Real Estate Agent · Rocklin, CA · Member since 2020 · 5 posts · 2 votes
This is my first time posting. I'm hoping to get some good feedback and advice.
My wife and I are looking at a one parcel property in CA. There are two houses in the lot and both are currently rented to long term tenants. One is 9 years section 8 and the other is 20 years. The properties are separated by a fence, but considered a duplex from my understanding.
The property is off market at 375,000. The rent is currently $1,400 and $1,600. Rough calculations out the ROI at approximately $800-$1000.
The property is currently being managed at $96 a door by the owner of the property management company who is also the selling agent (Broker).
My question focuses around loans and down payments. I'm interested in any tips to get a lower down payment.
My wife is an agent and has several lenders she uses. The first one she reached out to suggested 25% down. I'm not sure if this is their requirement. Again this is a non owner occupied.
Any suggestions and tips would be greatly appreciated.
Lender · Greenville. SC · Member since 2018 · 25 posts · 9 votes
5y
For a conventional loan product (backed by Fannie Mae for example) the minimum down payment for an investment property duplex is 25%. So that will be a consistent requirement for conforming loans. Maybe start shopping local banks and credit unions to see if any of them have an appetite for that in a portfolio loan product?
Specialist · Valparaiso, IN · Member since 2020 · 10 posts · 8 votes
5y
@Brandon Lunardi
My lender in Indiana will require 20% for a conventional loan on a SFH that's an investment property. Commercial and muli-fam properties are 25% so I'd say they're on par with other lenders. Shop around, you might be able to find a lender requiring a 20% downstroke but you might be searching pretty hard. Someone on here might know one though. If it's far enough away and you can use it as a "vacation home" you might be able to put down 10%.
Lender · Denver, CO · Member since 2017 · 348 posts · 143 votes
5y
For a conventional loan you will be looking at a minimum of 20% down typically. There are some programs that do allow less than that down such as HomePath, but those do require that you purchase one of their REO properties. I would suggest talking to a few other lenders to see if you can get it down to 20% or even talk to a few local banks and credit unions and see if they have any investor programs that would be less than 25% down.
Also are you purchasing the property at market value or are you getting it at a discount?
For a conventional loan you will be looking at a minimum of 20% down typically. There are some programs that do allow less than that down such as HomePath, but those do require that you purchase one of their REO properties. I would suggest talking to a few other lenders to see if you can get it down to 20% or even talk to a few local banks and credit unions and see if they have any investor programs that would be less than 25% down.
Also are you purchasing the property at market value or are you getting it at a discount?
Thank you for the info. It's at market value, but the only property worth the comp is an actual duplex with same square footage. This property is two separate houses on the same parcel.
For a conventional loan you will be looking at a minimum of 20% down typically. There are some programs that do allow less than that down such as HomePath, but those do require that you purchase one of their REO properties. I would suggest talking to a few other lenders to see if you can get it down to 20% or even talk to a few local banks and credit unions and see if they have any investor programs that would be less than 25% down.
Also are you purchasing the property at market value or are you getting it at a discount?
Thank you for the info. It's at market value, but the only property worth the comp is an actual duplex with same square footage. This property is two separate houses on the same parcel.
Do you think that the property would be worth more if you were able to split it into 2 parcels?
If so than Iwould say look into that as an option to see if you could get it split and purchase it as 2 properties that will have better comps.
For a conventional loan you will be looking at a minimum of 20% down typically. There are some programs that do allow less than that down such as HomePath, but those do require that you purchase one of their REO properties. I would suggest talking to a few other lenders to see if you can get it down to 20% or even talk to a few local banks and credit unions and see if they have any investor programs that would be less than 25% down.
Also are you purchasing the property at market value or are you getting it at a discount?
Thank you for the info. It's at market value, but the only property worth the comp is an actual duplex with same square footage. This property is two separate houses on the same parcel.
Do you think that the property would be worth more if you were able to split it into 2 parcels?
If so than Iwould say look into that as an option to see if you could get it split and purchase it as 2 properties that will have better comps.
Yea that's something we're considering if we can get into it splitting it comps out to around 275k a piece