Area: Solid B area (largely a solid residential middle class town, only 1 other 3-family has sold in this town in the last 2+ years)
Exit strategy: BRRRR project, the plan is to cash out refi
We are a little delayed in posting this diary so in the coming posts we will detail what went into purchasing the property and where we are in the rehab phase of the project. From there we will try and keep up with posting updates regularly.
@Rick Santasiere We typically refi out in 4-8 months depending on the situation.
We have used portfolio lenders and asset based lenders.
We prefer to use local/CT based portfolio lenders if we can but have had success working with asset based national lenders as well. Whatever keeps our money moving faster works for us.
Just curious, what portfolio lenders have you used in CT?
Real Estate Broker · Granby, CT · Member since 2015 · 695 posts · 317 votes
10y
@Philip Pape, funny you ask.. Working on a deal now where I am hitting a wall. It's kind of due to the "deal" itself (and not cash flowing properly in it's current state). But I have used a portfolio lender in a small town (First National Bank of Suffield) for some of my short term loans. They are a little more conservative than I (and all of us) like, but can do more than a national lender can (in terms of not following every Fannie guideline to a T..) I have a deal now where I need a lot of money with no re-payment for at least 6 months, which is not in my "wheelhouse" so to speak.. Research is key I guess.. And you? What do you use?
Investor · Bloomfield, CT · Member since 2016 · 86 posts · 25 votes
10y
@Rick Santasiere, I'm actually brand new to this and just joined the forums today. But I did come across this other post after replying to yours that lists quite a few possibilities for portfolio lenders here in CT. Maybe it will be helpful to you:
Thanks for letting me know about the Suffield bank, which is on the aforementioned list. What would you say have been the biggest pros/cons? For example, is this the best option for someone with stellar credit and good income or are there less expensive financing options (rate and points-wise)?
Real Estate Broker · Granby, CT · Member since 2015 · 695 posts · 317 votes
10y
when you are getting started you have no real reason to use a portfolio lender, but might prefer it if you have huge aspirations for the future. There are some national banks that are giving crazy low investment property rates (4 fam and under) with stellar credit and good income. Pros and cons to portfolio lenders can be mixed based on the lender. So my experience(s) could vary from others, but I will share my personal ones:
Pros: they hold the mortgage "in house," meaning they don't sell the note on the open market. This is a pro for a variety of reasons.
Because they hold it in house, hey have the ability to be slightly more "relaxed" on what the Fannie Mae/Freddie Mac guidelines call for. Let's say Fannie's guidelines are a max DTI of 43%, the PL might allow up to 50%.. An so on.
For one of my loans (on my primary), I have a PL with a 10 year ARM (adjustable rate mortgage). This means it stays fixed for 10 years and is a lower APR than a regular conventional mortgage. Average person stays in their house for 5 years, and indefinitely don't plan on staying in this place for the full 10, so I am not concerned in the least about the adjustment.
One more for me (personally) was that two of my loans were done as 10 year options. This gave me the ability to bypass all the BS fees in a standard conventional mortgage (no appraisal- they do a drive by/free appraisal, no title insurance, lender fees, or attorney fees. I paid $25 for the Loan)
Cons:
For the no title loans: cash flow!!! This is huge, for someone trying to maximize monthly cashflow and keeping DTI lower. This has hurt me (and continues to..) because I show negative cash flow on two props.
On the conventional: the ARM annoys most people, but realists understand that there is a much higher % they will not be in a home for that long any way (unless you can truly commit your family - all of them, that they are in their "forever home.."
Other than that, pro's beat cons all day. Let me know if you want to meet up some time to discuss REI. I live for this...
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
10y
@Filipe Pereira Been lazy in updating this post but we have this house fully rented and a 2-family in Southington fully rented that we have started the refi process on.
I know it is an old post, but it is impressive I have to say. I am new to REI, and didn't start my first project yet. I started reading the BRRRR book by David Greene, and I like the idea. I live in CT and I was wondering if you have any tips for a starter like me. I always wonder if one would like to start with cash, what budget one would need for a duplex/Triplex brrrr project, I know there would be no good answer, but I though to ask ? Anyhow I appreciate your knowledge and expertise.