All Forum Posts by: Account Closed

Portfolio loan is very common for investors who owns multiple properties. You can save a little bit on the closing cost. And the process makes easier instead of doing three times of job.

@Kendra DeKay for multi-use or pure commercial properties, there are two types of acquisition method. 1. If the property does not have tenants, or have low occupancy, you look for a bridge loan for you to acquire (also renovate if needed) and put tenants in. After about a year stabilization, you can refinance to a long-term loan. 2. If the property already have tenants in and have the income and expenses statement, you can directly look for long-term loan (25- or 30-year amortization). Ask the seller for current rent roll and 12 months P&L is the documents you want to start with. 

Just my 2cents, hope it helps.

Doing portfolio loan definitely makes more sense if they are all used for the same purpose, either all STR or all LTR. One thing to look out that differs from doing individual loan is the partial release terms. Once you want to sell one of the properties, does the lender allow that? If allow, any additional principal pay down requirements?

@Catherine Javier 1. Business loans can be 30-year fixed rate for condo investment property.

2&3. I believe personal loan should put the property under personal name. Business loan should put the property under LLC. I might be wrong this one, but the Title company can confirm this.

@Catherine Javier A new LLC just to hold the rental property is totally fine. You will need business loan or called commercial loan to purchase the properties. Yes, you will get higher interest rate than getting conventional residential loan under your personal name. It's about 1-1.5% higher. Getting a commercial loan is easier as it does not require your W2 income and tax return for underwriting. As long as the property cash flows and you have the down payment (minimum 20%) in the bank account, you are good to go. In addition, the loan will NOT show on your credit report, so it will NOT affect your DTI.

Hard money loan is good for fix and flip project. It lends up to 90% of the purchase plus 100% of the rehab cost, caps at 70% of the ARV. No income verification needed.

@Jelissa Bisono There are more information needed in order to decide which funding route should you go to. For the two businesses, will you become the owner and operate them? For the mixed-use property, does the liquor store occupy >51% of the space? If yes to both questions, SBA loan would be a good option as it requires much less down payment. For underwriting purpose, you will need to look at the last 3 years tax returns and up-to-date P&L of the businesses so that you know the profitability of the businesses.

If you are just acquiring the properties and rent to other business owners to run the business, you need to go through regular commercial loan which typically requires 25% or more down. Then you need to figure out what kind of rent income you can collect and what are the expenses to maintain the properties. Since they are owner-use now and don't have these historical data, the financing would not be an easy and favorable term. 

Next, what are the purchase prices? 

@Reyna Lopez It depends on the relationship between you and the lender and how hungry they want a deal from you. If a lender knows you and knows that you are actively searching for deals, they may help you out with any questions to earn your deal in the end. If the lender does not know you and they are busy with other customers, they probably will just ignore your email. So build a relationship with a commercial lender would be my advice.

In terms of pre-approval letter, commercial lenders usually don't give out because there is no deal yet. But in some cases, they still write it as the sellers insist to request one. For example, they know you, they know what kind of property you are looking at, and the future deal will highly likely fit their loan programs. Again, it's kind of like a relationship based. 

Hope this helps!

@Carmelo Caceres, in order to consider the STR income for a loan, you will need a commercial loan. Conventional/VA loan won't consider that. It is the guidelines set up in different types of loan. At this crazily low interest rate age, commercial loan won't be a bad idea to explore. On the contrary, it is easier to qualify.

If you are doing fix and flip on these 3 deals, and you have 5+ completed projects in the last 3 years with good credit score, it is likely. For rent-ready property acquisition, 80% LTC is the maximum.