I have a deal involving 11 properties that I have been trying to finance for two months. During that time I have talked with many investors and had my credit hit som many times it has dropped 20 points from inquiries.
270000 purchase price (includes 5k to close)
54% LTV on appraisals in todays market
current rent roll of 3125 with 5 of 11 rented
I have one sold for a 20k profit and can double close
40% LTV on FMV
Can someone give me an idea on options? I have paid the previous owners payment of 3100 for two months to stay in the deal (netting 4000 in rents in escrow to close - on of the rentals is not a paqrt of this owner)
I have a lot of income but a lot of revolving debt.
Have you tried putting it all down on paper and speaking with a local commercial banker? Breaking them up into individual loans will not be cost effective because of closing costs and you would be capped at 10 due to fannie guidelines. Don’t let anyone else pull your credit until you have a solid financing choice. Did one of the previous lender give you a copy? The new lender will most likely not be able to use it for UW, but it can at least be added to your financing package for a lender to review for score and ratios. Hope this helps.
I do have it all down on a nice spreadsheet with value today (appraisal), arv (comp), current rent, LTV, etc. and a picture of the property. What I am learning is that most banks are shying away from comercial loans because of the “mortgage crises,” and those that will do a blanket loan are looking for more liquidity in my PFS. I agree with you on the individual loans, but am being forced into that option. Even with that option, two of my six loans came back with a no because my tax return - even though it shows well over 100k income personally (not including 7k/month profit income from a business), shows a loss. I set the loss up purposely with a resource loan as part of my tax strategy. It’s funny how little bankers really know about tax returns. The money is there, but the credit score and PFS mut not be in line.
Further suggestions?
I’ve spent the past several weeks calling around to local banks within several major metro cities. I’m actually hearing the same thing that you are. The convetional financing options are changing so much that most of my clients will be needing either commerical loans from national commercial lenders (which their are very few of) or local banks for their mid to long term hold strategies. A lot of local banks either took on too many rehab projects and got burned or are still experiencing difficulty with their clients getting out of their short term financing. Those banks that like to loan on rentals have taken on a lot of new business and are being very picky about additional new clients.
What market are you in?
Have you considered getting a hard money loan? It may be short term but could possibly meet your needs to acquire the property? I want to be sure what you’re looking to do. It sounds as if you are wanting to use the equity in the properties as your down payment. Is that correct? I see nothing mentioned about down payments.
What will your profit for the one you can double close be? I wonder if you could use the profit from that one to bring down the balance on the other 4.
The one I can double close will make me 30,000.00 but I agreed to carry back a second for the buyer to achieve a no money down loan. Since the purchase proce for him will be 75,000.00 I will end up netting ~20,000 that culd be aplied to the master loan of 220,000 on the remaining properties. I can put down some money on that loan myself (10,000 or so but probably not more then 15,000 in the next month). Total, this would be 30-35,000 down.
There is 4,000 in escrow because I paid the payment (3100.00/mo.) for the last two months and collected the rents in escrow -this would satisfy closing costs. This is a short sale.
I have spoken to some hard money lenders and have noticed they are more stingent on the requirments for PFS liquidity , however I remain open minded. This could be a solution.