Buy and Hold Investor · Nashville, TN · Member since 2013 · 264 posts · 102 votes
Does anyone work with an investor friendly lender (small bank, credit union, etc)?
It's obvious to me now that the choke point in my buy and hold strategy is financing, since anyone who follows Fannie/Freddie guidelines sees my DTI as way out of whack (due to an oddity where they'll count the debt servicing on properties against my debt but won't count the rents as income until they show up on tax returns). This isn't going to change, so I'm looking for a lender that makes underwriting decisions in house and doesn't sell loans on the secondary market.
I can buy and fix up with private or hard money, but unless I have a lender that will put long term financing in place based on the rent rolls and my track record I'm going to be waiting a long time to acquire new properties.
CedarStone bank. Hank Stuart is the investment lending specialist and actually knows what he is talking about. Most lenders hang up the phone when you say the word "investment"
They hold portfolio loans. Their max term is 20 years and since they hold their loans in house they don't do fixed mortgages. If they did that they would be receiving a low interest rate on money loaned out and paying higher interest rates on deposits. (When interest rates rise).
Does anyone work with an investor friendly lender (small bank, credit union, etc)?
It's obvious to me now that the choke point in my buy and hold strategy is financing, since anyone who follows Fannie/Freddie guidelines sees my DTI as way out of whack (due to an oddity where they'll count the debt servicing on properties against my debt but won't count the rents as income until they show up on tax returns). This isn't going to change, so I'm looking for a lender that makes underwriting decisions in house and doesn't sell loans on the secondary market.
I can buy and fix up with private or hard money, but unless I have a lender that will put long term financing in place based on the rent rolls and my track record I'm going to be waiting a long time to acquire new properties.
JT,
I am currently hunting for investor friendly banks with long term financing on non owner occupied properties as well. I started calling banks all over Tennessee. I am at a similar choke point. We are in the same boat, but I'm sure there is a way and/or some banks. We just have to find them. I'm working on a list of banks and the products they offer. Have you called every bank in Nashville yet and inquiring whether they offer anything fully amortized or any products that are fixed or have set variable rates with commitments longer than 5 years and that you are looking for fully amortized or fixed rate products of 10 years or more? I'd be willing to share what I find if you can share what you find in Nashville.
So far I've only found a few that hold their loans, and I've been trading voicemails with the business loans people. No one that jumps out as a great investor option so far.
I've looked into visio lending before, and if I remember right their long term loans are ~8% (plus points) and 60% LTV. So, those are pretty big turnoffs, although potentially viable for the right deals.
It sounds like you'really running into banks with OVERLAYS. Fannie clearly states that you can use 75% of lease agreementsigning if refinancing in the same year you bought the home. If it's the next year the it will be on your Schedule E.
When you have approximately 20 minutes go to my profile and listen to my interview on the Joe Fairless Show. The link is on my profile. This will help with some of your questions.
Take care guys and pm me if you need any other questions answered.
has anyone tried B2R financing? They are a sponsor of the BP podcast frequently and they "say" they base their financing decisions on the deal and not on your personal finances. Just curious!
I've also talked to B2R, and they do base financing on deal metrics and not investor DTI, but their portfolio loan product is a 5 year ARM with a minimum loan amount of 300k (75% max LTV so 400k in equity needed). They have another product for acquisitions that I'm considering, but the rate is a bit higher than I'd like (~7%). Good news there is that they'll loan down to 60k properties and 80% LTV for investment properties.
CedarStone bank. Hank Stuart is the investment lending specialist and actually knows what he is talking about. Most lenders hang up the phone when you say the word "investment"
They hold portfolio loans. Their max term is 20 years and since they hold their loans in house they don't do fixed mortgages. If they did that they would be receiving a low interest rate on money loaned out and paying higher interest rates on deposits. (When interest rates rise).
It sounds like you'really running into banks with OVERLAYS. Fannie clearly states that you can use 75% of lease agreementsigning if refinancing in the same year you bought the home. If it's the next year the it will be on your Schedule E.
When you have approximately 20 minutes go to my profile and listen to my interview on the Joe Fairless Show. The link is on my profile. This will help with some of your questions.
Take care guys and pm me if you need any other questions answered.
Have a good one.
Shaun Weekes
But not for properties owned by an LLC. I'm looking for long term noo lending for my LLC. I have found a lender who will loan locally only, at 80% LTV for 25 years fully amt at 5.5%. It's apparently the proverbial unicorn but it exists. Looking for me for more lenders like this.
the thing is JT, I have been working on a simple refi on 3 rental properties and we are almost into month 4 of a process that should have take 30 days max, and to be quite honest, this loan officer is terrible and I dont want to thow him more business with my named attached, nor do I want to slow my refi up with more business he can't handle at the moment. This is why I keep looking for new lenders with similar terms.
It sounds like you'really running into banks with OVERLAYS. Fannie clearly states that you can use 75% of lease agreementsigning if refinancing in the same year you bought the home. If it's the next year the it will be on your Schedule E.
When you have approximately 20 minutes go to my profile and listen to my interview on the Joe Fairless Show. The link is on my profile. This will help with some of your questions.
Take care guys and pm me if you need any other questions answered.
Have a good one.
@Shaun Weeks
But not for properties owned by an LLC. I'm looking for long term noo lending for my LLC. I have found a lender who will loan locally only, at 80% LTV for 25 years fully amt at 5.5%. It's apparently the proverbial unicorn but it exists. Looking for me for more lenders like this.
Hello Sir,
There was no mention of an LLC in the post I responded to. You would have to guarantee the loan yourself and then put it back into the LLC's name.
This is a simplementation process but will need to be done if you want conventional financing.
That Fannie DTI choke on rentals is still the usual wall in Middle TN. Portfolio banks can work if they'll hold the note, but DSCR (rent-based) is how a lot of investors keep scaling when Schedule E lags. Compare a local portfolio quote against a couple DSCR term sheets on LTV, amortization, and prepay — apples-to-apples beats chasing one "unicorn" bank.