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Real Estate Investors: Non Primary Residence Loans
Posted on 8/12/15 at 9:58 pm
Posted on 8/12/15 at 9:58 pm
For those of us that don't have the cash to purchase homes what types of loans are you using for your investments?
My mortgage company (a local institution) is charging me 15% down and a 3% origination fee on my investment properties since they aren't my primary residence.
This is killing my ability to purchase multiple properties due to not having the cash available for the down payments. I'm missing out some great finds because I'm having to fully close on one property before having the cash to put down on another.
For instance: The current property i'm rehabbing I paid 80k for. Due to the 15% down and 3% origination fee I had to pay roughly $16k down out of pocket to close.
Are they're any big lendors like Wells Fargo or other institutions that have less stringent stipulations on non primary loans?
TIA
My mortgage company (a local institution) is charging me 15% down and a 3% origination fee on my investment properties since they aren't my primary residence.
This is killing my ability to purchase multiple properties due to not having the cash available for the down payments. I'm missing out some great finds because I'm having to fully close on one property before having the cash to put down on another.
For instance: The current property i'm rehabbing I paid 80k for. Due to the 15% down and 3% origination fee I had to pay roughly $16k down out of pocket to close.
Are they're any big lendors like Wells Fargo or other institutions that have less stringent stipulations on non primary loans?
TIA
This post was edited on 8/12/15 at 9:59 pm
5
Posted on 8/12/15 at 10:06 pm to AUtigR24
I looked at this with my father recently. I spoke with a friend's father that works for a large local bank. Suggested using a line of credit to temporarily finance it and then get a mortgage within the year, or once it is rehabbed. Not sure if that is what your asking or not though.
Posted on 8/12/15 at 10:15 pm to AUtigR24
Find a partner. Join a local REIA. Hell, for as many people that invest on this site someone should start a tigerdroppings real estate investment group.
Posted on 8/12/15 at 11:08 pm to AUtigR24
As stated above, LOC that you finance out after you can show property is income producing. A lot of banks use about 75% of rent as income.
If you can't get a good LOC, find private money that hold a lien. Then, refinance out again for better rates.
Once you have enough, portfolio loans (if you can find one) and HELOC's on your currently paid off properties.
Most lenders will want somewhere around 25% equity on the property. That is where the above private lenders come in handy because they will give you purchase and rehab costs. Just make sure your numbers run to force equity to that 25% level.
If you can't get a good LOC, find private money that hold a lien. Then, refinance out again for better rates.
Once you have enough, portfolio loans (if you can find one) and HELOC's on your currently paid off properties.
Most lenders will want somewhere around 25% equity on the property. That is where the above private lenders come in handy because they will give you purchase and rehab costs. Just make sure your numbers run to force equity to that 25% level.
Posted on 8/13/15 at 10:34 am to AUtigR24
Jeez...in researching i've been told the same as far as down payment minimum-didnt realize origination was much higher too....
Are you in east al by any chance?
Are you in east al by any chance?
Posted on 8/13/15 at 10:38 am to AUjim
Wouldn't it make sense to simply lower your entry point for properties from a pricing standpoint? If you can't afford the down payments then you need to reduce your purchase price on the properties to an amount you can afford.
This will create more stress on the back end and yes it will make the need for a property management company increase but it will allow you to more quickly pay off these investments and as you increase in number you'll also have more properties to utilize LOC's or HELOC's with.
This will create more stress on the back end and yes it will make the need for a property management company increase but it will allow you to more quickly pay off these investments and as you increase in number you'll also have more properties to utilize LOC's or HELOC's with.
Posted on 8/13/15 at 11:49 am to AUjim
I'm in SE Alabama
Posted on 8/14/15 at 8:39 am to AUtigR24
quote:
is charging me 15% down
and??? low down payments are not always better. More down payment equals more instant equity and higher cash flows plus taking less time to pay down principal. I'm paying 25% now per fannie mae guidelines. Some private lenders charge as much as 50% down! with higher interest as well. but for much shorter terms.
Posted on 8/14/15 at 9:03 am to Fat Bastard
I think he's flipping, not holding long term...
Posted on 8/14/15 at 9:06 am to AUjim
Correct, 10 / 15% is not what you want when you plan on offloading in 2-3 months. Especially when you have limited cash pool to purchase and remodel with. A larger down payment benefits me in no way.
Posted on 8/14/15 at 12:24 pm to AUjim
quote:
I think he's flipping, not holding long term...
gotcha
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