All Forum Posts by: Account Closed

I'll go head and help you out. I personally do not recommend financing the down payment unless you are willing and able to pay it off in less than a year. And the reason why is because you are paying so much in interest and the secret to building net worth is to build equity in your portfolio. You won't find too many lenders that will do "piggy back financing". This means and 80/20 or a 85/15. However, if you are looking to put a minimal down payment your best route is conventional financing putting 3-5% down. You will need solid credit, good cash flow, and show 6-9 months worth of payments in the bank after the down payment. I do not like this method either because you will end up having to pay Private Mortgage Insurance. This may not be the case in all states but in Texas it is. Good luck.

I would recommend going through a bank who has an origination department in which they either sell or have the secondary market fund the loan. Two reasons. Your terms and interest rate will typically be better. However, Edwin makes a good point if you show that you have 4 or more properties financed on your credit report than it will more than likely be difficult to secure financing.

If you are looking for a lender to give you a stated assets stated income loan you are wasting your time.

Ryan,

Yes lending has tightened all over the US. I can only imagine what it is like in Michigan considering how big the automotive industry was there. If you are looking for financing I can give you some pointers. I used to be a commercial lender myself and I am currently a bank examiner.

First off, make yourself marketable. If you are looking for bank financing or conventional financing it doesn't matter. You need to establish liquidity. Enough cash to be able to make the first 6-9 payments at the very least. Second, if you are looking to purchase a property put a substantial amount of cash into the project. I am talking 30-40%. This will make the deal so much sweeter. (I know what you are thinking...easier said than done) Lastly, you want to show enough cash flow on your tax returns to service existing and proposed debt. A lot of people nickel and dime the IRS resulting in "supposed losses" on properties to reduce tax liability. This does not look good in a lenders eyes. So be careful in that regards. It also depends upon what you are buying. Banks can be picky, as mentioned above, about where they lend money. So do your homework as to which neighborhoods are troublesome. As you said comps are another big issue. Stale comps are making it hard for a bank to decide on suitable minimum LTV ratio. If you want more tips on how to secure financing message me.

Kevin,

The flip side of the coin would be to establish a banking relationship with a community or regional bank. I have no clue what your financial situation is, however I do know that many community banks are still lending on real estate. This is only a suggestion. I know you are looking for an unsecured line of credit but the reality is that we live in a world that frowns upon secured debt much less unsecured debt. So my advice would be find a lender that will give you a line of credit secured by one of your properties. I would advise against securing it with your personal residence. Here is another advantage of using bank financing. You get a better rate and better terms. Not all cases but most. If your cash flow position is so short-term meaning 30-60 days your receivables keep turning over (which is good) then you may want to continue down the route you are going. It all depends upon your business and what you are willing to compromise. Good luck.

I am here in San Antonio as well. I am looking for networking and private funding on MF's. I'll be coming to the meetings. Are people still meeting at the Omni Hotel on the 1st Tues of every month?

Sergio,

Welcome to the site. I was born and raised in Corpus Christi and I was a banker there for 2 years. I know that real estate market pretty well. I am also a newbie investor wanting to learn. Colleague me as well.

Just remember if they overestimate the amount to be applied to taxes and insurance, I am pretty sure they have to either pay it back if you refinance or apply to it next years escrow balance if you keep the loan with that bank.

Great worksheet! Thanks.