Need help with Lending Knowledge

[Fallon Gilbert]

Hey all!

Everyone here has been super helpful with answering any questions I have and I appreciate you all for that. I do have another question which pertains to lending that I'm not sure the best route to take.

The area I'm looking to invest in has low priced SFH and MFH (low like ~$60k or less) and I would like to put them in an LLC. Since the purchase prices are so low, I don't necessarily need 20/30 year mortgages on them but I'd also rather not lay out $60k cash that way I can do more deals. I've heard of portfolio loans but I'm unsure of how that works and same DSCR loans.

Basically, I'm looking for a loan (or lender) that will lend to an LLC and I don't know what they base it on. Would I be able to show the calculator for previous deals plus the new deal to see the CoC return?

Any advice appreciated!

[Keira Hamilton]

Lenders usually have minimum value requirements (often $100k), so it may be difficult to secure traditional funding, although I understand not wanting to lay down all of your cash. For a purchase of that dollar amount you may consider an unsecured personal loan.

[Fallon Gilbert]

Quote from @Keira Hamilton:

Lenders usually have minimum value requirements (often $100k), so it may be difficult to secure traditional funding, although I understand not wanting to lay down all of your cash. For a purchase of that dollar amount you may consider an unsecured personal loan.

Makes sense. Does it make sense to purchase a property in cash, then get a loan on the ARV to pull the cash back out?

[Keira Hamilton]

Quote from @Fallon Gilbert:

Quote from @Keira Hamilton:

Lenders usually have minimum value requirements (often $100k), so it may be difficult to secure traditional funding, although I understand not wanting to lay down all of your cash. For a purchase of that dollar amount you may consider an unsecured personal loan.

Makes sense. Does it make sense to purchase a property in cash, then get a loan on the ARV to pull the cash back out?

It would depend on how the rates you qualify for on an unsecured personal loan compare to the rates of a cash out refi. Keep in mind lenders often have minimums for cash out refis, so depending on the ARV you might not even qualify. Either way, you're going to end up paying to get capital. Also, you mentioned that you're not necessarily looking for a 20/30 year loan. Conventional lending is going to tend to be in this range, while a personal loan would be more 5-12 years.

[Eliott Elias]

I have yet to find a lender that will lend under 100k on a 30 year. 

[Michael Paling]

It sounds like you just need to start calling a bunch of local lenders and asking them what they can do or how they can help in your situation. You'll get one answer from one lender, but the complete opposite from another. I've heard that a lot of lenders do have minimum loan limits, but when I brought this up to one of my local ones, they said they don't have a minimum amount at all. They also said they'll do 100% HELOC's for primary residences, while I've heard many lenders only do 80 to 90%. Just different rules between lenders.

[Fallon Gilbert]

Quote from @Eliott Elias:

I have yet to find a lender that will lend under 100k on a 30 year. 

 Yeah, I don't necessarily need a 30-year, even 5 years would be enough

[Fallon Gilbert]

Quote from @Michael Paling:

It sounds like you just need to start calling a bunch of local lenders and asking them what they can do or how they can help in your situation. You'll get one answer from one lender, but the complete opposite from another. I've heard that a lot of lenders do have minimum loan limits, but when I brought this up to one of my local ones, they said they don't have a minimum amount at all. They also said they'll do 100% HELOC's for primary residences, while I've heard many lenders only do 80 to 90%. Just different rules between lenders.

 Yeah, I think that's what I'm going to have to do. I'm hoping I can find someone who would do a deal with multiple properties which would hopefully then meet their lending criteria as well as allowing me to get more deals. Thanks!

[Jim Duncan]

I would absolutely agree with both ideas of a personal loan, and shopping through local lenders.

I was actually just trying to help a client do DSCR cash-out refis on two $100k properties in Missouri this week, and long story short, we couldn't match up anything that would work throughout our entire network. The loan amounts are just too small for the risk associated with investment properties for most larger lenders. Additionally, in your case, New York in about the hardest state in the country for most mid-size lenders to get approval in, so that alone diminishes your options considerably.

I'd recommend contacting all small banks, and especially credit unions in your area, to explain what you're looking to do. If they believe in your plan, then you can most likely get a long-term relationship going with one of them where they cut you some leeway on the smaller property sizes.

Best of luck!

[Robin Simon]

Quote from @Fallon Gilbert:

Hey all!

Everyone here has been super helpful with answering any questions I have and I appreciate you all for that. I do have another question which pertains to lending that I'm not sure the best route to take.

The area I'm looking to invest in has low priced SFH and MFH (low like ~$60k or less) and I would like to put them in an LLC. Since the purchase prices are so low, I don't necessarily need 20/30 year mortgages on them but I'd also rather not lay out $60k cash that way I can do more deals. I've heard of portfolio loans but I'm unsure of how that works and same DSCR loans.

Basically, I'm looking for a loan (or lender) that will lend to an LLC and I don't know what they base it on. Would I be able to show the calculator for previous deals plus the new deal to see the CoC return?

Any advice appreciated!

Your best bet to qualify for DSCR is going to be able to bundle at least 3 at once into one portfolio. If you can do that, the economics can work for the DSCR lender and the minimum property values can be pretty low

[Fallon Gilbert]

Quote from @Jim Duncan:

I would absolutely agree with both ideas of a personal loan, and shopping through local lenders.

I was actually just trying to help a client do DSCR cash-out refis on two $100k properties in Missouri this week, and long story short, we couldn't match up anything that would work throughout our entire network. The loan amounts are just too small for the risk associated with investment properties for most larger lenders. Additionally, in your case, New York in about the hardest state in the country for most mid-size lenders to get approval in, so that alone diminishes your options considerably.

I'd recommend contacting all small banks, and especially credit unions in your area, to explain what you're looking to do. If they believe in your plan, then you can most likely get a long-term relationship going with one of them where they cut you some leeway on the smaller property sizes.

Best of luck!

 Thank you!

[Fallon Gilbert]

Quote from @Robin Simon:

Quote from @Fallon Gilbert:

Hey all!

Everyone here has been super helpful with answering any questions I have and I appreciate you all for that. I do have another question which pertains to lending that I'm not sure the best route to take.

The area I'm looking to invest in has low priced SFH and MFH (low like ~$60k or less) and I would like to put them in an LLC. Since the purchase prices are so low, I don't necessarily need 20/30 year mortgages on them but I'd also rather not lay out $60k cash that way I can do more deals. I've heard of portfolio loans but I'm unsure of how that works and same DSCR loans.

Basically, I'm looking for a loan (or lender) that will lend to an LLC and I don't know what they base it on. Would I be able to show the calculator for previous deals plus the new deal to see the CoC return?

Any advice appreciated!

Your best bet to qualify for DSCR is going to be able to bundle at least 3 at once into one portfolio. If you can do that, the economics can work for the DSCR lender and the minimum property values can be pretty low

 Yeah, I'll probably give this a try. Thanks!

[Mohammed Rahman]

Hey @Fallon Gilbert - which areas are the properties located in? Asking because you will likely have better luck working with a local bank that understands the market as you probably have already learnt from the other comments, lenders typically have lending thresholds. 

[Edward Burke]

Quote from @Eliott Elias:

I have yet to find a lender that will lend under 100k on a 30 year. 

For a BPL, we work with a few Lenders that will lend < $100k on a SFR-30yr., the caveat is the Minimum home 'value' must be >$100k. Min. Loan amount must be >$75k.