Having Trouble Finding A 30 Year Portfolio Lender

13 Replies

This problem only applies to the Refinance portion of the BRRRR process. I am having trouble finding a lender who will finance a 30 year loan on a SFR rental property. However I have talked with a lot of small banks and a few offered a 5 year ARM with a 20 amortization. The 5 year ARM would work with the properties I am looking at but that obviously decreases cash flow. My biggest concern is giving up the extra cash flow I would get on a 30 year amortization opposed to the 20 year.

Is this because of Covid?

My ideal lender would offer a 5 year ARM with a 30 year Amortization is that too much to ask for😂??

Also I am aware that I can put properties in my personal name and qualify for a conventional 30 year mortgage but I currently do not have the income to acquire more than one mortgage.

I am located in the Birmingham area any referrals would be greatly appreciated!

@William Eric Schaefer It seems like you are willing to transfer the title into your name. In that scenario your DTI shouldn't be an issue if you have a good cash flow property. Find a mortgage banker that will give your 75% rental income credit. That should offset your new mortgage payment, so there should be no impact to your DTI.

Good luck.

You are with a bank who has limited options. There should be no hold on rate and term refinances or cash out refinances unless you have a 5 Unit or more and the loan amount is under $1MM. Those loans are at a standstill with most lenders. If it's a 4 unit or less SFR than it can be done all day. Also 5 units or more over $1MM are still closing with great rates. Closing in an LLC also should not be an issue again its just certain banks.

Originally posted by @William Eric Schaefer :

This problem only applies to the Refinance portion of the BRRRR process. I am having trouble finding a lender who will finance a 30 year loan on a SFR rental property. However I have talked with a lot of small banks and a few offered a 5 year ARM with a 20 amortization. The 5 year ARM would work with the properties I am looking at but that obviously decreases cash flow. My biggest concern is giving up the extra cash flow I would get on a 30 year amortization opposed to the 20 year.

Is this because of Covid?

My ideal lender would offer a 5 year ARM with a 30 year Amortization is that too much to ask for😂??

Also I am aware that I can put properties in my personal name and qualify for a conventional 30 year mortgage but I currently do not have the income to acquire more than one mortgage.

I am located in the Birmingham area any referrals would be greatly appreciated!

You're looking in the wrong places. Banks, that aren't quoting conventional financing, aren't good with non-qm lending.  Also, it sounds like the banks you're talking to are quoting you commercial money terms.  

Having said that, if you don't have the income to qualify, then you need a no income verification loan. There are numerous lenders and brokers that will be happy to give you a quote on a 5/1 ARM with a 30 year amortization.

After speaking to a bunch of them, you'll find, in TODAY'S market, with good credit, your rate will be in the high 6's to mid 7's with a few points.  Birmingham is a tough market and the loan sizes can be a problem.  Make sure it's above 100K and you'll be fine.

Best of luck

Stephanie

Originally posted by @William Eric Schaefer :

@Jason Wray

Thanks for your response but I have called 49 banks in the Birmingham area and they all give me the same answer: "We can do a 5 year ARM with a 20 year amortization".

49 banks?  Whoa.  Bet that was a hoot.

5/5/20 terms are standard commercial fare.  A lot of people corner themselves into commercial bondage by over-sophisticating a house or being too impatient to allow seasoning. 

Dont forget that you also get to report your financials to them every year and the loans are callable (at the mercy of some committee) every 5 years, not just adjustable.

That said, I've had plenty of commercial loans on commercial property.  When they force you to pay them off in 20 vs 30 yrs, you won't wish you still had 10 more years of payments when it's paid off. 

 

Originally posted by @William Eric Schaefer :

@Steve Vaughan

What do you mean by over sophisticating a house?

 Putting it in an entity or trust or something 'sophisticated' vs your own name. Won't be able to get 30 yr fixed conventional financing like natural persons can. 

@William Eric Schaefer Have you called a larger bank that works specifically with investors?  Like Lima One, First Lending, or Ridge Lending?  30 yr am programs exist right now... I agree you might be looking in the wrong place :)

Originally posted by @Stephanie P. :
Originally posted by @William Eric Schaefer:

This problem only applies to the Refinance portion of the BRRRR process. I am having trouble finding a lender who will finance a 30 year loan on a SFR rental property. However I have talked with a lot of small banks and a few offered a 5 year ARM with a 20 amortization. The 5 year ARM would work with the properties I am looking at but that obviously decreases cash flow. My biggest concern is giving up the extra cash flow I would get on a 30 year amortization opposed to the 20 year.

Is this because of Covid?

My ideal lender would offer a 5 year ARM with a 30 year Amortization is that too much to ask for😂??

Also I am aware that I can put properties in my personal name and qualify for a conventional 30 year mortgage but I currently do not have the income to acquire more than one mortgage.

I am located in the Birmingham area any referrals would be greatly appreciated!

You're looking in the wrong places. Banks, that aren't quoting conventional financing, aren't good with non-qm lending.  Also, it sounds like the banks you're talking to are quoting you commercial money terms.  

Having said that, if you don't have the income to qualify, then you need a no income verification loan. There are numerous lenders and brokers that will be happy to give you a quote on a 5/1 ARM with a 30 year amortization.

After speaking to a bunch of them, you'll find, in TODAY'S market, with good credit, your rate will be in the high 6's to mid 7's with a few points.  Birmingham is a tough market and the loan sizes can be a problem.  Make sure it's above 100K and you'll be fine.

Best of luck

Stephanie

 Stephanie,

If I send you a DM would you be able to send me some of the banks that offer these terms?

Hi William,

As an alternative to traditional lending, have you looked into asset-based loans? Interest rates are definitely going to be higher than conventional (although pre-COVID-19 they were competitive and looks like it's trending that way again), but as long as the cash-flow is really strong, and you can have someone with solid credit guarantee the loan, you should be able to get a 30-yr fixed on a 1-4 unit property at around 70% LTV for cash-out, 75% LTV for purchase or rate-term (although again, we're seeing strong pressure to move these percentages up about 5%, but this is where most are currently).

I can send you a PM, would be happy to answer any questions you have. Cheers!