!
@Alex Vargas My apologies on the late reply, I will most certainly be reaching out to you. I'm very interested in us having a conversation. I'll IM you my information.
@Jamie Jones My father (partner) lives in Ashland City and we have other family living in Dickson County that would be interested in doing some property management for us. We figured we would start in these areas since we're seeing considerable growth as of late. To be honest we have not done thorough market research yet though, we're just brainstorming. We are open to Nashville and many other surrounding areas as well.
@Aaron Hall call local banks and ask about speaking to a loan officer about the types of products they offer for investment properties. A loan for an investment can come in many different forms and the down payment is only one aspect of a loan.
For example, i just got a loan that you may consider "10% down" but it actually was a 89% Loan-to-value. The reason they gave me that high of an LTV was because the product is only a 5 year fixed interest rate period with a 20 year amortization period. But also because It isn't a typical 30 year fixed consumer mortgage loan, I have very very low closing costs.
TL;DR if you want to sound like you know what you're doing, call around and ask about residential investment loan products and listen carefully. Maybe ask if they will send you some product term sheets and read them carefully. Some may only require 20% equity, which is what you are after.
When you say call local banks do you mean banks in the area you are investing or banks in the area you currently live in? I’m having a hard time finding lending for non owner occupy SFRs in Detroit.
@Ryan Stahr Right! I understand that part. Is it better to deal with the banks in your local town where you live at or local to the area you’re trying to invest in?
Maybe it doesn’t matter which one. Sorry, I’m still new to all of this.