30 year Financing and other Questions

4 Replies

I have become a regular listener to bigger pockets and I’m a new real estate investor. I closed on my first deal in September (Quadplex and a House) and am under contract now for an 8 unit apartment complex.

It seems to me the majority of time people in the podcast are talking about analyzing deals and cash flow and their goals they are basing it on a 30 year Finance. My first question, is: Is it common to find a 30 year Finance on an investment deal? Because in my area, banks will not even consider that! And they typically need board approval to even get 20. They push you hard to go 10-15, but I have been able to secure 20 at least. So how are people finding 30 year Finance deals on investment properties?

Next question....

This also makes a MASSIVE difference when you are analyzing cash flow for properties. I hear on the podcast and things I read such as take your debt service, taxes & Insurance, maintenance, vacancy, mgmt, and perhaps cap-ex and then shoot for $100 a door after that. This seems to be brought up ALOT on the podcast, but is this typically based on a 30 year Finance? Because when dealing with 15 or 20, that’s much harder to do. Doable but harder.

When people talk about the 2% rule, does this change based on Finance term of the property?

It just seems like I do not hear many dealings on the podcast with 15-20 year terms. Just curious....

@Dwain Roark, Jr. - The financing depends if you are going with traditional (fannie mae backed) non owner occupied financing or portfolio/commercial financing. With the traditional financing it is more stringent and is really based off you as the borrower. This is where you get the 30 years fixed rates.

Where as with portfolio/commercial lending, while your info is important, they tend to be more centered on the property. These are the shorter amortization periods and tend to have 5 or 7 years balloons. 

There are lots of options, a lot depends on your goals and how strong of a borrower you are.

Good luck!

Originally posted by @John Leavelle :

Howdy @Dwain Roark, Jr.

Did you purchase the Quad and SFR together? If so, that required commercial or portfolio financing (5 plus units). Conventional 30 year loans (1 - 4 units) would not apply. Your 8 unit is also a commercial deal. 15 - 20 years is right.

Hello, John. Yes I did purchase them together. So I am sure I would not have been able to get 30 year on those anyways. Or the 8 unit Im under contract on now. However, I have yet to find a bank in my area to do a 30 year finance on a SFR either. So I am just curious how people are getting these and if Im just looking in the wrong places.

@Dwain Roark, Jr.

Not sure why you are having trouble getting a Residential Loan.  Keep shopping.  Try Credit Unions, local and national banks.  All of them have  Residential loan products for investment properties.  15, 20, and 30 year mortgages.

You can also try on-line Lenders like LendingTree or Quicken Loans.