I am looking at starting a thread devoted to people who have experience using one of the big hedge fund landlord lenders. I am currently in the works with First Key Lending on a property and so far it has gone smoothly. I know there are a few out there another being B2R Finance. If you have done a deal please write what you got in terms of %, lending terms and such.
have not personally done anything with B2R but have had clients .
reports are mixed.. underwriting is pretty ridged and of course your not going to buy a property for 50k then get an arv appraisal and they will lend you 100%.. they will look to back off of equity from actual cash in.. Now someone who has owned properties for years this would be different.
I know of one company that closed.. I know of many smaller players that never could get the deals done... because of equity requirements and or other terms
Does any one know if they are connected to micky financial? see my post at
That would be a huge risk to me if you go with a 5 year balloon and the firm goes under. Whoever ultimately ends up with the loan isn't likely to renew it when the balloon comes due. And how easy it is going to be to refi a large blanket loan with multiple properties.
The biggest thing I don't like with any of the hedge fund deals is that they want you put all properties that are in the loan into a separate LLC. Thats a huge headache. Now you're having to do accounting for another entity. You're going to need separate bank accounts.
Why should I do that when local banks are all doing portfolio loans again? They don't require any of that nonsense. And their rates are far better than the hedge funds too.
I'm getting some of my end loan financing at 4.5 to 5%. Some is 5.5% but still... These hedge funds are hitting you up with rates of 6 to 7%.
I called First Key a week ago and they told me that they offer 30 year fixed rate loans on appraised value @ 6.5%(no seasoning requirements). Seems good to me so I am in the process of picking up 5 properties so I can cash out refi with them. Would be interested in hearing from anyone else who has completed the process.
Does anyone know who is the appraiser for B2R?
I would be interested to have an appraisal done before i get into the whole nightmare of applying....
calling FirstKey tomorrow to get the ball rolling.......
I agree that local banks are giving better rates, but what is the longest loan term you have been able to get? 10yrs? Firstkey is giving a 30yr note
@ Tyler Caruso
Tyler, do you have any update on your loan/experience with firstkey?
Does FirstKey require the properties to be in an LLC?
yes they do!
I prefer local portfolio lenders. I just did 2 deals with 2 different banks in my area. One of them was 80% LTV @ 5.00% w/ 5 year balloon and 25 year Amortization. Other was 75% LTV @5.10% w/ 3 year balloon and 30 year Am. If you already have a relationship with a local portfolio lender I would go that route. If you don't have a relationship with one, start building a relationship now so that on the next deal you will be ready to go.
anyone working with them now?
Spoke with First Key representative today. As of May 18, 2015 these are their rates*:
5 yr balloon - 5.45%
10 yr balloon - 6.26%
30 yr fixed - 6.50%
* rate is for the 65% LTV. If the LTV selected by the borrower is going to be at the max 75% LTV then the rates are about a 1/2% higher.
Time to complete loan is about 60 days
Appraisal required for each property - $450 avg each and properties must be placed in a single purpose LLC
Still researching and comparing funding options.
What are the points for the programs you mentioned above?
I'm uncertain of the points at this time. You are right to ask about points and other possible hidden fees. APR vs the Rate often help to indicate if the lender will be heavy with fees. Lenders always prefer to mention the Rate since it will be lower.
The 65% LTV was a little disappointing as I prefer greater leverage.
At this time I'm still weighing options. I prefer to have a single non-recourse fixed mortgage on each property.
I got a B2R loan about a year ago. I give them kudos about being relatively early on the scene, though it seems like options are multiplying. I got a ten year term with twenty year amortization. The rate was 6.25%. They would have given 75% LTV but the actual was closer to 70% due to the DSCR limitations. There are very very steep prepayment penalties, so get ready to stay in this loan for a while.
It seems like they were still getting the kinks out of the process as their due diligence and application process was quite painful, as was arranging the insurance. Furthermore, the ongoing reporting requirements are a bit painful. I did have a conference call with a number of their executives and they acknowledged the issues so I would hope that the process has gotten easier.
Has anyone used Colony American Financial?
@Michael S. would you mind providing your contact information at First Key? I've been trying to reach them and none of the public numbers get through to a person and they do not reply to emails or messages. Would be greatly appreciated.
Also - how did your loan go with them? Were you able to close?
I ended up not going through with the loan, it was an option I was exploring for a larger than usual purchase. I received two emails from First Key, here is their contact info as requested.
Scott Boyker, Loan Officer | Business Development
FirstKey Lending, LLC
155 N. Lake Ave, 8th Floor, Pasadena, CA 91101
Grace Soueidan, Senior Vice President
FirstKey Lending, LLC
155 North Lake Ave 8th Floor Pasadena Ca. 91101
For now I have been sticking with smaller SFR projects. I have found the leverage and terms are much better with the smaller residential lender I have been using SNMC - Security National Mortgage Company
Let me know if you need any additional details.
@Michael S. thank you for your prompt response. I left a message with both. I see you are in Chandler, good to have another East Valley investor on the forums. I appreciate the info.
Does FirstKey still have an office in Pasadena?
@John S. and others, has B2R relaxed their prepayment penalties? Are there any other asset-based lenders out there with loans that have no prepayment penalties?
Hi Henry, I haven't done another deal with B2R, so not sure about their relaxing their pre-payment terms. The indications I'd seen were that they hadn't relaxed them I think they are funding them more like commercial mortgages. I've done some with FirstKey which is much more like traditional SFR. Scott Boyker was actually the guy I dealt with. Their process was similar to B2R, but a bit stricter on the insurance requirements. The ongoing reporting requirements, however, seem to be a bit easier. Unfortunately, I think FirstKey has pulled out of the business, and I believe that Scott is no longer with them.
@Henry Chen where do you invest? Do you often sell within a few years and have pre-payment concerns?
@Dustin Lauer so far here in Los Angeles. I'm looking for asset-based lending because my investment group is structured with a Limited Partnership as the title holding entity. Also, conventional lenders more often than not require the title of the property to be held by an individual; they also consider personal and asset (rental) incomes together.
Cool. I can't think of any recommendations in LA, but I am confident you'll find some companies that do what you are looking for.
Sounds like your making some smart considerations figuring out your prepayment penalties and your upfront point together when factoring your financing costs. (Especially if you plan to resell in a fee years after your acquisition). I think too many investors care about the rate or worse yet their monthly costs, but not their overall bottom line.
Any updates on B2R loans? I am considering paying the appraisal fees for a blanket loan of 10 properties. Attractive features are a loan to an LLC rather than a person and 6.5% investor loan.
Just wondering if anyone ran into snags during processing or closing.
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