All Forum Posts by: Mike S.

@Victor Yum Thanks for the details on your rate and congrats on closing on the townhome. The insights from @Chris Mason earlier in this thread were quite helpful in opening my eyes to the current opportunities that exist with substantial buydowns. It’s great to hear from someone who just closed and is now benefiting from them.

@Anthony Wick That's awesome. Thanks for sharing the additional insights. Your recommendation to shop around "but then stick with a great partner bank once you find it" is excellent and definitely the path I aim to pursue. I appreciate the insights on how your LLC was able to gain traction with that partner bank (through the personal guarantees and your pre-existing relationship with it). That's also great to hear that that duplex was so easy to close on and that you were able to tap the bank's attorneys to do the close and title work. Congrats again!

@Michael Zau That’s incredibly helpful advice--thanks for zooming out to focus on crucial big picture considerations. You provide such a great a reminder to think carefully and deliberately about the opportunity cost that can come with using a Fannie or Freddie loan when first building one’s portfolio. In an ideal situation—which definitely rewards and is largely the product of vision, strategic planning, and forethought—one would avoid saving a few nickels today at the expense of saving dollars tomorrow.

@Zac Boelkow Thanks for the insights. And congrats on what sounds like an excellent owner-financed deal. I completely agree that “How can I?” is a crucial question and perspective for unearthing opportunities . . . and often opportunities that others have initially overlooked. A commitment to asking this question and diving deep into the answers can emerge as its own competitive advantage. If you’re continuing to explore financing on that multi-family property, please keep me posted—I’d love to hear what you’re ultimately able to attain.

@Caitlin Waldschmidt Thanks again for all of your assistance. It’s great to have a rough estimate for the difference in interest rates with 20% down vs. 25% down.

@Chad McLeodThanks for the rate information and detailed context--it’s quite helpful. Were these two loans with the same lender? And thanks for the encouragement to procure more quotes--I’ll definitely be doing that.

@Ricky Davis It’s great to hear you’ve been able to establish such a strong and fruitful relationship with your local bank. Indeed, I’d prefer to work with a local lender and establish a long-term relationship--assuming their rates and fees are ultimately competitive. That’s a great tip on trying to secure a few points from your local bank by committing to having your payments automatically drafted. Lastly, thanks for sharing the details on your rate and terms. I’m continually looking at things through the lens of a thirty-year fixed rate with approximately twenty percent down. Consequently, it’s great to see the diverse range of ways others are structuring their deals to meet their specific objectives.

@Nathan Hall Thank you. It’s great to hear this conversation has been helpful. I’m continually amazed by and grateful for the knowledge and wisdom people share so generously on Bigger Pockets. Congrats on the multifamily/multi-property opportunities you’ve created this year and the inroads you’ve made with local lenders. I share your sentiments--I ultimately hope to build a long-term relationship with a lender in my market. I just hope to be able to do this while securing competitive rates. I hope all is well in West Virginia.

@Diane G.Congrats on closing the refinance--and thanks for sharing your rate and fees. Were you pleased with your overall experience with LoanDepot?

@Account Closed I appreciate your sentiments and perspective. When looking at rates in the context of the past few decades, it likely seems ridiculous to hear someone question a 5% or 6% rate as being too high. And I definitely agree, if an SFR deal is contingent on a difference in interest rates of 0.5%, there's a good chance the margin of error one is operating is too slim to begin with. That being said, there's no reason not to seek out competitive rates in today's market while also keeping an eye toward the crucial variables of customer service, fees, the value of the relationship with a specific lender, etc. Thanks for reminding us of the long view--and the fact that today's low rates may very well be fleeting.

@Jessica Beard Congrats on the new property! It sounds like the rate you received through Chase is very similar to the quotes I received from Cornerstone. @Michael DeHaan piqued my interest in Better Mortgage given the rate he was able to attain, the customer service, and lower closing costs (although I recognize that these details can often be specific to a particular applicant/purchase). I'm definitely going to add Better to the list of lenders I'll be contacting. It sounds like a lot of others have had good luck with their local credit unions as well.

For those generously sharing their insights in future posts, it would be great if you could state the lender you used if you feel comfortable doing so. Thanks!

@Shea Spinelli Thanks so much for sharing these details. Your post is definitely a great reminder about the value of seeing what local credit unions can offer--which I’ll be sure to do. Congrats on the new duplex!

@Anthony Wick I greatly appreciate the details. As a follow-up question or two--if you don't mind--how long have you been purchasing properties under this specific LLC? And have you worked with the same lender for all of the associated loans? Although it obviously depends on the details and balloon payment, at a glance that seems like a great rate to attain through an LLC in today's market. Lastly, congrats on the new addition to your portfolio!

