I'm currently house hacking and that is going great so far. My parents also have several rental properties and habe learned a lot from them. I'm now looking for my first investment property but before I go to far I plan on getting my financing in order. (Making sure not to get the cart before the horse)
I seem to recall from possibly one of the many podcasts that I have been listening to that it's best to get financing from a small local/community bank that is close to the property. Have y'all found this to be true? Also where do y'all get your financing?
I have 20 percent down and have some extra for updates etc.
Thanks in advance for any advice/information.
Generally yes - as a rule of thumb small local banks and credit unions only lend in their general geographic areas. The catch is there that many are not what you would consider "aggressive" with their programs/terms. Typically more regional sized lenders are the ones providing more options program wise, but it only takes one local community lender with a good program to make it work. I would approach both the local lenders in that area as well as larger regional lenders to get a good overall feel for your options.
There was just an article on the BP blog about this:
finding a lender local to the property is best. They know the area and it reduces their risk. An out of state bank has no idea about the area and they have to build in more mitigation to deal with more unknowns. Also, it benefits banks to invest in their area from a community reinvestment standpoint.
Thanks for the replies. Ill read the blog you mentioned Alexander. I went to several banks in the same town im looking to invest. So far there is one that stood out (BB&T) they manage and service all their loans compared to several others that will sell them after. One thing I noticed all of them we visited require 25% down for 2-4 unit properties and 20% for single family homes. They would be able to do cash out REFI for 80 % on single family and 70 % on multi family homes.
Is it common practice to require 25 % for multi family property?
We plan on going to local banks to us soon. (Will be larger more well known)
@Tom S - I accidentally made two post. Thanks for the input.