Investing though a Corporation

[Chris Penny]

Hi, Everyone. New member here.  We have a single family home that we bought with half down and half hard money that we paid off in a couple years.  Problem is the return is not that great without leverage.  We bought it through our corporation, but found out banks don't want to loan to Corporations for single family homes. You live and you learn.  We will probably end up selling that property to get our equity out.  But it is adjacent to Culver City, a booming area. So we should hold onto it for a few more years, methinks.  Now we are looking for other properties.

Talked to my local Chase banker about commercial lending.  The good news is my personal credit rating (which is not great) does not matter.  The less than good news is that the bank will only loan me what the rents will cover after expenses, and the smallest multi-family they will loan on is 5 units.  They will loan me 65% Loan to value.  They assume 5% vacancy, $250/unit/yr for replacement reserve, property taxes, insurance, utilities, and repair & maintenance.  Take total income and subtract those expenses and it determines the size of the loan I can get on the property. 

One thing I like about this is that the bank won't let me get into a bad deal that I cannot afford.  But it is challenging to find a property that fits their needs and gets me into the deal.

I have $250K-300K to invest.  The bank's minimum loan is $500K.  Properties I can afford end up with a lower loan amount and will not qualify.  Others that qualify end up needing a bigger down payment than I have.  Chase also wants to stay away from areas where properties are cheaper (Inland Empire, Fresno, Bakersfield, etc) because there are many questionable neighborhoods.  But my instincts tells me there are sill a lot of good properties in that area.

Should I approach local banks in those areas?  Should I just wait and save more money for a down payment on a local property?  Or are there other alternatives I am not considering.  

Thanks.