5.25% Interest rate on investment property

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5.25% Interest rate on investment property

Wendy S.
Ellenwood, GA · Member since 2016 · 267 posts · 70 votes

Hi all.

Is 5.25% on a 30 yr conventional loan with 15% down and excellent credit, about where the market is right now on less than a $250,000 property or should I be shopping lenders, considering I'm using a broker.

8Reply
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Most Popular Reply

Nick C.
Investor · Tampa, FL · Member since 2011 · 2k+ posts · 3k+ votes
6y

If the property is in your name you can do better. If the property is in an LLC that's about the going rate.

17Reply
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  • Lola Omishore
    Investor · Brooklyn, NY · Member since 2019 · 37 posts · 24 votes
    6y

    Is this rate with points to buy down the rate? 

    Is this rate based on the property being "non-owner occupied"?

    Is this your first investment property?

    4Reply
  • Wendy S.
    OP
    Ellenwood, GA · Member since 2016 · 267 posts · 70 votes
    6y

    @Lola Omishore

    Yes, yes and yes.

    0Reply
  • Cameron TopePro Member
    Property Manager · Katy, TX · Member since 2015 · 1k+ posts · 1k+ votes
    6y

    Keep shopping around. I heard an investor get 3.125% 30 year fixed for an investment property and I recently got 3.625% 30 year fixed for investment.

    [email protected]832-770-7090
    13Reply
  • Nick C.
    Investor · Tampa, FL · Member since 2011 · 2k+ posts · 3k+ votes
    6y

    If the property is in your name you can do better. If the property is in an LLC that's about the going rate.

    17Reply
  • Frank Wong
    Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
    6y

    I am not a lender but the higher rate could be for the 15% down. Built in MI. 

    4Reply
  • David P.
    Member since 2020 · 404 posts · 235 votes
    6y
    Originally posted by @Cameron Tope:

    Keep shopping around. I heard an investor get 3.125% 30 year fixed for an investment property and I recently got 3.625% 30 year fixed for investment.

     3.625% 30 year fixed is what i got offered in los angeles for my duplex 2 units but with about 6k in fees. Currently i am at 4.125%. Did you have to pay any fees to get that offer?

    1Reply
  • David P.
    Member since 2020 · 404 posts · 235 votes
    6y
    Number of units definately effect the rate too. I know SFH investment properties get lower and i heard of that 3.125% but the rate goes up as the number of units go up.
    3Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    6y

    @Wendy S. I just got back from closing on refinancing two SFH at 3.5%, no points, 75% LTV (25% "down"), 30 year fixed conventional, $2500 in closing costs, non owner occupied. You rate is going to be higher with only 15% down. I honestly didn't even know you could put under 20% down using conventional financing. Typically 20% is required for your first investment property and over four it goes to 25%. Underwriting standards are always changing, so there could be new rules there.

    7Reply
  • Wendy S.
    OP
    Ellenwood, GA · Member since 2016 · 267 posts · 70 votes
    6y

    Thanks guys. That's what I thought too.

    Now I've asked for an LE to get a better pic of what all fees we would pay but am told it's possible but won't be accurate until we go under contract and Title company info is all in. I get this, and really hoping to go under contract on a particular property today.

    I have worked with said Lender or rather broker before but I'm always taken aback when he requires everthing prior to providing a LE. Is this normal? I was of the impression that once you submit, bank statements, credit checks, etc, fully complete all required docs for loan application you can get an LE. Am I wrong?

    Now looking at putting 20% down and see what that looks like.

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y

    15% down has a huge interest rate bump. It almost never makes sense to do 15% down. Get to 20% and you will be in the low to mid 4's most likely.

    [email protected]301-893-4635Podcast Guest on Show #192
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    9Reply
  • Wendy S.
    OP
    Ellenwood, GA · Member since 2016 · 267 posts · 70 votes
    6y

    Yes, I see that now. Was trying to invest 15% dp into the property, use the 5% difference for reserves in addition to the 6 months required PITI.

    0Reply
  • Scott WolfPro Member
    Lender · Boca Raton, FL · Member since 2014 · 1k+ posts · 958 votes
    6y

    @Wendy S. a title company should be able to get you a separate title quote.  Them saying a LE won't be correct sounds a bit fishy.  They should have given you one immediately, and given you a caveat that numbers may change.  That's why an estimate is an estimate.  Is the company reputable?

    If interested, I can get a title quote for you.

