I've been reading this forum religiously for the last few days and it's been very helpful. However, I think this is quite a unique situation and warrants a new thread. I've been given the opportunity to work for a friends real estate investment group seeking out lending from banks. I'm jumping in this head first with no background in real estate (closest experience I have is a BS in Finance). I've only been involved in this for about 1.5 weeks, so let me know if I've left any important information out.
The investment group is an LLC operating out of CA that does redevelopment in another state. Right now, we've got about 40 SFH's in our portfolio that are 100% renovated (some are already occupied) with plans to expand even more. We're renting out these properties but give the renter a 3 year option to put 50% of their rental income towards the down payment on the house.
This is where I come in; I'm trying to find banks that will give us a loan against these houses to replenish our working capital to fund future acquisitions and redevelopments. We are seeking loans that are 30 yr amort, with a 3 yr balloon.
I have an extensive list of banks throughout the country that I've been cold calling asking if they're interested in something like this. Every bank has said no due to a variety of reasons. Mostly due to the properties being out of their region or the speculative nature of these loans.
Understandable, but this is before I even mention anything about the loan specifics or investment background. These loans are pretty conservative: 65% LTV, 1.5+ avg debt coverage ratio. We've lowered the total asking amount per bank, seeking loans on about 5 properties at a time (willing to go with more though if the bank is fine with it). The president has over 25 years of REI experience and an outstanding track record, excellent FICO, etc.
Also note, that before I came in, they did go around to some commercial banks and regional banks. The commercial banks that approved wanted to move the loans out of the LLC and put the loans in the individuals names. Some loans that were approved a few months ago still haven't gone through. Others only wanted to deal with owner occupied homes. The regional banks didn't really understand what was going on (I'm not too sure on what this means, but I know our people tried) or thought it was too much of a risk for them. I'm pretty sure HML is out of the question due to higher int rates and length of time needed.
I know it's a bad time to be hitting up the banks for loans and that I'm looking at an uphill battle. What I'd like to know is what's the best way to approach this with banks? Are there any specific banks that I should know about that are willing to make these kind of loans on this scale? Any other funding options I should be aware of? Again, I'm jumping in this head first and trying to figure this all out so any advice is appreciated. Thanks!