@Steven Foster Wilson Thanks for the clarification. Like @Jay Hinrichs, I'm curious if you had to reside in the credit union's footprint to be eligible for such a great rate. And thanks for the advice on interviewing and vetting lenders, as well as on the flexibility afforded by those offering portfolio loans. I've often heard that in the abstract about portfolio loans/lenders--it's great to see that via your personal experiences and the rate you were able to attain.

Best of luck with the closing. Cheers to smooth sailing through September 16th and beyond!

@Jay Hinrichs Thanks for pointing that out. Indeed, that's a crucial detail. As always, I'm incredibly grateful when you share your wisdom and experience. I've also found comfort in knowing you have faith in Spokane's long-term prospects, as evident in some of your other posts. Thanks again!

@Steven Foster Wilson Just to clarify, will you be living in part of the duplex you purchased as an investment?

@Account Closed Thanks—I greatly appreciate your insights as a lender and hearing the fact that these rates are in line with what you’re seeing. It’s also a good reminder to look beyond my confirmation bias. When soliciting feedback, it can be so easy to focus on the facts that support one’s own preconceptions so it’s good to hear the opposite perspective—that perhaps I should not be so surprised by these rates. Thank you, also, for your insights on the availability of 20% vs. 25% down payments. From your experience, can you provide any general ballpark rules on how much higher interest rates will be with only a 20% down payment vs. a 25% down payment for a residential investment property?

@Steven Foster Wilson—Congrats on the refinance and new purchase and thanks for the insights on the rates you’ve obtained. I appreciate your sentiments on 5% serving as a bit of a personal benchmark for what's currently acceptable. Prior to receiving these quotes, I had more or less adopted the same benchmark (and viewed it as a conservative number for evaluating properties). Needless to say, I was taken aback to see rates closer to 5.5% and beyond.

@Jeff Stein—Thanks for your insights and sharing your experience with the size of commercial down payments. I share your belief in being conservative with all estimates—indeed it’s a great way to “leave a little room for the unexpected.”

@Nic S.—Congrats on your upcoming closing and thanks for sharing your rate. That rate is definitely more in line with what I was hoping to find. If you don’t mind me asking, was that rate with 20% down? And did you have to pay for the float down protection?

@Michael DeHaan Thanks a ton for the insights on Better Mortgage and how you were able to lower your closing costs by leveraging the competing offers. This is great--I'll be sure to include them in the running. It sounds like they have a lot to offer--both with regards to service and pricing. Have you been able to work with the same loan officer/broker with each subsequent loan with Better? If not, have you found this to be a moot detail given their strong customer service? I greatly appreciate your time and insights.

@Jared Boundy Thanks for your insights. Indeed, the rates you quoted are definitely more inline with what I was expecting and have been using to evaluate most properties. They're also in tune with what I've seen a few others cite as the rates they've secured with a similar profile.

@Michael DeHaan Congrats on recently closing on your triplex. Thanks for sharing the rate you were able to attain. May I ask what lender you ultimately selected? These quotes were from Cornerstone. I'll definitely be shopping around on the heels of these quotes. I value excellent service (one of the things that initially attracted me to Cornerstone) and understand it can come at a price, but the quoted rates definitely change the game for some properties.

@Chris Mason This is incredibly helpful--thank you. I haven't explored rate buy-downs and your comments definitely open my eyes with regards to the opportunity currently on the table with them. I greatly appreciate it.

I’m grateful for any insights folks can provide on current interest rates for an investment property. Do the following rates (issued in the past few days) seem especially high:

For a single family rental home:

+200,000 purchase price, 25% down, 30yr 5.25% apr 5.379

+175,000 purchase price, 25% down 30 yr fixed 5.25% apr 5.3895

+150,000 purchase price, 25% down 30yr fixed 5.375% apr 5.55

+125,000 purchase price, 25% down 30 yr fixed 5.375% apr 5.57

For a multi-family (of two to four units):

+250,000 purchase price, 25% down 30 yr fixed 5.5% apr 5.918

+225,000 purchase price, 25% down 30 yr fixed 5.5% apr 5.603

+200,000 purchase price, 30yr fixed 5.5% rate apr 5.918

We were recently pre-approved and when I ultimately drilled down into the current rates our mortgage advisor could offer, this is what we were quoted.

I realize it's only possibly to speak in generalities without having a complete financial picture, but here's a snapshot: my wife and I are applying together and each have credit scores of approximately 800, very low DTI, and strong income/employment histories for the price range of properties we're considering. This loan would be for our first investment property, which we aim to purchase in Spokane, Washington (99205, 99224, 99201, 99203, etc.).

I realize that we should expect higher interest rates compared to someone who is purchasing their primary residence (perhaps 1% for an SFR and up to 1.2% for a multi-family), but I was definitely surprised by these rates—should I be? If so, what would you expect a reasonable rate to be for SFRs in the above price ranges?

Lastly, should I expect most lenders to require 25% down rather than 20% down for an investment property?

Thanks so much for your insights and assistance.