Funding Investment Properties-Highlights from Avid Investors Club

[StacyA McBain]

A wealth of information on Funding Investment Properties was shared at the last meeting of AVID Investors - An Idaho Real Estate Investor's Club. It included a panel discussion with four experts, each of whom spoke about a different source of lending. It was informative beyond these bulleted takeaway notes that I'm sharing below, which summarize some highlights that may serve as a helpful frame of reference as you explore your options and run your numbers.

This Wednesday's meeting will cover 1031 Exchanges  - you may PM me with your email address if you'd like an invitation (It's held in the Boise area - Meridian to be exact). 

Residential Lending (1-4 units)

• 45 day closes more common right now due to new lending laws (TRID)
• Up to ten loans, more down payment required after four loans
• Add 1/8% to the rate for a cash out refinance
• 4.25% was the 10/21 rate for cash out refinance 

Commercial Lending ( >4 units)

• 25% down
• Loan based on property performance and the person (can loan to entity)
• 10-year term 25-30-year amortization
• Interest rate tends to increase or go variable after a certain number of years.
• One example of a ten-year term:
• 3.35% years 1-3, 4.25% years 4-6, variable years 7-10.

Private Lending  

• Loan to LLC or entity, backed by the property
• <3 year term
• 7-12%
• 70% loan to value for a new investor/client
• Fund in 2-4 days

Self Directed IRAs (Mountain West IRA)

• Works for any investment properties
• Works with partnerships (you can partner with your IRA)
• $200 -$1,850/year
• Easier when a loan is not involved
• Loans would need to be non-recourse (not secured by collateral/the property), which means a higher rates

* The scenarios above were specific to the individual presenters, each of whom serves as a local resource whom we deem competitive. Information like rates and programs change daily.