How do people typically finance their rental homes? I’ve owned a few rental homes but I’ve been doing 15 or 20 year commercial loans. It’s very hard to find a house priced well enough to cash flow with a 15 or 20 year loan. Is my financing my problem why I can’t create a better than break even cash flow?
Investor · NY · Member since 2020 · 57 posts · 44 votes
6y
I bought my house in my name... conventional 30 year with 25% down, non-owner occupied. After, I closed, I reached out to my title company and changed the deed to my LLC. The mortgage company knows because I made sure to tell them before I changed it..and I added my LLC to my insurance as an additional insurer. I'm in contract to purchase my 2nd rental property...it will be with a conventional 30 year loan and with 25% down again, and non-owner occupied and in my name....I will have the deed changed to my LLC after closing again too. My mortgage broker said that if I get the loan originally in my LLC's name that the interest rate will be higher...I don't want that.
Investor · Johns Creek, GA · Member since 2017 · 463 posts · 488 votes
6y
@Scott Mcnemar I have put down payment ranging from 10%-32%, interest rate from 3%-6%, all 30-year amortization, with balloon payments of 5-10 years. Cash on cash ranges from 12% - 20% year one,
Rental Property Investor · Miami, FL · Member since 2016 · 173 posts · 206 votes
6y
@Brad Moore The last 2 properties I bought I closed under my LLC with a 20% down 30-year loan at 5-6%. Slightly higher interest rates than a loan closed under your personal name, but it was important to me to close under the LLC. Those loans are out there. You just have to keep asking around. Call the smaller regional banks. They're more likely to have the types of loans you want.
Fort Lauderdale, FL · Member since 2016 · 22 posts · 8 votes
6y
@Jennifer Brown. Consider Greg gentiles at suntrust or Marc at cornerstone bank I have done 15 percent down on my invest properties. Rates were 4.7 to 5.3
Investor · Tampa, FL · Member since 2017 · 589 posts · 251 votes
5y
30 year term is the strategy with the tenants paying it over time. The longer the term the lower the monthly payment. When you charge higher rents you will cash flow more. Shorter terms are great if you follow a Dave Ramsey mindset of having no debt when investing in real estate. The leverage game is long term cash flowing with appreciation strategy.