Landlord Lending, b2R First Key Lending

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Landlord Lending, b2R First Key Lending

Timothy Aughinbaugh
Rental Property Investor · Kansas City, MO · Member since 2014 · 72 posts · 28 votes

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.  

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Tyler Caruso
Rental Property Investor · San Marcos, CA · Member since 2014 · 58 posts · 29 votes
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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. 

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
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    @Timothy Aughinbaugh 

      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

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  • BA R.
    Duncan, OK · Member since 2014 · 53 posts · 10 votes
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    Does any one know if they are connected to micky financial? see my post at

    http://www.biggerpockets.com/forums/92/topics/173614-is-b-at-r-associated-with-micky-financial

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  • Mike H.
    Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
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    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%.  

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  • Tyler Caruso
    Rental Property Investor · San Marcos, CA · Member since 2014 · 58 posts · 29 votes
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    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. 

    1Reply
  • Antonio Guillen
    Stone Mountain, GA · Member since 2014 · 10 posts · 2 votes
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    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....

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  • Timothy Aughinbaugh
    OP
    Rental Property Investor · Kansas City, MO · Member since 2014 · 72 posts · 28 votes
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    calling FirstKey tomorrow to get the ball rolling.......

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  • Shawn M.
    Investor · New Haven, CT · Member since 2012 · 285 posts · 175 votes
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    @Tyler Caruso

     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?

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  • Brent Kelley
    Investor · Rancho Santa Margarita, CA · Member since 2014 · 24 posts · 5 votes
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    Does FirstKey require the properties to be in an LLC?

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  • Timothy Aughinbaugh
    OP
    Rental Property Investor · Kansas City, MO · Member since 2014 · 72 posts · 28 votes
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    yes they do!

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  • Bret Lorenson
    Real Estate Investor · Lakeville, MN · Member since 2012 · 15 posts · 5 votes
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    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.

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  • Timothy Aughinbaugh
    OP
    Rental Property Investor · Kansas City, MO · Member since 2014 · 72 posts · 28 votes
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    anyone working with them now?

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  • Michael S.
    Rental Property Investor · Gilbert, AZ · Member since 2015 · 49 posts · 56 votes
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    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.

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  • David C.
    Investor · Bay Area, CA · Member since 2014 · 207 posts · 190 votes
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    @Michael S.

      What are the points for the programs you mentioned above? 

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  • Michael S.
    Rental Property Investor · Gilbert, AZ · Member since 2015 · 49 posts · 56 votes
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    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.  

    @David C. 

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  • John S.
    Real Estate Investor · La Jolla, CA · Member since 2012 · 6 posts · 1 vote
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    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?

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  • Serge S.
    Rental Property Investor · Scottsdale, AZ · Member since 2010 · 390 posts · 599 votes
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    @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?

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  • Michael S.
    Rental Property Investor · Gilbert, AZ · Member since 2015 · 49 posts · 56 votes
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    @Serge S.

    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

    Office: (646) 362-6495 E-Fax (646)-362-6500

    155 N. Lake Ave, 8th Floor, Pasadena, CA 91101

    [email protected]

    www.firstkeylending.com

    Grace Soueidan, Senior Vice President

    FirstKey Lending, LLC

    Office(646) 362-6484

    155 North Lake Ave 8th Floor Pasadena Ca. 91101

    [email protected]

    www.firstkeylending.com

    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.

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  • Serge S.
    Rental Property Investor · Scottsdale, AZ · Member since 2010 · 390 posts · 599 votes
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    @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.

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  • Henry Chen
    Investor · Arcadia, CA · Member since 2016 · 14 posts · 3 votes
    10y

    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?

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  • John S.
    Real Estate Investor · La Jolla, CA · Member since 2012 · 6 posts · 1 vote
    10y

    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.

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  • Dustin Lauer
    Lender · Orlando, FL · Member since 2016 · 340 posts · 115 votes
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    @Henry Chen where do you invest?  Do you often sell within a few years and have pre-payment concerns?

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  • Henry Chen
    Investor · Arcadia, CA · Member since 2016 · 14 posts · 3 votes
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    @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.

    1Reply
  • Dustin Lauer
    Lender · Orlando, FL · Member since 2016 · 340 posts · 115 votes
    10y

    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.

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  • Dooreuhn Cee
    Real Estate Investor · Chicago, IL · Member since 2014 · 229 posts · 171 votes
    9y

    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.

    1Reply
  • Rick Martorano
    Jacksonville, FL · Member since 2016 · 4 posts · 1 vote
    9y
    My partners and I looked at refinancing our four-plex with B2K. On the surface the deal seemed pretty good and it's great that they can refi with the property in an LLC. But after analyzing the numbers, the deal did not make sense. We were fine with the 7.3% interest rate but once you add there 2 points upfront and they require 6months of payments held in an escrow account for the entire course of the loan. So you can see the 7.3% rate is not really the true rate and erode you ROI. We decided to go with a credit union that offer portfolio mortgages with better rates and no additional charges.
    1Reply
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