Quote from @Steven Dzuris:
I am a new investor and have been following bigger pockets for about a year. I now feel confident with the underwriting after doing 100's of practice listings but confused on the financing. My scope is c+ single family or duplex under 150k to BRRRR. I recently found a duplex in my area and was going to make an offer. I contacted my agent who happened to also be the listing agent and she told me to get a preapproval first before I submitted the offer. I spoke to my local banks lending officer and explained what I wanted to do. I told her upfront I wanted to get a preapproval letter, 30 year term, conventional loan 20% down. I told her I had a partner for the property for this duplex I was looking at but I wanted the mortgage in only one of our names , we would setup a JV for the property. She told me she only will do a 25% 15 year term, conventional, and both of us had to be on the mortgage. I didn't go any further, the property went under contract 2 days later. I was fine with the 25% down but was confused by her only offering 15 year term.
The question I have are:
1. Is it normal for banks to only offer 15 year terms on investment property.
2. Is there a different structure to purchasing an investment property with a partner with one partner getting the financing?
Any help would be appreciated
@Steven Dzuris Congratulations on taking the plunge!
Answers:
1. I believe the bank you approached may have special guidelines and shorter terms for investor loans. 30 year financing is the rule rather than the exception. Banks are touchy and not always easy to work with, especially when borrowers have little or no track record.
2. An entity is generally required by lenders that write DSCR / Business Purpose Loans. Lender guidelines will vary when it comes to ownership % requirements between partners where the objective is to have a non-borrowing partner.
I would strongly recommend working with a mortgage broker that understands your loan structuring goal. They will be able to advise on ownership percentages when applying for and structuring your next loan.
Good luck locking down your first deal! Shoot me a message if you have any questions.
