Website design By BotEap.comReal Estate Investor Financing

Website design By BotEap.comNow is a great time to invest in: single-family homes, two- to four-unit buildings, condominiums and townhomes, as well as multi-family apartment buildings. For Real Estate Investors who are operating as a business buying residential properties to maintain and benefit from positive cash flow, there are only limited financing options available. Now there are programs available to you. For one- to four-unit conventional residential properties, standard conventional guidelines through Fannie Mae and Freddie Mac limit a borrower to having only four properties financed, including the owner-occupied home.

Website design By BotEap.comThere is a great solution for you. Even though conventional financing guidelines severely limit who can qualify (and this has only gotten worse in recent years), there has been a rise in portfolio lenders who will lend on residential investment properties with guidelines similar to home financing. commercial apartments. This is great news for those in the business of owning and managing their own portfolio of rental properties. Here are two examples that were often not available even a few months ago.

Website design By BotEap.comgeneral financing

Website design By BotEap.comLike all the options discussed in this article, this financing is for business entities and not individual borrowers (sole proprietors). This is to ensure that lenders are not violating any residential lending laws intended to protect consumers as they purchase and finance owner-occupied homes. Inherently, these collaterals must always be occupied by non-owners and used for business and investment purposes. Understanding this, it is natural that any general mortgage should cover at least five units. Anything less would not be considered a business loan.

Website design By BotEap.comWhat is a general loan?

Website design By BotEap.comA general loan is when two or more buildings are encumbered and used as collateral for a loan. In other words, one mortgage can cover two properties or one hundred properties versus two or one hundred loans. Could you imagine owning a small business with fifteen or more projects that you own and maintaining that each one has separate loans? Generally, they are like buildings in relatively close proximity, but that is not always required. For the entrepreneur looking to purchase and maintain multiple properties for the long term, the umbrella loan could be an excellent option. Plus, it may actually cost less even though there aren’t many programs available for these small business owners.

Website design By BotEap.comCash-out refinance with no strings attached

Website design By BotEap.comThe term “seasoning” in the mortgage world means how long a homeowner has owned the specific property. The general guidelines for conventional lenders is that a property must be “seasoned” or owned for at least one year before they will use the current learned value against acquisition costs. For example, if the purchase price was $50,000 and the appraised value is $100,000, the maximum loan would be 75% of the purchase price or $32,500. With no preparation requirements, the loan amount would be 75% of $100,000 or $75,000. This allows the investor to buy and hold, as well as make an immediate profit. This allows the investor to have an immediate return similar to that of a pinball, but still own the property with all the benefits of cash flow. This works on small transactions from seventy-five thousand dollars to multi-million dollar commercial apartment buildings.

Website design By BotEap.comGeneral loan without condiments

Website design By BotEap.comFinally, there is the possibility of using both strategies simultaneously. This offers entrepreneurs access to cash in their real estate portfolio that they would not have access to with any conventional financing program.

Website design By BotEap.comThese are just two financing options that can help the small business real estate investor succeed when choosing to own to rent or buy and maintain their properties to build cash flow and long-term capital.