All Forum Posts by: Milind Torney

As you look for a new lender, look for one that matches your investment strategy and can decrease the friction of buying as much as possible. Most borrowers typically migrate from traditional to DSCR financing once encountering roadblocks with DTI and concentration limits with conventional financing. You can go the creative route, but it is just very deal-dependent, and you end up missing out a lot on other deals that make sense with other financing options. I suggest using a combination of the two and just going with whatever option makes the most sense based on your deal.

With a 25% down payment, I would say that is about on par with the market, but at least with DSCR lending, it really depends on the deal and the borrower. If you have an 800 FICO, low leverage, and high cash flow, the rate should be a little lower. If you have a 630 FICO, high leverage, and no cash flow, I would expect the rate to be higher. It is really hard to tell someone something is a good rate just based on the rate, LTV, and points, but search around with a couple of lenders and see where their options line up.

@Milind Torney if it is new construction I would suggest seeing if the builder has incentives through their preferred lender. Most incentives are based on you occupying the property, but maybe you can get second home financing? Either way def worth looking into.

Another option is negotiating the sales price. I have learned in this game that everything is negotiable. You can also ask the builder to buy down the interest rate.

Which loan do you think a borrower will pay first, the one on their primary or on their rental?

Obviously, most would pay on their primary and let the rental go to foreclosure if needed.

So, rentals are riskier loans for lenders!

In the world of investing, Risk and Return are linked - the higher the risk, the higher the required return.

So, there is NO WAY around paying a higher rate (assuming the same loan type) on a rental property - unless you want to commit fraud.

Hey Milind, I'm a local broker, investor, and property manager (100+ STR/Airbnb properties in addition to LTR).

We offer mortgages through our subsidiary company, wholesale to over 100 banks and institutions. From my experience, most lenders are offering the same APR's. The real difference between lenders is gonna be origination costs / fees, which can amount to thousands or even 10s of thousands in closing costs, depending on the size of the loan. We cut out the middlemen to get these as low as possible, so be sure to use a wholesale lender rather than a more salesy loan officer.

Some newer investors try to use hard money or more creative solutions. This will result in much higher costs up front, higher interest rates, and ultimately an expensive refinance down the line. 

Good on you for saving up a substantial down payment so you don't have to go down that road. 

By the way, what kind of property are you looking to purchase? STR? Multifamily? Here in Sac or elsewhere?

For creative options you could ask the seller to finance it. You could pay cash and finance later. Indeed, you would have a higher interest rate for this commercial loan. Getting a 30-year fixed mortgage on a commercial loan is pretty nice. I would be happy with the 7.5%. Of course the purchase price would have to be right.

Hi Milind, yes I'd say 7.5% is fair rate for the current market on a rental. A lot depends on your credit score as well, 780+ is top tier as far as pricing out conventional mortgages. 

 Hi Milind, 

Depending on your FICO and DTI you may be Able to get 7.125 with no points. Are you getting quoted with a Credit Union or Bank?