All Forum Posts by: Michael Haines

Scott you are stuck in the conventional lending investment property rut. Even though FNMA changed their guidelines for investment properties to 5 to 10 properties to help stimulate the real estate market recovery, most lenders are still adhering to the old 4 property limit.

Your options are:

1. Find one of the conventional lenders out there who don't limit you to 4 properties. This may be your local community bank or a portfolio lender who lends using their own money.

2. Go the unconventional lending route which includes private money lenders and hard money lenders although this options is more expensive than conventional financing usually they don't have property limit restrictions.

3. Do a blanket loan to consolidate your existing properties should be 5+ or conversely buy in bulk.

Depending on your investment strategy if you are looking to build a large portfolio of rental properties then eventually you will want to go option two or three. I wish you the best of luck.

Tyler congratulations on your purchase and becoming a home owner. Would you be selling your condo prior to moving forward with your next deal? For your next deal will you be looking to purchase another home to live in or as as an investment to rent or flip? What will be your investment strategy? This will help you determine what type of financing to pursue and what your best option is.

Moving forward you may be able to use conventional financing as long as you can qualify for financing. For investment properties this means; qualifying for income and credit. Your LTV will be 75% for 1 unit properties and 70% for 2-4 unit properies so you will need to have adequate cash available for the down payment and closing cost plus reserves and a minimum credit score of 720. The appraisal will be based on the "as is value" of the property.

Both HML and PML lenders are equity based lenders which primarily look at the deal for qualification more than your income and credit but they are also more conservative with their money. They do follow the 4 c's for qualification meaning they will look at your cash, credit, collateral and character to determine your ability to pay back the loan and to qualify. The interest rate and loan costs are much higher than conventional financing and the LTV's will be in the 65% to 80% range depending on the property type. SFR and 2-4 units 65% to 70% and multifamily 5+ up to 80%. The benefit is that you have more options for financing such as short term loans for rehab fix n flip projects usually from 6 mos. to 3 yr. terms and with interest only payments. The LTV's can also be based on the after repair value, ARV, rather than the as is value. Some HML will also do asset based lending or limited doc financing where credit may not be an issue.

Anyway I am getting rather lengthy with my reply. I hope this at least gives you an idea of your financing options and opens up further discussions. Keep in mind as a new investor the PML and HML lenders will expect you to put money down on your deals @ 10% to 20% until you can get some experience under your belt. They want to build a relationship with you and will work with you after you have proven yourself to them.

I wish you the best of luck with your future deals. If I can be of any further assistance feel free to reach out to me.

Andrew it will depend on your experience, your credit situation and your strategy for the homes. If you are looking to wholesale the properties and do a quick flip to an end buyer then you can do Transactional Funding which is an asset based transaction so credit wouldn't be an issue.

If you are looking to buy, rehab and flip or buy and hold then you will want to pursue a hard money lender who is primarily asset based. The interest rate and costs will be much higher than traditional financing but credit may not be an issue.

I hope this helps you out. Let me know if I can be of further assistance.

@Ali Boone - The international company I worked with is a US based company with offices in Great Britain and Europe. We did auctions for developers and banks all across the US, Canada and in Spain. Have you heard of Kennedy Wilson? Their corporate office is in Beverly Hills not too far from you. Besides their auction division they also do property management and commercial property acquisitions.

Thank you guys for the warm welcome and the tips. I really like how everyone is helpful on this site. That was a big factor for when making a decision to sign up.

Hi everyone this is Michael Haines from sunny Laguna Hills, California. I am a long time lurker and reader of BP and, I decided that I should jump aboard to take advantage of all of the benefits that BP has to offer.

My background is in real estate and finance having worked with developers prior to the crash and with an international real estate company in their auction division. I am looking to further my education in real estate investments and to give back to the community where I can to help newbies and fellow investors.

Thank you for building such a great community, I look forward to meeting and networking new people and contributing to the forums.