Real Estate Investor · Chicago, IL · Member since 2011 · 139 posts · 101 votes
12y
Looks like a good product on the surface but the key will be in the details.
What are your typical closing costs associated with say closing on a $1M portfolio of SFH:
- Appraisal fee x # of properties
- Upfront fees / points (looks like you are a broker...do you get paid on points or yield spread)
- Underwriting / processing fees
We looked into doing this last year but the big deal killer for me was that all of these fees came to over $25k on a $500k loan. As a reference our total closing cost with a local bank on the same portfolio was less than $5k.
Lender · Nat'l Commercial Mtg Lender - Round Rock, TX · Member since 2014 · 916 posts · 235 votes
12y
@ Craig Rismiller
Estimated Upfront Diligence Cost are Typically: -Around $500 per Single Family Residence for Valuation & Diligence ( V & D cost are different for 2-4 units and multifamily) -Around $250 per Guarantor -Around $1,395 for Underwriting Fee
The estimated upfront quote excludes origination fee, title insurance, borrowers legal counsel and other cost customary paid by borrower.
Estimated Upfront Diligence Cost are Typically: -Around $500 per Single Family Residence for Valuation & Diligence ( V & D cost are different for 2-4 units and multifamily) -Around $250 per Guarantor -Around $1,395 for Underwriting Fee
The estimated upfront quote excludes origination fee, title insurance, borrowers legal counsel and other cost customary paid by borrower.
*Quote is subject to change
Thanks Karen - those fees seem typical. The big unknown with these types of loans is the one you excluded...the origination fee. What is typical for a $500k to $1M loan...1% origination?
Origination is not an upfront cost. You only pay an origination if the loan closes. I am a broker and my company charges 1% on $500,000 up. Like a realtor, I only get paid for the work I do when the loan closes.
I am also an investor so I can appreciate having a concern with the cost. When I look at doing a deal, it comes down to the cost of doing business and if it will take me to a higher level of investing. I sit down and look at the numbers. Each investor has to determine for themselves if the results (the numbers) out way the cost. If the results do not out way the cost, my recommendation to that investor would be not to do the loan. You might want to talk to your tax preparer to find out if the origination fees are tax deductible.
Wishing You the Best,
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