Looking for financing a new deal

11 Replies

I have 2 potential good deals. One that I think would make a good flip and the other that is a good rental deal. I already have 3 mortgages so I understand I can only have 4. I would like to find an investor for the flip but never did that before. Any suggestions are greatly appreciated

@Debra Muth

Here is a web site that may be of interest.

http://www.moneyunder30.com/get-mortgage-for-rental-property

Also, if you go to the Fannie Mae and Freddie Mac web sites they will have information regarding he max mortgages. As they change over time, it used to be 4 but now it appears they have raised the limit. Recently, at my REI group there was a loan officer that spoke about the changes from the government entities that now allow up to 10. There are also things like portfolio lenders that I recently found out myself more information on and am discussing with a lender just what they offer. That may also be an avenue for you to explore. Good luck.

@Debra Muth

You can get financing for up to 10 properties. Financing a flip is what can be difficult, but you have the option of delayed financing, when it is in livable condition prior to 6 months.

Here is some info that you may find helpful.

You can borrow for up to 10 conventional mortgages, down to a price of 10k! You have the option of a 15, 20 or 30 year term.

For A Fixed Rate Purchase, Investment properties, Mortgages 1-4;

  • A SFR requires a LTV of 85%
  • A MFR requires a LTV of 75%
  • A minimum credit score of 620

For A Fixed Rate Purchase, Investment properties, Mortgages 5-10;

  • A SFR requires a LTV of 75%
  • A MFR requires a LTV of 70%
  • Minimum credit score of 720

Here are some answers to FAQ as well;

1. For all 1- to 4-unit investment property transactions, cash reserves equal to six (6) months PITI for the subject property are required.

Cash Reserves Required For Other Properties Owned by Investor;

  • If the borrower has 1-4 mortgages, an additional two (2) months for every other SFR investment property and second home is required and additional six (6) months for every other 2-4 unit investment property and second home
  • If the borrower has 5-10 mortgages, An additional six (6) months for every other investment property and second home.

2. Gift funds are not allowed on Investment property transactions.

3. Escrows for taxes and insurance are required unless otherwise approved by the underwriter.

4. Loans for investment properties are not eligible if the transaction includes non-arm’s length and/or at-interest characteristics

5. Investment property transactions cannot close in trust.

6. Maximum 2% sellers concessions is allowed!!

http://www.biggerpockets.com/blogs/5110/blog_posts/42789-conventional-financibg-available-for-up-to-ten-properties

Thank you for this information, this is great to have. It is difficult to navigate the marketing in the commercial world compared to a SFH purchase to live in without renting out.

Originally posted by @Jerry Padilla :

@Debra Muth

You can get financing for up to 10 properties. Financing a flip is what can be difficult, but you have the option of delayed financing, when it is in livable condition prior to 6 months.

Here is some info that you may find helpful.

You can borrow for up to 10 conventional mortgages, down to a price of 10k! You have the option of a 15, 20 or 30 year term.

For A Fixed Rate Purchase, Investment properties, Mortgages 1-4;

  • A SFR requires a LTV of 85%
  • A MFR requires a LTV of 75%
  • A minimum credit score of 620

For A Fixed Rate Purchase, Investment properties, Mortgages 5-10;

  • A SFR requires a LTV of 75%
  • A MFR requires a LTV of 70%
  • Minimum credit score of 720

Here are some answers to FAQ as well;

1. For all 1- to 4-unit investment property transactions, cash reserves equal to six (6) months PITI for the subject property are required.

Cash Reserves Required For Other Properties Owned by Investor;

  • If the borrower has 1-4 mortgages, an additional two (2) months for every other SFR investment property and second home is required and additional six (6) months for every other 2-4 unit investment property and second home
  • If the borrower has 5-10 mortgages, An additional six (6) months for every other investment property and second home.

2. Gift funds are not allowed on Investment property transactions.

3. Escrows for taxes and insurance are required unless otherwise approved by the underwriter.

4. Loans for investment properties are not eligible if the transaction includes non-arm’s length and/or at-interest characteristics

5. Investment property transactions cannot close in trust.

6. Maximum 2% sellers concessions is allowed!!

http://www.biggerpockets.com/blogs/5110/blog_posts/42789-conventional-financibg-available-for-up-to-ten-properties

Is it possible to finance the rehab of a purchase in the same transaction? Meaning, normally the mortgage being acquired has the normal 20% with 80% being financed but in addition to - the rehab costs of say $25-30 are also part of the financing? This property would be a buy-n-hold.

@Debra Muth

I would hon in and target the best deal.  We get distracted chasing deals around rather than making a deal.  Get the deal in contract.  A contract is the base point for creating a good deal.  

Good luck.

Frank

@Daria B.

The house would have to be in livable condition to obtain financing. You wouldn't be able to finance rehab costs with conventional..... Maybe a local lender or private lender. If you have four or less mortgages including the subject you can do a cash out refinance based on ARV after 6 months of ownership.

Originally posted by @Jerry Padilla :

@Daria B.

The house would have to be in livable condition to obtain financing. You wouldn't be able to finance rehab costs with conventional..... Maybe a local lender or private lender. If you have four or less mortgages including the subject you can do a cash out refinance based on ARV after 6 months of ownership.

 Thanks Jerry, The house is livable to the extent of fixing the back-side roof leak. Some investors would paint and do a clean up and buy what appliances need replacing and say it's 'livable'. But I don't like doing that since I want to attract a good client to rent to. So in this case, if it were just the roof leak and with all other things being equal that the rehab is to get it to a 'better' livable condition, would that qualify for rolling rehab costs into the over all financing. I realize that you have not seen the property and my explanation is subjective since others would look at it and may have a different opinion. I'm looking for 'could it be possible' based on yes it's livable but I'd like to do some work to make it better. Thanks!

@Daria B.

Livable condition includes things like the roof, plumbing, electrical, flooring, walls, ceiling, no peeling paint and cabinetry being in place and working order for someone to move in without a hazard etc. Cosmetics are not counted against you. Hopefully this helps. The assessment comes from the appraiser. 

@Jerry Padilla ,

Livable condition includes things like the roof, plumbing, electrical, flooring, walls, ceiling, no peeling paint and cabinetry being in place and working order for someone to move in without a hazard etc. Cosmetics are not counted against you.

As above, can we fix the house and refinance? Is it possible to do 10 house with  - buy with cash and rehab and refinance once it is rented?  

Thanks @Jerry Padilla and @Padma Mody .

I think in the case of the roof needing to be fixed, the appraiser will note that and the financing will likely not be able to be done through conventional methods. Hence the portfolio lender. But the good thing is that albeit with higher interest rates from a portfolio lender, the property can be purchased and rehabbed and refi-ed in 6 months or if more time permitting from the conventional lender. And granted that the appraised value is greater, which after a rehab "should be". :)

@Daria B.

@Padma Mody

You can do a rate and term refinance at any time, without any seasoning requirements for up to ten mortgages.

You can do a cash out refinance based on appraised value after 6 months from closing. This only work for the first four mortgages.......

At mortgage 5 if you pay cash at first for the property than you can do a cash out prior to 6 months, with delayed financing. 

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