Short time lurker, first time poster here. Love the content and forums on BP.
A little about myself, I have a background in sales and marketing (just moved to the tri-state area from Dallas last year), and I have decided to put my financial well being in my own hands. Got motivated by reading "Rich Dad Poor Dad" and "Cashflow Quadrant," and I have a decent amount of capital to get going.
I have committed to investing in real estate and buying my first rental property this year. I would like to do the BRRRR strategy if possible, but at a minimum want to purchase a SFH buy and hold in my market.
I have networked and lined up most of my "team", now trying to establish a relationship with a local bank in town.
The issue I have run into is with the banks, I can't find a portfolio lender that will do a 30 year commercial loan like the guys on the BP podcasts always talk about. I have tried a few of the local credit unions and smaller institutions to no avail (15 and 20 yrs are most common). Any other ideas? Am I missing something? Thanks!
Nothing wrong with a 15 or 20 yr commercial loan that you can refinance after 6mo/1yr...I understand you'd prefer to finance more & put down less like the books recommend, however you have to understand from the banks perspective you're unproven. You could try negotiating buy offering to agree to higher interest rate, higher monthly or more down in exchange for a 30yr but then you're kind of defeating the purpose.
But if you're going the SFH route, why go for a commercial loan?
Probably easier just to go the conventional route.
Welcome, and good luck by the way!
@Ali Hashemi thanks for the reply and the information. Honestly the reason I was going the commercial route was due to my lawyer's advice. He said to buy all properties in an LLC for asset protection. I still have a couple of other institutions to meet with though.
@Joe Weaver Welcome! I’ve always interpreted that when they mention a 30 year note on the podcasts they are getting conventional financing. In a podcast I listened to recently, Brandon said that he gets a conventional mortgage and then titles the property in his LLC after closing (they discuss the possible implications of doing so in that podcast).
I’m not aware of any local banks in Evansville that will do a 30 year amortization on a portfolio loan, so I’d be interested to hear if you find one.
Since you’re new to the area, I encourage you to take a good look at the property taxes and how they’re taxed differently for rental property in Indiana. For example, on one of my properties, the taxes went from $783 one year to $1,886 the next. Investment property isn’t eligible for deductions and is taxed at 2% compared to 1%.
Thank you @Account Closed ! Great piece of information on the taxes that I had recently been made aware of. I’ll certainly keep you posted if I do find a lender who does offer a 30 year amortization on a commercial loan.
@Joe Weaver .... Good luck looking for 30 year commercial. Not going to happen with prime constantly going up. I've been investing in the Evansville market for the past 11 years, and have actively in property management for the past seven years. We have close relationships with a mortgage brokers and several local banks that can provide favorable terms. We also have access to some deals for our investor base that typically doesn't hit market.
PM me for more information or if you have any questions.
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