Financing for my second rental property

[Matt R.]

Hello, all!

I've bought my first SFR, fixed it, and rented it, and I am now at the "refinance" step of BRRRR. To get my next rental property, I need to
go to some kind of lender and get some kind of loan, but I'm not sure exactly what to ask for.

Here are the moving pieces:

My one SFR. I own it outright, 100%. I have owned it since spring 2016, and it's been rented since summer 2017. I don't have any kind of HELOCor other loan against it. Based on 30 seconds of researching comps on Zillow, it would probably list on the MLS at $105K +/- if I decided to sell it today.

My next rental property. Most likely another SFR. I was originally thinking of something in the $90K-$100K ARV range, but the market has tightened so much that I might have to add $10K to that.

My "cash for investing" pile. I have enough to put 20% down on the types of properties I have been looking at, as long as it doesn't need
more than a few thousand dollars' worth of rehab. Beyond that, I would need to either have a lower down payment (down to around 15%), or figureout a way to finance some of the rehab costs, or both.

A local regular bank. I have my real estate account there. They have been good to work with so far, but I haven't asked them about loans yet.

A local credit union.  I have a personal account there. They have been OK to work with so far, but I haven't asked them about loans yet.

My real estate business. It's just me; not a partnership, LLC, Inc, or anything else.

My residence. I own it outright but I really, really, really don't want to take out any loans against it, based on a bad experience in the past.


My ideas so far include:

Go to the bank or the credit union and get a regular mortgage loan.

Go to the bank or the credit union and get a loan against the rental house - HELOC? Something else?

Go to a new bank (one I haven't done business with before) and do one of the above two things.

Go to a private lender and get some type of loan from them.

My questions:

Is one of these options much better (or much worse) than another for some reason?

Is there a good option I haven't thought of yet?

Thanks for your help!

Matt R.

[Andrew Postell]

@Matt R. thanks for the post here.  Sounds like you have some resources to work with.  When it comes to loans, the terms of the loan are important but many loans will have similar terms.  So if you have a lender that you like, just stick with them.  It's kind of like a mechanic...sure, lots of other places can change your oil but if one gets done quickly, provides good service, and doesn't overcharge you, then stick with them.  Lenders can be the same.  So interview the lenders on what their tolerances are with closing times. 30 days is kind of what you want.  Also, ask if they use rental income IMMEDIATELY to qualify you for the loan. That will help you with qualifying you for future deals.  If you are working on your first 10 loans, then a Fannie Mae/Freddie Mac loan will be have the best terms for their loans.  They might be a little heavy on paperwork, but a simpler loan will have a higher rate, or a shorter period for you to pay the loan....so get all the information from the lenders and see who you like best.  Feel free to ask more questions if you need.  Thanks!