All Forum Posts by: Darren Eady

Utah - $15 LLC renewal each year.

I think you've covered your basis with the bank.  Closing costs, pre-pay penalty, interest rate and terms are the major factors to be concerned with.  Second would be the work you have to go through to get the funds (full appraisal that upsets tenants, ridiculous reserve requirements, etc.)

Investment property at 5% interest rate is fantastic.  My private loans are 12%.  .5% origination is also very low for rentals, in fact, I wouldn't be surprised if that either went up or additional fees show up before closing.  

You've clearly already done your research - no reason to 2nd guess yourself or continuing to look for programs that don't exist.  Good luck! @Jay Patel

It sounds like you've found a niche lender, not a Fannie / Freddie loan, if it is variable after five years.  Are you sure about the rate and fees and term?  If so, I think you should definitely take the deal you've been offered AND share the lender's name with BP.  Nice find @Jay Patel

@Bradley Bocker

Great job getting into investing at a young age.  I did the same.  Typically to participate in buying performing mortgage notes or subscribing to a Fund, you will need your OWN capital.  I would focus on other real estate based money making activities, like flipping properties, before jumping into either arena and trying to use other people's money.  Also, I don't think I would introduce any money making activity as a "scheme", as you mentioned, because it makes it sound "fishy".  You could introduce those you know with money to people like me who provide performing notes and have a Fund and maybe those people will somehow cut you in on the return, but I'm just speculating for you.  I guess if it's your own family, anything is possible.  Good luck!

@Erich S.

I'll tell you it's not easy. I've been trying to find that program for five years. More banks are looking at it now than did before. I met with B2R before they had their current loan program and possibly gave them the idea of small residential lending. Visio Lending, Peak Asset, Lima One are all lowering their requirements, including min. loan amount, but have other stipulations that are not very desirable like pre-pay penalties, high fees (which makes the APR too high), etc. I'm currently working on a bank loan (small bank) to accommodate 30 properties in Ohio. I'll see how they do before referring anyone, but I think the bottom line is to put together a portfolio of homes and your income and credit package and make it look so good that a small bank, local to the properties, will want to finance you.

@Curtis J.

If you qualify for conventional / commercial lending, I would talk to two or three banks about financing what you would like to finance.  I would choose smaller local banks that do business in your area rather than going to Wells Fargo (in fact, never go to Wells Fargo for a loan).  IF you qualify for bank financing, you should almost always go that direction.  Realize that one or all of you as individuals may need to qualify for the loan.  Good luck!

@Brian Garrett

I'm going down that road now on a portfolio of 30 homes. Income is not reviewed as much as DSCR on the properties. I've been waiting / working on it for about two months with commercial terms but still do not have an approval. Some of the requirements are a little different everywhere and cause some banks to pass on rentals (seasoning period to use appraised value, exterior only appraisals vs. int/ext appraisals, minimum loan amounts per property, etc.) Groups are jumping into this space of portfolio lending, but it seems like they are all using their old conventional play books rather than looking at a borrower and performing portfolio with a common sense approach. We'll see what happens in the next few weeks and I'd love to let you know if the market is truly ready for this space yet.

@Brian Garrett

Conventional investment loans are totally "square peg, square hole" stuff still. They don't like to lend to LLCs and if they would lend to the LLC at a bank, they may have you qualify the income from the LLC (through two years taxes). This typically is a problem for most, so many conventional lenders have you pull the property out of your LLC to qualify personally (which you could not do without provable income). In your case, I think you will most likely have to work with private or hard-money lending until banks loosen their tight grip in this space.

Always use conventional financing if you can.  It's way cheaper and the terms are better.  If you are flipping homes, you probably won't hit the four property rule (some lenders have a 10 property rule anyway).  Only use hard money if you don't have the income (provable), credit (720 or above for investments), or the time (banks take a little longer than many HMLs).  Good luck Ryan!

@Michael M.

Michael, you are a talented writer.  I'm not sure if that helps your current situation, but I think there is a career there for you.  It takes money to be involved in the note business, so it's probably not the route you should go right now.  There are other ways to get involved in real estate outside of notes that take less or no money.  Find a partner to supply the cash to flip some homes.  Get a lease / sub-lease going and make a spread.  Too many people talk and write about being involved in real estate and then they don't do anything and they end up with that hand-to-mouth job your were mentioning.  Good luck Michael!