How is some of my BP friends getting financing?

Question

I’m currently self employed and have two rentals that were BRRRR’s.... my bank won’t refi again and my DTI is too high apparently for another property. (I have a car note of 13k. I offered to pay this off but they say it wouldn’t be enough to change things) is this common and does anyone have a fix?

Landon Bleau · Answer

Robin, just because your bank won't do it, doesn't mean the bank next door won't. Call every bank and credit union in your area till you find one that will let you refi. If you can't find a bank that will lend, worst case scenario you sell the properties in one of the best sellers markets in history; not a bad backup plan!

Rick Pozos · Answer

For the next one, you might want to just rehab it and sell. I know you WANT to keep everything, but just like The Rolling Stones said, "You can't always get what you want,...you get what you need." What you need might be an extra 20k from a flip instead of another rental. Maybe you will find an owner financed property if you ask enough people!!As mentined, there is not only 1 bank in town or 1 way to finance a property.

Account Closed · Answer

You may try the DSCR loan which does not look at your DTI. As long as you have the down payment and the rent income is enough to cover the monthly expense and monthly mortgage payment and you have fairly good credit, you should qualify. The interest rate is a little higher than conventional mortgage, but not crazy, and all the number works.

Ben Riechmann · Answer

You can talk to a mortgage broker that may find financing from a lender that will finance you. You can find a seller that will seller finance a deal with you, sometimes these come from investors that want to get rid of their rentals or a homeowner that is having trouble selling there house. It can also be a seller that just doesn't need all the money right now and likes the idea of making interest off the sale. You can also do hard money deals, but you would want to know you can get some kind of financing down the road to refiance it for less or be able to flip it. These are just some examples. By the sounds of it, you may be most comfortable with a mortgage broker and they have access to more lenders all at once for you. Hope this helps. Happy investing.

Jon Kelly · Answer

@Robin Marsh Account Closed is spot on. Most people refer to these as commercial loans. Commercial loans focus more on the property (asset) and less on the investor. Call as many small/local banks as possible. Others have mentioned selling... While this may help in the short-term, it's counterintuitive because you'll likely run into this problem again. If your goal is to BRRRR or buy-and-hold, then selling doesn't make much sense. There are plenty of lending options out there for you.

Nicholas Connell · Answer

@Robin MarshI just closed on a seller financing deal. Seller financing is rare, I think like 5% of all real estate transactions. But it never hurts to ask. The seller originally said no, but with a little negotiation he could see the benefits.A transaction where both parties walk away happy = good deal.

Ryan Haro · Answer

Hey Robin,You should honestly consider an investor cash flow loan program. No tax returns needed, no personal income or DTI, just credit score, LTV, and if the property has $1 positive cash flow. I'd be happy to run a specific scenario for you if interested.

Samuel Proctor · Answer

Like Landon said, every bank and broker is a little different - I'd just ask around and you'll most likely find someone. If that doesn't work nor the DSCR loan, then I'd consider going to the commercial banking side. I've always had a lot of trouble getting personally financed and have exclusively used commercial loans. The interest is a little higher and they tend to do 5 over 20 loans, but the loan officers are typically more knowledgeable and easier to work with.

Michael Glist · Answer

As mentioned you can look into a DSCR loan. This is a great option when conventional financing is not available. The DSCR loan will base approval mainly on your credit as well as the rental income and it's ability to cover the mortgage, taxes and insurance. As recommended you should still look to see if a local bank or credit union has an available portfolio product that can work. And I also recommend making sure that the lender(s) you talk to know how to put together an investment deal. Even though all lenders have the ability to do an investment property loan does not mean that they know how to properly structure it to get it approved.

Alyssa Dyer · Answer

@Robin Marsh look into commercial financing with a smaller bank. As long as you can show income, a track record, etc you’ll usually be in a good spot with them. It’s usually a little easier if you have a referral but ultimately bankers are sales people. They want to do deals and will work with you.