Bank Financing

[Joe DiMaria]

I am a real estate investor in the Chicagoland area. My partner and I are currently fixing and flipping 2 to 3 properties/month. We buy all of our properties with cash. We are looking at renting out some of our properties however will need to free up cash in order to buy more product. We are looking for some sort of financing or a line of credit. Any recommendations? I am open to ideas.

[Justin Thompson]

Joe,

Go commercial, don't go residential mortgage route and here is why:

Find a local lender that keeps the loans in house. Put together a package showing the properties you want to keep as rentals and the potential returns expected. Find a local "portfolio" lender and take a shot at them. I have 5 units, with a 6 set to close in a week or so and I have no "residential" loans. All my loans are in my LLC's name and nothing on my personal side. I don't deal with Fannie Mae/Freddie Mac. Most members I've seen advise to get 10 loans in their personal name and then blanket loan the properties to free up space to add a few more rentals. My advice is find a local bank that will keep the loan in house and start with commercial loans from the get-go.

Going commercial keeps the loans in the LLC name. Yes, you have to sign on the loan but it keeps it off your personal reports. All my loans are 15, 20 year amortization under $100k amounts. Over $100k they go max of 25 year amortization. I will only ever go commercial loan route. Dealing with the residential side you will deal with loan officers who have no clue what they're talking about. All they know is this way or no way at all. Get yourself a good small lender and you'll have no problems.

I've done 3 deals in the past 2 months with no money out of my pocket with 100% of the rehab money provided and I pulled out $11k at my last closing for myself.