Asset Based Lending For Properties

[Gaurav Srivastava]

Hello All, Would appreciate feedback from Investors / Landlords who have worked with Finance of America Commercial to secure asset based loans for buy and hold and or flipping? Any insights on the process and honesty / integrity of the institution. As well as if you would recommend any other lenders for single family buy and hold who provide best interest rates for the lowest down payment? Care to share. Thanks.

[Andrew Postell]

@Gaurav Srivastava I can answer this question but I might say that the 2nd question actually conflicts with the first question.  More on that in a second.

I have worked with FOA and found them to work very well with investors. Closing time is reasonable and you'll need an appraisal...and other standard stuff that kind of goes along with investment property lending.  They are the ONLY lender that I know that lends a 30 year fixed rate on a commercial product.  There might be others out there but we don't have that many in my state so that was very refreshing.

Now, the 2nd part of your post - best rates from other loans:  The best you will find is Fannie/Freddie loans.  But those have very different qualifying terms.  Fannie/Freddie are safer for banks to lend (they'll even get some money back in some scenarios if you foreclose) and the money is unlimited (since it comes from the government).  But if I can't qualify for those loans then I need to go the "portfolio" route...or sometimes called "commercial" loans.  Those loans come from the bank's own "portfolio" of money (thus the name).  Their money.  And since it's their money...there's less of it...and if you foreclose...that bank it 100% out.  So the rates and terms 99.9% of the time are always higher.  A common term for commercial loans out there is a 20 year adjustable rate mortgage.  The rate is reasonable...but it adjusts...and since it's a 20 year term, my payment is higher.  So even if the interest rate was EXACTLY the same....it's still not as good as Fannie/Freddie.  Don't get me wrong, there are many investors that use those loans to great success.  All this to say that if you have a lender who can write a 30 year fixed rate commercial loan....take it!  That's the best TERM you are going to find.  

Hope this is helpful in some way.  Thanks!