All Forum Posts by: Matt Neisser

They are real and the other names Jay mentioned are as well. Most of the larger lenders now have similar Line programs. I would always check the company size etc. Some will have different terms and limits: ex. we go up to $20m. One thing to keep in mind that almost none of them will tell you upfront is that it is not exactly like a line of credit you have on your home. You can’t just pull it down whenever you want. Basically, as you do each property there is still an appraisal and underwrite , although a simpler and easier process.  Lots of smoke and mirrors out there so trust your instincts.

I’ve written out this in the past : 

Questions to ask:

Are you a direct lender or do you work with brokers?

Do you have the available funds to close this loan or is there a limited amount of funds you have to lend this month?

Can you explain all your fees?

When will you issue a written term sheet or commitment letter?

Things to be careful of:

Be very careful of online directories.

Many are just lead generation sites and sell your name and information to brokers

Large application fees or upfront money that is requested prior to issuing a term sheet and only accepting checks without the ability to accept credit cards

Anyone that uses gmail, aol or any non-corporate email

Check that they have a working website with a phone number and address

Someone that says they are a direct lender but:

Asks you to fill out an application without a logo or contact information

Asks you to fill out different forms with very similar information

Needs an excessive amount of time to get back to you or

Typically these are signs you are working with a broker or non - lender 

@Salvatore Lentini   -  

I just want to lay out the framework of options and typically which is cheapest and the best options for an investor by number of Properties Owned:

1-5: Conventential loan through a traditional mortgage company or bank (Caveat: if you are self employed this can get challenging. You most likely will need a DSCR driven program)

5-10: Conventential loan through a traditional mortgage company or bank. This starts getting very tough to get approved unless you have a lot of W2 income and excess liquidity

>10:  A Conventential loan is no longer an option. You must go to a regional bank in their C&I lending group or a national private lender.  A regional/local bank typically caps a borrower's  exposure between $2-3M per borrower so you need to work with multiple banks once you reach that limit.  Rates are cheapest with a bank, but they will be a 5/7/10 term based on a 20 or 25-year amortization.  This impacts the cash flow of the property and you are subject to interest rate risk at the rate reset period. If you are holding short-term and you have a good bank then this is a good option. 

Most national lender's rates are driven by credit score, ltv, and experience. FYI: For a non-bank national lender, we have some of the lowest rates in the industry. If you are comparing non-bank lenders to a bank, then all the private lenders will be more expensive. 

@Lane BabinExisting thread about LendingOne - Here is another related one. 

@David Zheng  - Congrats! Awesome first deal. Glad we were able to help you on the first deal and many more to come!

Yeah, I certainly wasn't defending them, but was just outlining to people typical vs non-typical terms.  For example, at my firm, we don't charge a release price and outline everything in a written term sheet up front. I think the key to everything is disclosure and questions.  

Generally, all commercial and private rental lenders like B2R, Colony and our firm will have some type of prepayment penalty.  Please keep in mind there is a big difference between a portfolio loan and an individual 30 yr fixed. For the true commercial portfolio loans like B2R/Colony, they typically have a yield maintenance prepayment penalty in addition to a release price per property that is 1.2 the loan amount.  

Example: You have a loan against 5 different properties and each property is worth $150,000 the estimated loan is $525,000 or $105,000 per property (70% LTV)

Release Pricing:  If you have a loan against 5 different properties and each property is worth $150,000 and you have a loan for $105,000 (70% LTV), you will be required to pay back 1.2 * 105,000 =$126,000 to release the property from the loan.

Prepayment Penalty: The simplest form of a prepayment is a straight declining fee (ie a 5/4/3/2/1 % penalty) . Ex. If you payoff the loan in year 2 you would owe 4% of the balance of the loan. A  much more complicated version is a yield maintenance calculation. This penalty depends on the interest rates at the time you took the loan versus the rates when you payoff the loan. It is really a crapshoot. http://www.investinganswers.com/financial-dictionary/real-estate/yield-maintenance-2793

@Jack Lewis   Hi - Jack. I am not sure if you ever received information on our company, but you can see a similar thread where people were researching our company. In addition to some reviews on our website ,you can read the bottom of the post with an active BiggerPockets member that has experience with us.  Thanks and please let us know if we can help. 

https://www.biggerpockets.com/forums/520/topics/25...