:help
Saw your thread about the local banks, and I heard credit unions may be in on these deals. So do these local banks and credit unions, as I’m referring to as portfolio lenders, do they prefer to approve on particular properties or do they sometimes give pre-approval as many of the foreclosure properties require before you can submit a contract.
Hi,
Are you refering to trying to get a bank or lender to finance the properties they own as REO's?
Or getting a loan approval from a bank or lender and recieving a pre-approval letter to use as you try to buy a property?
Or are you refering to Hard Money / Private Money Lenders?
Please define and refine this question?
GR
Here’s the deal. We’ve heard that small local bank and/or credit unions may lend for those of us who are looking to purchase foreclosed SFRs. That these smaller institutions don’t play by the big mortgage rules and don’t sell off these loans is why I’m calling them portfolio lenders. Not talking hard money, but our experience is not there yet. So… we are trying to pitch to these small banks for business lending. Heard LOCs HARD to get, but what about going after a particular property? Any advice how to pitch this? Detailed estimate, personal guarantee, and business plan…How do we make this POP?
Get a binder with some dividers. Put your last three years of tax returns in there. Get a print-out of your current bank statement too. Also include your business plan, LLC Operating Agreement & Articles of Formation (if you have an LLC). Include a couple listings of examples of the type of property you would want to finance.
Understand you’ll probably be looking at either a 3 or 5 yr fixed rate on a 10, 12, or 15 yr amortization. Base you financial analysis on that rather than thinking you’ll be getting them to carry a investment property loan for 30 yrs.
You’ll almost definitely need to personally guarantee this so that’s why your personal financial documents are important. Set realistic goals and be able to speak about them intelligently. There’s a huge difference between someone who has thought this out and set goals vs. someone who goes in there and says I’m a new RE investor & I need you to lend me some money.
Thanks Justin. Gives us some structure to use and runs numbers. What about rehabbing and quick turning instead of just holding/renting? Been advised that lenders don’t like this, but this is a real possibility in the area we are focused where foreclosures are high but values are steady. A lot of seasoned loans are going belly up, nice equity and low renovation costs.
If a bank doesn’t want to help you with rehab/resale, maybe you could look at hard money. If you’re able to get out quickly, you should come out ok and they’ll still make a nice cut for their trouble. We’ve had a couple deals where the bank financed most of the rehab amount too, but they know we’re holding long term so they’ll still make their money on the deal. Think thru the deal and make sure you know where you have to be on the purchase, rehab, carrying costs, etc in order to still make a decent profit.