My wife and I are 2.5 years into real estate investing in Michigan. 1 Rental, 1 fix and flip on which we just received our first offer!! Yeah!!, and 4 properties we purchased at a tax auction in late 2024. I handle the financing, and she handles the management.
I would really appreciate some direction and advice from this community.
Below are the details of our four tax auction purchased properties. We may have swung a little too big for our first at bat, but we believe in ourselves, have a great mentor, work with a honest builder, and are in a market lacking rental home supply.
However, why can I not find a bank or CU to loan me money on any loan product other than a 5-year ARM balloon with a 15 - 20 year amortization? In order for my numbers to work long term, and to make our dreams come true, I need a 15-year loan. I would accept an adjustable rate, or even a higher fixed rate, but this 5-year ARM stuff means I only pay interest for 5 years, then they want me to do it again and again. I believe that to become financially independent, I need to be done paying for these in 10-15 years.
Full details are below...by here is the elevator pitch...
4 properties with an expected ARV of 360K (Appraisals should be back in 2 weeks).
My all in cost for purchase, auction fees/taxes, and expected rehab is 320K.
I am seeking a loan of 240K, which is about 75% LTV of my total cost basis, and only 67% LT ARV.
Cash investment is 110K, and we should get 80K back from the loan with the intent to do it again next year at the auction.
I feel like this is a win-win for me and the bank, but, as I mentioned, they only want to give me a 5-year ARM. I feel like I am missing a puzzle piece. I am super new to this community and any help is much appreciated.
| Rental Property Loan Request Package - March 2025 |
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| Street Address |
Bed/ Bath/ Sq Ft |
Purchase Price |
Auction Fee's & Taxes |
Estimated Reno Cost |
Cost Basis |
Loan Request |
ARV |
| Property 1 |
3/1
1008 |
24,750.00 |
2,830.26 |
77,500.00 |
105,080.26 |
78,810.20 |
Approx. 100K |
| Property 2 |
2/1
1065 |
16,000.00 |
2,369.40 |
37,500.00 |
55,869.40 |
41,902.05 |
Approx. 80K |
| Property 3 |
3/1
1189 |
24,750.00 |
3,070.49 |
58,560.00 |
86,380.49 |
64,785.37 |
Approx. 100K |
| Property 4 |
2/1
793 |
32,250.00 |
4,056.79 |
37,000.00 |
73,306.79 |
54,980.09 |
Approx. 80K |
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Loan Request Summary |
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Total Cost Basis: |
320,636.94 |
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Loan Request (75% LTV): |
240,477.71 |
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Total ARV: |
Approx.
360, 000 |
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| Annual Financial Projections |
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| Rental Income |
Property Tax |
Insurance |
Maintenance / Vacancy |
Estimated Mortgage
(15 Fixed 8%) |
| 17,076.00 |
-1,577.00 |
-498.00 |
-1,704.00 |
-27,600.00 |
| 13,404.00 |
-1,375.00 |
-601.00 |
-1,340.00 |
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| 17,076.00 |
-1,150.00 |
-651.00 |
-1,704.00 |
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| 13,404.00 |
-1,365.00 |
-531.00 |
-1,340.00 |
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| Financial Summary |
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| Total Annual Income: |
60,960.00 |
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| Total Annual Expenses: |
-41,436.00 |
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| Annual Profit: |
19,524.00 |
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| Cash Investment: |
110,076.94 |
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| COCROI: |
17.74% |
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