Any good commercial lenders (or maybe portfolio) in Idaho?

Question

Looking to finance a purchase- it will either be a flip or rental. Currently don't have any income and my tax returns don't offer anything that would help qualify. Having a hard time finding a lender that will lend based solely on anticipated rental income for this property (which already has a tenant in place I could keep). Have impeccable credit score, no debt, a history of managing/owning rental properties, able to put 40% down and still have a few years living expenses liquid. Hoping to avoid hard money lenders- Any suggestions as to viable lending sources that would allow me to qualify based on anticipated rental income?

Jeff Dzado · Answer

sure! It's actually perfectly easy! Run the numbers the same way that you would if you were buying the property!  For the refinance, pretend that you don't own it yet and ask the question "how much debt could it support?"

Another way is like this: say you have a $100k property that rents for $1000 per month. You have a loan on it with $60k remaining. If you refinanced only the $60k to a new 30 year loan, that payment would be roughly $300/month with a 4.5% interest rate. Say that you're willing to have a mortgage of $400 per month and that the property would still cash flow nicely for you. You could then take a loan of $80k out on the property (assuming it would appraise) with a 4.5% interest rate for 30 years. This would mean that you could take out $20k in cash since the property has only $60k loan left on on.

Now pretend that the bank is willing to give you a $200k mortgage on the property. In this situation you would only take out the $80k loan because you are only comfortable with the payment that comes with the $80k loan!

You could also analyze the deals as a group, and have one property cover part of the loan for another. It is all about being creative in these scenarios!

I'll send you a direct message if you want to chat more specific details about this. I suspect that your best path forward here might be to find a commercial loan as you were asking, or to find a partner to qualify for the loan for you.

Jace Holt · Answer

@Hen Ley In response to your question about how the refinance part of the BRRRR strategy works, I think the answer is not every flip is good enough to refinance some cash out. It only works if you get a good enough deal and build enough of both equity and cash flow. Each market is different on how easy it is to find a BRRRR deal. And then within each market, each class of property is different.

What specific loan products are you looking for? Are you just looking for single family conventional loans? Even with those you may have difficulty buying distressed property. I have had banking relationships with all of the banks mentioned above except MACU. MACU looked great both times I started looking at getting a loan with them. However I ended up finding comparable products for my needs at other banks and, I also used to care about having a face to face relationship with the lender. Their commercial lender for the whole state was located in Boise. The face to face relationship is a non-issue to me now.

Even if a bank is a portfolio lender, lenders care that you have both experience and good personal financials. While commercial lenders primarily analyze the income statement and situation, everyone I have worked with absolutely cared that the lender also looked financially sound.

I personally like CCB and Zion's for local commercial.

I would recommend bringing on a partner.

You have mentioned avoiding hard money, but I would not rule that out. If you only want to do a small handful of deals, then I could see only wanting to use conventional financing. However, if you are making a long term business out of this, you may be better off using hard money. The cost, per deal may be higher especially at first but you need to compare cost per deal against IRR. IRR will provide a much better measure of your wealth building. If your turn around is half the time and your cash into the deal is only half of what conventional financing is, that means you can do 4 deals in the time you only did 1-2 with regular financing. If your profit per deal is 30K, and you do 4 deals in 7 weeks instead of 1.5, then who cares that they paid 3 percent higher on interest or 2 or 3 points. That may be as little $5K more per deal. Take a step back and be honest with yourself about what your trying to do here. If you're going to be doing a lot, you may be stepping over dollars to pick up dimes.

John McNaughton · Answer

@Hen Ley I've also used MACU with some success, though they didn't solely look at the investment's income.  Also, they may want an extra step like a Phase 1.  Definitely had to jump through a couple extra hoops compared to my regular lender, but rates and terms were worth it.

Probably the most appealing feature was the ability to amortize over 25 years instead of 20, allowing you to hit debt service coverage ratios with a higher principal amount, essentially turning a no-deal into a deal.  However, since that time my regular lender has started doing the same thing.

If you are putting 40% down, things should be easier than just 25%. Some lenders can remove recourse once you pass a certain level, butb that might be closer to 50%. I haven't reached that point yet.

If you would like a name/number at MACU just reach out.

Don Spafford · Answer

@Hen Ley As everyone here has said MACU would probably be your best option. I have been working with them for over two years and have been great. Bank of Idaho would be a good commercial loan option. A commercial loan technically should only be based on the income the property produces but at the same time they want to be sure you can cover it if it fails. But commercial loans also come with a shorter amortization time and usually a higher interest. But that would pretty much be your only option for a 5+ unit property.

Brett Spence · Answer

Collin Hunter at ICCU idaho falls manages all the mortgage lenders.  He also is one of the 2 hard hard money guys I have used in east Idaho.

I need a line of credit and my old bank who I had been with for 8 years said no.  Iccu had it approved for me in about 3 hours the day I asked them.  We switched that day

Cory H. · Answer

When we first started out we had our personal accounts with ICCU, but struck out with them (and lots of others) for a commercial loan. Mountain West Bank stepped up and believed in us. I'll go back to them for everything we do in the Treasure Valley.

Assuming your ducks are in a row, talk to Emily Solly (commercial) & Eli Bellomy (Residential). They are fantastic!

Brian Smith · Answer

For those of you using MACU do you have any one person that you would recommend working with?

Brett Spence · Answer

If your in twin contact Jason Royce in the Boise area he runs that whole area and use me as a reference good luck

Hen Ley · Answer

@Brett Spence, thanks so much for the insights.  I tried with an ICCU branch in Twin Falls to no avail, but sometimes it just takes talking to the right person.  Much appreciated-

Craig Jeppesen · Answer

I do all my business with Idaho Central Credit Union.

Any good commercial lenders (or maybe portfolio) in Idaho?

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