We understand the needs of real estate investors.
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In fact, we are investors ourselves! Our professionals have entensive knowledge of many different investment property loans and investment real estate financing techniques. We also understand that no two deals are the same. Put our expertise to use to help put more money in your pocket!
100% Investment Property Loan Type 1 -
This loan allows financing of 100% of the lesser of the sales price or appraised value. Typically, it is structured with an 80% first lien and a 20% second lien. This product is available down to a 680 credit score, and income verification is not needed. The rates are somewhat higher than conventional loans, but they are still very reasonable.100% Investment Property Loan Type 2 -
This loan allows financing of 75% of the appraised value on a purchase. This is a powerful product when buying properties under market value, e.g. If you purchase a property valued at $100,000 for only $75,000, you have a loan for 100%. This product is available down to a 620 credit score, and neither income nor asset verification is required. Better yet, the rates are conventional! This is truly a soft-money loan!100% Investment Property Loan Type 3 -
This loan allows financing of up to 65% of the final appraised value on a property. This is a great tool when buying rehab properties that will realize a substantial value increase when repaired and/or updated. Whatever money you have left above the purchase price, you can use for improvements, or simply put it in your pocket! This product is available with no credit qualification, and no income or asset verification. This is also known as a hard-money loan. Extremely fast and easy to get, but rates start at 9.99% and go up.Currently, we only place these 100% loans in Texas and Florida (we do have other products available nationwide), but if you call or email us we can direct you to someone in your area who can place one of these loans for you.
As a mortgage loan consultant, I have learned to capture my investors' attention by announcing that I can get them 100% investment property loans. Although, that is true, I try to explain to them that Type 1 100% Financing may not be the best financial structure for cash flow.
The thought of getting into a property with no money down is very enticing and there are many ways to make that happen with such things as subject to contracts, assuming loans (VA loans are still truly assumable with no qualifying), 100% seller financing and with a traditional loan accompanied by a seller 2nd. There are plenty of good deals like these available.
The Type 1 Loans will generally require that you pay 3-6% of the closing costs and have 2-6 months PITI in the bank. Lenders expect the investor to be stronger financially than the "average Joe". Their way of thinking is that if a borrower should get into a little trouble, it is the non-owner occupied mortgage that will likely be the first to not get paid. The Type 2 and Type 3 Loans are much easier to qualify for because the outstanding loan amount is much lower than the market value of the property.
This brings me back to the reason that 100% loans may not be the best use of cash flow. Unless you are buying the property at 20-25% below market value, it is difficult to get the rent to cover the mortgage payment plus expenses. Most Lenders only count 75% of your actual rental income to go toward the mortgage payment, taxes and insurance. This can hurt your debt to income ratios when you apply for a mortgage on additional properties. It is also possible to end up "upside down" in a deal with out meaning to.
Another "mistake" I often see with both new and seasoned investors, is setting up loans on 15 and 20-year terms. Their goal is to get the houses paid off early to use the equity to purchase with all cash or enjoy their retirement as early as possible! That sounds like a great plan, but what are you going to do when you have a couple of unemployed renters that don't or can't pay the rent or you have trouble renting in a slow economy and you are vacant for a few months or more? You are stuck paying the 15-year payment. You will wish you had trusted yourself to pay as if you had a 15-year term when the funds were available to do so and left yourself the option to pay the 30 year payment or an option arm interest only program. These types of programs are designed to the investor's advantage for both long-term AND short term goals.
I guess their are two points I'm really trying to make. First, don't let the unknown prevent you from taking positive action. Second, the best way to conquer the unknown is to make sure you know all of the options available to you. Let us help you maximize your cash flow and profits! Let us help you structure the financing of your real estate investments to meet both your current resources and your future goals.
We love investment property loans, and work with many lenders who also love investment property loans. Whether you want to put down 0%, 5%, 10%, or even 20%, we can match you up with the product with the best ROI and/or the best cashflow. Let me reiterate, we want to make your deals work and we want your deals to be profitable. In fact, we work with one lender who will finance up to 20 properties at a time from the same investor!
Not quite ready to take the plunge by yourself? We can help you find willing investor-partners, and/or assignees for your deals. We can also show you how to find additional funds for improvements, rehabbing, cashflow, etc. A true one stop source for all of your investment real estate financing needs. Call today and ask for Jason. He will be happy to just talk with you about a deal, or even help prepare a specific scenario to maximize your profits!
DEALS GONE BAD!
Most contractors are honest, but assume that no one is. As Ronald Reagan said, "Trust but verify". We recently had a client who was asked by her contractor to pay some the labor costs upfront. He had already done 50% of the work, seemed honest enough, work was acceptable, so why not. She not only paid him some of the labor costs, but also had given him some gift cards at Home Depot to help pay for his supplies and materials.
He ended up taking some of the supplies back to the store, spent the labor costs and after weeks of trying to contact him, she found him in jail, which is where he belonged anyway. The problem is she had to take an additional $8500.00 out of her pocket to finish the repairs. She is having to refinance it at 95% to get her cash back out. Fortunately, she is still going to cash flow. That is an expensive lesson learned for her and a free one for the rest of us. Take heed and know that this can happen to any of us.
TIS THE SEASON FOR FORECLOSED PROPERTIES!
Now is the time to be making offers! Banks are desperate to get rid of their properties. If they have foreclosures on the books, that is less money that they are able to loan out the next year. They are really willing to dicker, so take advantage of the opportunity. Also, don't forget to ask them if they have other properties in the area they are looking to sell as a package. Many times they are able to come off the price more on a different house, that combined may make your deals work.
As always, if you find a good deal and can't come up with the cash or don't feel you are credit qualified - CALL US! If we can't help you fund it on your own, we can find you a partner. Don't let deals slip by because you don't think you have the resources.