All Forum Posts by: David Tsariov

Hey David,

There are certainly a few, and Cleveland is a great area right now. I have a few clients doing pretty well up there.

There are a handful of DSCR lenders that will do loans of under 75k, but if you have a few of them and they are close, it might not hurt to look into some smaller portfolio lenders as well if it comes down to it..

As long as it cash flows, you generally will have a good argument with a lot of different groups. There are also some different classifications of 'foreign investors' so I would clarify with whatever group you look at how they would distinguish that on their end as their interpretation guidelines might even differ from lender to lender.

Good luck, happy to help where I can.

While it is true, the lenders will make less money, its also true that the smaller loan amounts don't have enough leeway for any lender to make any money. Lenders only get paid when the loan closes, so it doesn't make sense for a lender to allow their Loan Officers to do loans for less than $100,000 as both the lender and the loan officer will make virtually nothing, yet the loan will take the same time and effort, (Actually more time and effort as there are fewer lending partners) as a loan that is $100,000.00 or more. Further complicating the issue is there are very strict compensation laws that may not allow a loan officer to be paid below certain thresholds. 

Therefore due to the compensation laws and super low revenue challenges, some of those loans just can not be made by virtually anyone. A credit union is different in these cases, so they are the go to source for any loan below $100,000.

That said, I have a hand full of lenders that will allow me to go down to $50,000 or more on the loan amount, but I would have to jump through a number of hoops and in the end, I would make virtually zero for my time. 

I hope this helps clarify why smaller loans can be very difficult to get done with most lenders. 

Are the properties atleast worth 75-100k?

The problem with small loan amounts, I.E. $100,000 or less is that most of those loans are residential in nature and therefore must comply with RESPA. RESPA has a points and fees test for both owner occupied and non-owner occupied. For Owner Occupied, the test is a max. of 3% of the loan amount for items such as the origination, discount points and processing fees. 

On a non-owner occupied, the test is 5% of the loan amount for items such as the origination, discount points and processing fees.

For this reason is why most lenders have minimum loan amounts of $100,000 to $150,000. A credit union is regulated differently than other entities, not that they don't have to comply with RESPA, they do, however they have options at that low loan amount that most the rest of the lending world doesn't have. 

I hope this helps. 

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Hey David, 

I can send you a list of lenders that we use in Cleveland.