Projected Appraised Value Lending

[Matthew Dunn]

Hey BP,

I was listening to a podcast recently by Dan Lane from the Rental Income podcast  and he interviewed a gentlemen who was using credit unions to invest in value add buy and hold deals. I was intrigued by this as these credit unions were providing commercial loans up to 80% of the projected appraised value. At the closing this investor was in most cases not needing to bring any of his own capital, instead he would get a check for the rehab and more often than not would have some left to put into the next deal. 

I've since found a couple credit unions in FL where I reside and have also found two credit unions that will do it. I'm seeing terms of 5 years fixed interest rate of around 5.4%, 10 year fixed term or a 15 year balloon with a 20 year amortization. I realize these are commercial terms and I would need to refi at around the 5 year mark (I think I can negotiate this longer), but for the above investor it allowed him to buy some great properties with no money down. 

Anyone have any experience of using these loans?

Thanks!

Matt