All Forum Posts by: Michael L.

@Rachel Pivonka Was this is nonbank lender? 

@Manuel Savorelli Is the building leased? Are renovations required? 

There are nonbank options. Banks have to stick with conforming loan guidelines or do an in house commercial loan. Once these two options are off the table, banks do not have any other options. There are several 'portfolio lenders' or non bank lender that specialize in non-owner occupied financing. The rates will be between 5.5%-7.5% and there are non-recourse and recourse options. The money is a little more expensive than a bank, but then again this will allow you to grow and grow with you. Also non-recourse loans provide great protection. 

@Hollis Cook You can get a owner-occupied mortgage for around the number you quoted, 3.44%, that is a conventional loan. You can also get a handful of loans through fannie/freddie that are for non-owner occupied mortgages, however borrowers often hit DTI restrictions and you pretty much cap out at 6 loans like this. After this you have to work with a bank on their commercial side (these are loans they often keep on their books, so they are pretty restrictive). Because of this tight lending environment many alternative lenders have jumped into the non-owner occupied lending space such as AssetAvenue.

You are smart to purchase within an LLC. Also you can now use non-recourse loans, which is a very smart way to protect your personal assets. There are local banks which will provide a commercial loan or you can use a portfolio lender.

There are some DTI restrictions that kick in as well. So while the guidelines allow for 10 properties with fannie, often an individuals income does not support that type of leverage. This is my understanding but I could be off, if so, please let me know.

@Joe Campbell Local banks are constrained on two-sides - on the residential side they underwrite to fannie/ freddie guidelines, on the commercial they hold these loans in house and are very restrictive in their terms/ conditions. Several people mentioned Portfolio Lenders, which can mean many different things, but in terms of your situation, their are several companies have emerged to extend credit in this space to individuals with LLC's, that dont fit DTI requirements, and have cash flowing rental assets.

For those who own 5 or more SFR properties, what exit strategies would you consider? 1. Sell individually to other rental investors, 2. Sell in bulk 3. Sell to homeowners

@Steven Gesis Steve knows his stuff and is one of the best SFR investors and turnkey provides around. @Michael Dunn

@James Cerenzie James are you still looking for a portfolio lender to help you? There are good lenders out there.