where to find long term private lenders?

Question

Hi all.  I'm a newbie and this is actually my first post.  Very happy to have found this site and I anticipate learning and contributing a lot.  Meantime, I thought I'd see what kind of response I'd get on a current subject.  I am looking at a rental property with a 20%+ money on money ROI in the same area where I already have a duplex with similar returns.  I am in the process of winding down my full time business so my DTI is far from current requirements but I would prefer to not go cash.  I have very good credit and am wondering about private lending options.  I'd appreciate any thoughts and suggestions.

Payman A. · Answer

Hi Paul and thank you for the suggestion.  I might have to consider converting to an LLC for the near future.  Meantime, thinking of having my wife apply for the next loan (small amount) since the loans hurting our DTI are under my name only.

Cody Steck · Answer

Account Closed can you elaborate a little bit more on the business line of credit? How does this work and what is it backed by? What are the terms normally?

Paul Timmins · Answer

@Payman A.

Private money is everywhere just identify the pain and offer a better solution.

You can also look at a business line of credit companies will give everyone in the LLC with 720+ credit 50-150K

Paul

Payman A. · Answer

Hi Ned and thanks for the reply.  Yes, quickly finding out the same thing and though I'm not totally comfortable with a short-med term loan I think its something we'll also have to consider.  I'm sure I'll feel better once the first 1 or 2 properties qualify for conventional loans after a few years.

Payman A. · Answer

Thanks and we are  now looking into the loan under her name alone.  That would definitely open up some doors for us!  I'll update with results.

Ned Carey · Answer

I have used a lot of private money. My experience is that private lenders do not feel comfortable loaning for longer terms. I would love to find some longer term money myself. The work around is to borrow short to medium term and refinance out with traditional lenders once the property has a history of cash flowing profitably.

Robert Sepulveda · Answer

The investor portfolios exist in the way I described above, but I know they're difficult to find. Keep posting on your progress and always ask for help if you run into trouble. Your solution should work if her income alone qualifies.

Good luck.

Payman A. · Answer

Hi Robert and thanks for the post/info.  I've contacted several "portfolio lenders" but they do not offer their product for investment properties.  Going to keep looking while this opportunity is still there and as also mentioned, going to look into my wife applying under her name only.  Debts are mostly in my name and luckily property is not in a community property state.

Robert Sepulveda · Answer

Hard money is typically short term money. 6 months to 2 years. There are some exceptions with few niche investors out there but hard to find. This is a good option if you just need to close the deal and you can refinance as you improve your debt and income.

Portfolios offer the benefits of specific programs for investment property (some for primary residences as well). There are portfolios available that only consider the debt of the particular property you are buying or refinancing along with the income (or potential income) of the subject property as well. That's great for investors who find deals that can stand on their own such as yours.

There are other products that allow exceptions to liabilities and income calculations that help qualify where conventional programs might be difficult. So you have options. The portfolios typically are 5, 7, or 10 year fixed. Some are 15 and 30 year fixed as well.

Hope this sheds some light.