Advice on lending for an inexperienced landlord

[Nick Littleton]

Hey all,

I have my first rental finally built that we paid for through private lending and equity through our personal house. The goal here is to have a lease signed, put a renter in there, and cash out refinance the property to pay back the private lender and most of my own money... a BRRR if you will, but in a roundabout way. However, my wife and I have not been landlords yet and a fellow investor/friend of mine told me I might have trouble finding financing if we don't go through a professional property management company since we are inexperienced. Have any of you out there run into this problem and if so what solutions have you come up with? Are there any lenders out there that are friendly to fresh property managers?

Thank you!

N&T

[Alex Bekeza]

@Nick Littleton In my experience, it's a bit of a mixed bag. Some of the more competitive DSCR based options for example would like to see that the borrower EITHER has 2 years of PM experience in the subject market OR uses a 3rd party professional PM. However, I have seen exceptions made on this based on compensating factors. (physical proximity to the subject property, work history in real estate management, PM experience in a different market, and things like that). The experience requirements become more hard and firm when going after 5 + unit MF. I'm sure I've had borrowers engage a PM (on a short term basis) just to get the financing closed up.

I'm assuming you're local to the property since you don't want to hire a PM right?  I'm in Los Angeles investing in MO so using a 3rd party PM was honestly never even a debate in my mind.