Who do you use for creative financing?

Question

Who are you using for creative financing? I plan on buying and holding rental properties. A lender with low money down options

thanks!

Ryan E. · Answer

Its been mentioned on here before but Mountain America Credit Union has 10% down on non-owner occupied properties. Interest rate is a bit higher than 20% down or owner occupied but there's no PMI so that's cool.

I'm following to see if there's any other suggestions.

Ryan E. · Answer

@Jay Hinrichs I believe (but could be wrong) the property just has to be in one of the states where they serve/ have branches: Utah, Idaho, Arizona, New Mexico, and Nevada.

I think Mountain America calls it their Portfolio Loan program. There's also a limit of two such loans per person.

On a side note thanks for all your advice on the forum, Jay!

Jay Hinrichs · Answer

Ryan E.  well we come back around full circle.. 10% down is incredible leverage. a lthough 2 per buyer does not allow one to scale much...

Steve Vaughan · Answer

Who do I use for creative financing?  The Seller!

All of my LOI offers include an option and price point for seller financing.  Not Jack and Jill homeowner on the MLS, but tired landlords.

Sometimes sellers will take a vehicle as a DP, or a 2nd/3rd on other property you own, etc.  They may also want a trip to wherever you can buy on a CC.  Get truly creative @Rylan Anderson!

William Hochstedler · Answer

What do you mean by creative financing?  Doesn't that imply no banks?  Sellers are always going to be your best route.

@Rylan Anderson  Your description says you're a lender.  Do you not have any products that you like?

Jay Hinrichs · Answer

Ryan E.  boy those are good terms.. do you have to live in state to get them or in their footprint.?

Alan Walker · Answer

I used the MACU90 program also.  Took about the same amount of time as @Ryan Anderson.  They are in no rush to process it but it is SUCH a good way to get into something.  I was able to get into a duplex and with the money I didn't have to put down was able to put in some upgrades that should pay off in increased rents.  Definitely want to take advantage of that program a second time.

Ryan Anderson · Answer

@Anthony Hurlburt it was all of 60 days.  It's hard to say how much was attributed to the loan officer I worked with and how much was just a lack of urgency from MACU in general.  If you're putting in an offer I would give yourself at least 60 days though.  Luckily the seller I bought from was in no hurry so I was fortunate.

Ryan Anderson · Answer

@Brett Lanier I think the requirements are pretty standard for any other type of conventional loan, but you'll have to speak with them on those details such as credit score and debt to income, etc.  I notice they do have a footprint in New Mexico so it might be something worth looking into.

Lower down payments inherently mean more risk. I wouldn't want my whole portfolio consisting of 10% down properties.  But when you can add that to the mix with some traditional financed properties it's a good fit for me.  I'm not worried about gaining strong cash flow on those properties.  I understand them for what they are.  But getting some cash flow, huge interest deductions, huge depreciation deductions, high principle paydown (higher than normal since the downpayment is small), and then appreciation,  I am very happy with my decision to use it as a wealth building tool.

Anthony Hurlburt · Answer

I was just pre-qualified for the 10% MACU 90 loan.  The loan officer was surprised by how little it gets used, he thinks it is a great program.  It can be used twice on 1-4 unit properties.  Now we just need to find a good deal to use it on!  By putting only 10% down it does make it harder to cash flow. On the other hand by conserving capital you have the ability to add more properties and thus diversify and be better able to handle downturns.

@Ryan Anderson about how long did it take you to close?  Just so I can know what to expect.

Who do you use for creative financing?

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