I am new to BP so please forgive me if this question has been asked. I spent considerable time searching the forum before creating this post, though.
Can anyone recommend a commercial lender who will do a construction or construction-to-perm loan in Minnesota? I would prefer 85%-90% LTC but it that LTC might not be absolutely necessary. A lender who will do this nationally, including Minnesota, would be even better. This is for the purchase of a four unit that will be converted into a five unit.
I do not think this falls cleanly into the crowd-sourcing category since there are multiple types of lenders who might offer this...
Thank you very much in advance!
Hey @Matt Strehl I would be curious if you find someone that will do that LTC. I consistently see 75% LTV (not C) and realize there may be someone who will do this as a short-term construction loan. I have not heard of any institutional (non-private) lender offering this as a construction to perm loan. I think you will need to look for a lender that is owned by a hedge fund as bank regulators will not allow a bank to lend on such a low LTC. Remember banks losses are insured by the FDIC, and when the mortgage mess happened the FDIC "foreclosed" on 100's if not 1,000's of banks for their bad loans. I actually know of 3, near me that were taken over ty the FDIC and then sold to larger more financially secure banks. The bottom line, you may find what you're looking for in a bank for short-term construction loans but long term they must have a lower LTC as demanded by federal regulators. If you find this product it will not be a traditional bank, but a hedge fund or other wall street, private money funded group. Please tag me if you do find it.
Hey @Tim Swierczek . Thank you very much for this information. I understand what you are saying. Based upon this, it sounds like my best option is to go to a private lender to get an 85-90% LTC (or LTV since I wouldn't buy something I didn't think had a higher value than cost) construction loan. Once construction is complete and the rent is stabilized I can go to a traditional bank to refinance with a permanent loan.
Do you agree? If so, have you heard or a good private lender for the construction loan or permanent lender for the refi around that area?
@Matt Strehl , That would be the easiest plan to execute, however you may be able to find a bank that will do that LTC, with a LTV that is lower. Meaning your finished appraised value is expected to be higher than your LTC. They would consider this if you have an outlet that will pre-approve you to refi the property once the construction is complete and rents stabilized. My company is not good at this but I do know that is possible.
Thank you very much, @Tim Swierczek ! I will let you know if anything interesting results from this financing search.
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