    1Reply
  • Wendy S.
    OP
    Ellenwood, GA · Member since 2016 · 267 posts · 70 votes
    6y

    Thanks. Will see this progresses. 

    1Reply
  • Peter Baudendistel
    Rental Property Investor · Knoxville, TN · Member since 2018 · 36 posts · 36 votes
    6y

    @Wendy Smith I have just locked up 4.0% (4.2% apr all in) through the Graham Parham team at Highlands Residential. I would highly recommend them as you vet alternatives... Closed with them several times, great group to work with.

    3Reply
  • Steve Morris
    Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
    6y

    A broker will prob get you the best rate since he shops all lenders (that pay referrals of course).  A bank (unless you have a very good personal relationship) will only reflect their rates and desire.  Some big banks are not that hot about apt lending right now rates reflect that.

    At 85% LTV, 5.25% seems a little high, but that is a high LTV for non-owner-occupied property. If you wait a few months, the COVID thing will be a lot less (please) and the banks will be more accomodating.

    1Reply
  • Wendy S.
    OP
    Ellenwood, GA · Member since 2016 · 267 posts · 70 votes
    6y

    Thanks. Yea I'm agreeing to 20% down so waiting to see what that looks like and he is a broker. 

    Funnny thing is my bank is offering no Origination fees etc and my broker's standard fee is around $1,400 plus usually 1% or so in points. However, he delivers so I usually chalk it up to the price of reliability and expediency which we all know in RE is crucial. 

    1Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    6y
    Originally posted by @Wendy S.:

    Thanks. Yea I'm agreeing to 20% down so waiting to see what that looks like and he is a broker. 

    Funnny thing is my bank is offering no Origination fees etc and my broker's standard fee is around $1,400 plus usually 1% or so in points. However, he delivers so I usually chalk it up to the price of reliability and expediency which we all know in RE is crucial. 

     I have found sometimes lower interest rate comes with higher fees or lower fees means higher rate. You can find lower fees, lower rate and responsiveness. There are so many options out there. I would tell your lender straight out that you know people are getting much better rates, so time to sharpen his pencil. The fees are very discretionary, because it mostly goes in their pocket. Good luck!

    3Reply
  • Peter Baudendistel
    Rental Property Investor · Knoxville, TN · Member since 2018 · 36 posts · 36 votes
    6y

    @Joe Splitrock that's why it's important to look at the inclusive APR!

    1Reply
  • Lola Omishore
    Investor · Brooklyn, NY · Member since 2019 · 37 posts · 24 votes
    6y

    @Wendy S. I can refer you to my commercial loan broker. He got me much rates better than that and my loanwasn’t even a conventional loan, it’s a commercial loan.

    Message me if you’d like his info.

    1Reply
  • Rashaun ForrestPro Member
    Investor · Atlanta, GA · Member since 2020 · 54 posts · 20 votes
    6y

    @Wendy Smith seems high I’m closing similar circumstances and my rate is 4.25 no points.

    0Reply
  • Steven Griffith
    Rental Property Investor · Chapel Hill, NC · Member since 2019 · 120 posts · 119 votes
    6y

    @Wendy Smith

    Echoing what others have said, I just closed on an investment property 1 week ago: 20% down, 3.625% 30yr Conventional Loan. The lower down payment is probably why you're north of 5%. If, when you put 20% down your not before 4%, then shop around. I just bought in NC, but I think my lender may lend in GA too. If interested, send me a message and I'll pass on their name and contact information.

    2Reply
  • Mitch Brunette
    Rental Property Investor · Burnsville, MN · Member since 2017 · 48 posts · 25 votes
    6y

    @Wendy Smith

    I refinanced a 30 year traditional with 35% equity (my original down payment + 15%) at 3.125% fixed. Was at 5.125. I closed on that note 4-5 weeks ago.

    0Reply
  • Matt Humps
    Rental Property Investor · Marietta, GA · Member since 2018 · 29 posts · 22 votes
    6y

    I just got a 30 year conventional at 3.375% w/ 25% down for a rental.

    0Reply
  • Tyler Tacy
    New to Real Estate · Cincinnati, OH · Member since 2019 · 35 posts · 22 votes
    6y

    @Wendy Smith I was just recently quoted 4% with .125 point or 3.5% with 2.125 points for 30 year fixed rate

    0Reply
  • Wendy S.
    OP
    Ellenwood, GA · Member since 2016 · 267 posts · 70 votes
    6y

    Thanks again everyone. I'll see what my new rate is with 20% down.

    0Reply
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