I'm a newish investor looking to scale in Indianapolis. After purchasing 3 short term rentals, my DTI is in the 60s. I would like to purchase a rental property in Hamilton County Indiana (near Indianapolis). I'd love some advise on banks that might loan to me. I'm assuming they would be portfolio. Do I need to stick with commercial now or can residential portfolio deal with my DTI? I've tried a few credit unions and now my credit score is 15 points lower from credit pulls. I'd like to narrow in on best chances banks before another credit pull.
The best I've found so far is 25 year loan at 5% with 25% down. I would really like better terms/less down payment.
What's the purchase price?
Purchase price $176k. Off market home. Market value $215k. Current renter pays $850. Market rent $1600.
@Christy Brinkruff What neighborhood and bedroom count? From investor to investor those numbers are pushing the limit for a cash-flow long term rental (napkin calculation).
I've been working with Forum Credit Union for years. I've done real estate and auto loans. Maybe they can offer a better deal.
That $850 a month rental is really low -- hopefully you can get it up to the $1600. Try Elements Credit Union, they are local to Indianapolis and I have heard they have a good portfolio loan. I also have used Cross Country Mortgage for loans based on rental income not DTI. I will PM you because I need to look up contact info for you.
You can look into lenders that offer DSCR loans. These will be loans that are based on your credit and the properties ability to generate enough rental income to cover the property expenses (mortgage, taxes, and insurance) as opposed to your personal ability to cover that plus all your personal expenses.
When does the lease on the subject property end?
I think I found a good bank to help with my current deal, but I’m always looking for more options for the future. ￼
Have you ever heard of the First Bank of Berne?
They are offering 4.4 with 25% down, but I can use any amount it appraises above the purchase price as part of my down payment.￼ Hopefully the appraiser will give me a legit amount based on comps and not just the purchase price.
Thanks Michael. It will end four months after I purchase it￼￼.
@Christy Brinkruff -- I have heard of First Bank of Berne but not done any deals with them. That is an interesting concept, but I have been having an awful time with appraisals lately, so hopefully that strategy works out for you. (BUT, I think that is just me :).
Most of the lenders I work with are 20% down for single family and 25% for multi and about 1% above prime for investors.