Anyone Lending 100% in a cash-flowing rental property?

Question

I just saw a property in Georgia that's cash flowing well. Any lenders that'll 100% fully fund?

I can pay closing costs, purchase price of $140,000 and $1,800 of rent coming in.

Assuming it's fully funded, 25% set aside for vacancy/repairs/cap ex, PITI aside, we net $330/monthly

Anyone have any recommendations for lenders that'll charge pretty fairly on interest rate?

Erik W. · Answer

25% set aside seems low for those expenses.  Also, I noticed you didn't include property management (8-10%), legal (2%), or advertising (0-2%).  If we shoot low on those three (8 + 2 + 0), then 10% "eats" another $180 of your income.  My guess, after 15 years in this biz, is your expenses will be more like 30-35% if the property is in good repair or 40%+ if "tired" and needing some updates.

I'm not saying properties that are 100% financed can't cash flow, but this one seems "iffy".  In a best case scenario where everything goes right, it may cash flow as anticipated.  Be sure to triple check all those numbers and don't leave anything out of your expenses, especially those little nickle and dimes expenses that add 1-4% to your Operating Costs but no one remembers.  For example: City rental licensing requirements?  Lawn care?  Snow removal?  Utilities costs during vacancy (usually not included in the standard 5% vacancy that only applies to lost rent)?

Jay Hinrichs · Answer

Grandma and Grandpa  mom dad  uncle cousin.. or put together a little group of investors and pay cash.

Account Closed · Answer

@Kanwar Sodhi

Can you up the purchase price (assuming it'll appraise higher than $140K), and then have the seller credit you the difference at closing?

Dylan H. · Answer

@Kanwar Sodhi I heard of a credit union that would do 100% LTV cash out refi, but that was after you had owned the property for six months of seasoning.

Curt Neider · Answer

Is anyone lending anything on long term SFR investment real estate right now? Please send me actual contact info if so...

Brian Bagdasarian · Answer

Max conforming LTV on an SFR investment property is usually 85% (This is the Freddie Mac max). 75%-80% is more common.

Tom S. · Answer

@Kanwar Sodhi  Unfortunately these I'm hearing 30% down for an investment property.  Also read Chase just raised their min credit to 700 and 20% down for a primary residence.  I wouldn't be surprised if all the other big lenders followed suit.  Tough times out there right now :(

Matthew Irish-Jones · Answer

@Kanwar Sodhi I have never seen or heard of 100% LTV.  Besides all the RE guru courses that promise no money down RE investing.

Jaysen Medhurst · Answer

Nope, @Kanwar Sodhi. That's not going to happen. Even before all this craziness lenders required 20-25% down on investment properties. Your best approach is to partner with a capital partner who can bring the down payment to the table.

What kind of property is this? If it's SFR, I'd be very skeptical of the rent number.

Don't forget Management (10-12%) in your analysis of the property. If it's MFR, you'll also have water/sewer, lawn care, perhaps some other house utilities.

Anyone Lending 100% in a cash-flowing rental property?

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