Evergreen, CO · Member since 2017 · 91 posts · 22 votes
I've made about a dozen calls to community banks and credit unions, but haven't found one yet. Can you recommend or at least point me to some on the front range?
I've not borrowed from First Bank but I have met and talked with a banker at their Greenwood Village Branch. They will lend to a single member LLC with a personal guarantee. They do require a "banking relationship" - with my single member LLC, they wanted to see personal bank accounts as well as business accounts set up with them. They also have very specific lending areas (areas of Southern California, areas of Arizona, and areas within Colorado). They will do 75% loan to purchase price/cost basis on a property owned less than one year and they will do 75% loan to value on a property you've held one year or more. Essentially, they are looking to be sure you can cover the loan as their biggest lending criteria - both reserves and income (business and personal if applicable). In my case, I approached them about a specific property and I am waiting for the seasoning period to complete before we move forward. I'm also working on establishing that banking relationship. As a bonus, they have free donuts at their branches on Saturdays.
I was referred to them by a friend who is a mortgage broker (he's done three loans for me and I used to work with the guy about 20 years ago) that can't lend to LLC's.
First Bank out of Lakewood has been great to work with on investment properties for us. The only negative is the lenders move around a bit so you have to spend a little time educating them if they are new.
@John Carr, What kind of education should I be prepared to offer? I'm a newbie but I can certainly do more research if necessary. I understand the big picture of portfolio loans but I know there's always more to learn.
@Linda Weygant, I will definitely circle back with these guys. I thought for sure I asked FB & BoW about this when I was researching HELOCs. Elevations is new to my list so I'll give them a holler too. Thanks!
@Travis Sperr, I'm intending to buy some properties later this year and want to start building relationships with lenders. No specific properties yet, just getting ready...
@Account Closed unless you have over 10 properties, there is no need to go with a portfolio lender. Conventional loans are typically the best until you get over 10 loans on properties. If you are buying properties with 5 or more units you need a commercial loan. Those can be had via a bank or a broker so you may want to consider broadening your search there. Why do you think you need a portfolio lender?
I've not borrowed from First Bank but I have met and talked with a banker at their Greenwood Village Branch. They will lend to a single member LLC with a personal guarantee. They do require a "banking relationship" - with my single member LLC, they wanted to see personal bank accounts as well as business accounts set up with them. They also have very specific lending areas (areas of Southern California, areas of Arizona, and areas within Colorado). They will do 75% loan to purchase price/cost basis on a property owned less than one year and they will do 75% loan to value on a property you've held one year or more. Essentially, they are looking to be sure you can cover the loan as their biggest lending criteria - both reserves and income (business and personal if applicable). In my case, I approached them about a specific property and I am waiting for the seasoning period to complete before we move forward. I'm also working on establishing that banking relationship. As a bonus, they have free donuts at their branches on Saturdays.
I was referred to them by a friend who is a mortgage broker (he's done three loans for me and I used to work with the guy about 20 years ago) that can't lend to LLC's.
My lender at First Bank was concerned with the income (i.e. signed leases) covering expenses (insurance and taxes) and debt service (principal and interest) at a ratio 1.25x. Experience wasn't a big issue but my past experience. Rather as @Ed E eluded to in the event the property cannot cover the debt service can you (or whomever personally guarantees the loan) cover the shortfall. They did lend to my LLC and I did personally guarantee the loan, however I believe the lent 75% on this one, which was a duplex. That said in my past I was a commercial real estate lender for very large transaction and we would want lots of detail on who the sponsor was.
Maybe its best to start with what are you looking to accomplish as @Travis Sperr mentioned and maybe the community can better guide you.
@Bill S. - Thanks for chiming in. I read a lot of your posts. And congrats on finally leaving your W2 job!
I'm aware of the 10 loan limit, but is there a good reason to avoid portfolio lenders when just getting started? I haven't talked to many conventional lenders yet, but I just had the one that did my primary tell me that she wouldn't loan less than $100K (because she wouldn't make enough money) and so I need to look elsewhere. I haven't pinned down my exact market, but it definitely won't be in the hot areas of the front range. I'm curious to find out how little (rather than how much) I can borrow.
I thought it might be beneficial to just start building a relationship with a portfolio lender...
Got it. First Bank would be an easy one for me if the numbers end up making sense. Still undecided about whether or not to get the LLC right off the bat though. Keep reading pros and cons of both.
@John Carr - I want to start buying SFRs and then set them up on lease options. I can certainly talk to other conventional lenders if the lower price point isn't a hang-up for them. Any recommendations along those lines would be welcome as well.
I would think I would be approved to personally guarantee several loans in my current situation, but I don't know how it would play out after that.
@Account Closed based on the additional information I would suggest you find a small bank where your properties are going to be since it sounds like they would not be in this area. I seriously doubt you will find FirstBank will lend in Kansas (not saying that's where you will buy just an example). As Ed mentioned they only lend in their geographic target area. That is pretty typical of banks. They are a bit like us, they want to be near their money so to speak.
Also, you can do some searching with the search tool but I think I remember that the min loan is about $50,000. Below that and the paperwork eats up the profit.
@Aaron Hunt I haven't asked First Bank to do this but have found them willing to listen, but what you might want to do is have them set up a line of credit with the homes and cash flow as the collateral. However they are geographically restricted - example they will loan in Breckenridge but not Telluride reason being they don't have a branch near by. As you have the home on lease options it might then be more advantageous to place that particular home on a one of loan at that time or after a certain period of time like 12 months of on time payments, but closing cost could eat into that profit too. Overall things that they would want to know how are they getting paid back (1) property (2) you or other sponsor. Best of luck, and word of wisdom be prepared for several "no" answers until you find the right lender - that lender may even need to be a private lender.
@Account Closed-Are you looking into portfolio loans because the properties you want to buy have a front desk? I live full time in Breckenridge, am an investor, real estate agent and property manager. My clients have had good success with First Bank (local branch) and with Movement Mortgage, Jack Laurent. He is based out of Denver. Jack has a list of the condotel complexes and larger properties here in Summit County that he can underwrite. PM me if that's what you are looking for and I'll connect the two of you.