Updated 3 months ago on . Most recent reply
Financing Options after maxing out conventional loans
Hi BP,
Long time BP, I am a landlord in the Atlanta area. I'm currently exploring ways to acquire another property, but I am maxed out on conventional loans. Are there any alternative loan options or creative strategies to use or seen others use after they hit the conventional loan limit?
I'm open to hearing about portfolio loans, DSCR loans, selling financing or anything that might be worth looking into for an additional rental. I appreciate any insight or experiences. Thanks in advance!
Most Popular Reply
Hi Avery,
Here’s what we did…
We went to a local bank and did a DSCR loan with a cash out component as well that combined five older mortgages that at the time were at higher interest rates than what the DSCR lender was charging. Loans were from 2018-2019 in the 5% to low 6% range. The DSCR lender was offering 4.1%… back when conventional residential loans were in the 3's.
So because the bank holds its commercial (DSCR) loans, all 5 of those properties came off our Fannie Mae count and opened up 5 more spots for us. Obviously the interest rate situation has changed since then… But the method probably still applies in general.
But, keep in mind that the DSCR loans usually reset every five years and that is what happened to us. We went from 4.1% to 6.2% this year on that loan… So there are trade-offs to consider.
Otherwise, my best advice is to put each property in one person‘s name if you happen to be married. That gives you 10 slots for each of you. If you didn’t do that, you’re probably saying “well now you tell me!” lol! But that helped us too.
Hope it helps!
Randy