Should I consider HML?

3 Replies

Hi BPers

Looking for input for financing 1 family in SW Ohio. My main focus is on these types of long term rentals in prime school districts. I cannot qualify for a portfolio loan as my DTI is above the requirements even though my credit score is >800 and I don't have 20%-30% to invest. I could put 10% into it. I have come across a SFR 3 br 1 ba with detached gar. Needs approx. $3-4 k in carpet and new garage door and paint. Have not had inspections yet. The #'s look good. Asking $49k. Zillow has it worth $85k and Trulia $88k. Rental potential is minimum $850+/per mo.probably more per rentometer. Taxes =$127/mo. Ins. $50/mo. Never explored HML but hate to pass this one up. Is this a deal worth exploring with HML?

Thanks all in advance for your input.

@Phil Mays - HML are usually for less than 6 months, you may find one that would do 1 year - but if you are planning on holding and can't get a bank loan you would have no exit strategy. I suggest calling on commercial banks and looking for a blanket loan - they do not look at DTI but rather your experience in REI and the deal - but they will usually require 25% down

Couple of things:

1) HML's are for short term stuff, as already stated.

2) Paint, carpet and garage door are probably going to run more than 3-4k. Carpet is probably that.

3) Don't trust zillow and trulia for your valuations. Go to a local realtor and pay for comps within quarter mile radius over past 3-12 months. Ask the realtor for rent comps as well. You can get rent comps from places like hotpads.com etc but give you peace of mind to see what things actually rented for, and not just what people are asking.

Thanks guys...good information

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