Projected Appraised Value Lending

13 Replies

Hey BP,

I was listening to a podcast recently by Dan Lane from the Rental Income podcast  and he interviewed a gentlemen who was using credit unions to invest in value add buy and hold deals. I was intrigued by this as these credit unions were providing commercial loans up to 80% of the projected appraised value. At the closing this investor was in most cases not needing to bring any of his own capital, instead he would get a check for the rehab and more often than not would have some left to put into the next deal. 

I've since found a couple credit unions in FL where I reside and have also found two credit unions that will do it. I'm seeing terms of 5 years fixed interest rate of around 5.4%, 10 year fixed term or a 15 year balloon with a 20 year amortization. I realize these are commercial terms and I would need to refi at around the 5 year mark (I think I can negotiate this longer), but for the above investor it allowed him to buy some great properties with no money down. 


Anyone have any experience of using these loans?


Thanks!

Matt

Hey Matt, currently have 2 loans going on like this right now on flip properties that my business partner and I are doing. Both projects the lender is financing 100% and we only have to pay closing costs.

This can help level up your business a lot and I would highly recommend. However, they do typically use low comps so just be aware

Originally posted by @Carter Crowley :

Hey Matt, currently have 2 loans going on like this right now on flip properties that my business partner and I are doing. Both projects the lender is financing 100% and we only have to pay closing costs.

This can help level up your business a lot and I would highly recommend. However, they do typically use low comps so just be aware

Thanks for sharing your experience.  How did you actually conduct your Project Appraised Value?  Did you pay a commercial appraiser to provide your projected value?  Thanks.

Originally posted by @Matthew Dunn :

Hey BP,

I was listening to a podcast recently by Dan Lane from the Rental Income podcast  and he interviewed a gentlemen who was using credit unions to invest in value add buy and hold deals. I was intrigued by this as these credit unions were providing commercial loans up to 80% of the projected appraised value. At the closing this investor was in most cases not needing to bring any of his own capital, instead he would get a check for the rehab and more often than not would have some left to put into the next deal. 

I've since found a couple credit unions in FL where I reside and have also found two credit unions that will do it. I'm seeing terms of 5 years fixed interest rate of around 5.4%, 10 year fixed term or a 15 year balloon with a 20 year amortization. I realize these are commercial terms and I would need to refi at around the 5 year mark (I think I can negotiate this longer), but for the above investor it allowed him to buy some great properties with no money down. 


Anyone have any experience of using these loans?


Thanks!

Matt

 Thanks for sharing this.  I am curious about how did you go about approaching these credit unions.  

Originally posted by @Calvin Lipscomb :
Originally posted by @Matthew Dunn:

Hey BP,

I was listening to a podcast recently by Dan Lane from the Rental Income podcast  and he interviewed a gentlemen who was using credit unions to invest in value add buy and hold deals. I was intrigued by this as these credit unions were providing commercial loans up to 80% of the projected appraised value. At the closing this investor was in most cases not needing to bring any of his own capital, instead he would get a check for the rehab and more often than not would have some left to put into the next deal. 

I've since found a couple credit unions in FL where I reside and have also found two credit unions that will do it. I'm seeing terms of 5 years fixed interest rate of around 5.4%, 10 year fixed term or a 15 year balloon with a 20 year amortization. I realize these are commercial terms and I would need to refi at around the 5 year mark (I think I can negotiate this longer), but for the above investor it allowed him to buy some great properties with no money down. 


Anyone have any experience of using these loans?


Thanks!

Matt

 Thanks for sharing this.  I am curious about how did you go about approaching these credit unions.  

 Listen to episode 144 of that podcast and he explains it well. I called around 6 credit unions in my area, 2 of the 6 were open to it. I started the conversation with I was looking for a commercial loan for my real estate business. 

Originally posted by @Matthew Dunn :
Originally posted by @Calvin Lipscomb:
Originally posted by @Matthew Dunn:

Hey BP,

I was listening to a podcast recently by Dan Lane from the Rental Income podcast  and he interviewed a gentlemen who was using credit unions to invest in value add buy and hold deals. I was intrigued by this as these credit unions were providing commercial loans up to 80% of the projected appraised value. At the closing this investor was in most cases not needing to bring any of his own capital, instead he would get a check for the rehab and more often than not would have some left to put into the next deal. 

I've since found a couple credit unions in FL where I reside and have also found two credit unions that will do it. I'm seeing terms of 5 years fixed interest rate of around 5.4%, 10 year fixed term or a 15 year balloon with a 20 year amortization. I realize these are commercial terms and I would need to refi at around the 5 year mark (I think I can negotiate this longer), but for the above investor it allowed him to buy some great properties with no money down. 


Anyone have any experience of using these loans?


Thanks!

Matt

 Thanks for sharing this.  I am curious about how did you go about approaching these credit unions.  

 Listen to episode 144 of that podcast and he explains it well. I called around 6 credit unions in my area, 2 of the 6 were open to it. I started the conversation with I was looking for a commercial loan for my real estate business. 

 Thank you.

Let me see if I have this right. You have a lender willing to lend 80% of the rehabbed appraised value with only the unrehabbed property as collateral.

Originally posted by @Carter Crowley :

Hey Matt, currently have 2 loans going on like this right now on flip properties that my business partner and I are doing. Both projects the lender is financing 100% and we only have to pay closing costs.

This can help level up your business a lot and I would highly recommend. However, they do typically use low comps so just be aware

 That's great to hear! Can I ask if the terms I mentioned are comparable to what you have? Did they start you at 100% financing or did you work up to that with the lender throughout prior deals? 

Are these loans specific to credit unions only, or are private lenders and portfolio lenders doing them as well? Anyone with some experience please chime in.