Lenders: looking for a great lender for our rental properties

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Lenders: looking for a great lender for our rental properties

Mark Delosreyes
Accountant · Elizabeth City, NC · Member since 2017 · 41 posts · 20 votes

Hello, I am searching for a lender to build a long term relationship with. We currently have about 50 units in our rental portfolio, and are always looking to add deals, if they make sense. We use the BRRRR strategy for most of our new purchases, but would also be looking to refinance our existing portfolio. We are currently using local banks, but just wanted to test the waters on a different option. Thanks in advance for any references and/or advice.

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  • Doran Summers
    Lender · Chicago, IL · Member since 2015 · 608 posts · 70 votes
    5y

    @Mark Delosreyes if you Ian g banks then you going the right direction. Any particular reason you wanting to go a different direction besides refinance before 6 months? Or your DTI is high?

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  • Kevin Romines
    Lender · Winlock, WA · Member since 2013 · 1k+ posts · 1k+ votes
    5y

    Some of the things you have to be running into is the Fannie Freddie 10 property financed rule. Which then leads you to a portfolio loan, meaning the banks you work with are either doing the loans as residential portfolio or commercial, but in either case they are holding these loans, not selling them off to the secondary market.

    The other options you have are just to do the portfolio loans with a lender that has many Non-QM investors, so that as you reach your cap (max. loans to any one investor from that lender) you then just move on to their next investor to max. out with them before moving on again.

    I assume the local banks also have a max. cap as to how many loans they will give any one investor, so really its the same issue, however working with a banker or broker that has many investors, means that you are not chasing down the new lender, the banker or broker is doing it for you. So therefore easier to work with on your part. 

    I hope this helps?  

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  • George DespotopoulosBusiness Member
    Lender · New York, NY · Member since 2016 · 936 posts · 287 votes
    5y

    Hey @Mark Delosreyes -- it may be beneficial to look into working with a non-bank direct lender that focuses in/on investment properties only. The benefit is that the process is much quicker and you're able to borrower through an entity. The rates may be slightly higher but with GSEs limiting the acquisition of loans secured by second homes and investment properties to 7% of their volume and increasing rates, non-banks are much more competitive at the moment. You can also get debt on a 30 yr fixed. 

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  • Jonathan Hatton
    Lender · Fort Worth, TX · Member since 2021 · 15 posts · 4 votes
    5y

    Hey @Mark Delosreyes, definitely think you’re looking in the right direction away from the banks. It’s good to have a relationship with a lender that’s on your side and always just a phone call away.

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  • Mark Delosreyes
    OP
    Accountant · Elizabeth City, NC · Member since 2017 · 41 posts · 20 votes
    5y

    @Doran Summers, DTI is solid, and we still have a decent amount of exposure limit left with these local lenders. @Kevin Romines, however, they typically only offer 15 yr am on commercial loans (all units in LLC), so strong cash flow ($250+ per month per unit is our target) is challenging. I keep seeing private lenders willing to do 30 yr am on investment properties owned by an LLC. I have a certain group of properties that will be paid off soon, so a 30 yr am doesn't make sense; however, I have another group that I would really like to boost cash flow and put on a 30 yr am.

    @George Despotopoulos and @Jonathan Hatton, since this post, I've had about 5-7 private lenders reach out to quote terms. So far, rates seem favorable without a buy down, and they all offer the 30 yr am. I'm hoping to build a relationship with 1 or more of these. For the past 20 years, I've been a financial controller in the manufacturing industry. A lot of money is borrowed for capex, so my accounting has always been structured to please banks, CPA's, etc, at the push of a button. I do the same with my real estate LLC's...just over the grind of all of the intense bank reporting, 300 page tax returns, audits, etc.

    Thanks again for all of your input and help. I’m looking forward to a positive shift in my business model.

    Sincerely,

    Mark Delosreyes

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