Conventional Financing for Buy and Hold??

Question

So I have searched and haven't found anything that really is similar to my situation.

I currently own a condo that is paid for in full.  Value is about 100k.  The building  however only has about 50% of the units sold and the developer owns/rents the others.  The condo is a rental.  I also owe about 35k on my home.

I am looking to purchase my second rental.  I checked around today about a cash out refi and was told that this could not happen because the percentage of owner occupied units was not high enough.  Fair enough.

I then asked about a conventional 30yr mortgage with 5% down.  I was then told that these are very hard because the fixed costs cannot be higher than, I believe it was 5%.

So now I am wondering what to do.  I have plenty of cash in reserves but obviously don't want to tie it up as the property that I want to purchase cash flows.

Anyone have any suggestions for this.  I'm a construction guy and not financing.  It just seems crazy that an excellent credit score, plenty of cash in the back, and conventional 30yr loan wont work.

Will Bradford · Answer

Just as an update for everyone I spoke to one of the community banks.  They have said they would do a 10/1 ARM with 30 year amortization.  Also no money down as my current rental would be used as collateral.  Rate is going to be 5-5.25 for the 10yr.

Anyone have anything good or bad to share about this?  Thanks for the help.

Lorenzo Jackson · Answer

I've seen only 20% down for an investment home.

Matt Devincenzo · Answer

I think your problem for the conventional probably has more to do with the 5% down for an investment property. I haven't seen anything less than MAYBE 10% down for an investment property. I'm not saying it doesn't exist I just haven't seen it.

Jimmy Hong · Answer

Hi Will Bradford, I don't know about your area but conventional 30 year and 5% down applies to primary homes, not investment properties.  That's pretty much everywhere I've seen.

Is conventional 30 year and 20% down an option for you?

Will Bradford · Answer

I'm not sure about seller financing.  I really dont want to go that route though.  I am a pretty conservation person and am just a bit dumbfounded as to the hesitation on the 30yr.

I also dont know any private money lenders but also dont want to go down that route.

Anthony Dadlani · Answer

Just trying to think a bit more creative... Would seller financing be an option ?  Another suggestion would be a private lender however rates are of course going to be much higher.

Best of luck in all your endeavors.