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larrywww

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Reply with quote  #1 

Fannie Mae permits the borrower to have 10 loans.  But this is a merely theoretical right.  As a practical matter, according to Bruce, the more realistic maximum # of loans is closer to 4.  The problem is that you need to find a lender that doesn't have a lender overlay imposing such limits.  I am informed that most of the big banks wouldn't touch it with a 10 foot pole.  And the serious restrictions of Dodd Frank may have limited lender creativity.

Question: Do you know of any such lenders?

Bruce Norris has said that it's not as easy as it sounds.  You are required to have reserves to cover the multiple properties.
Norris has recently indicated that equity lines of credit are now only really returning to the marketplace to a substantial extent.

Although, even with his balance sheet, it took Bruce Norris over 3 months to get a line of credit recently.


Can anyone recommend a bank for a line of credit (that won't take 3 months, like it did for Bruce Norris)?  Or for a purchase loan (up to 10+ houses)?

brycewheeler

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Reply with quote  #2 
Yes Larry,, I spent hundreds of hours to find lenders who will loan more than 4 loans, up to 10.  That was 5 or 6 years ago now.  One company is Wintrust.  Call Chaz (a gal) Vice Pres. I believe  Cell is 858=922-0645.   I have 10 loans now with 7 or so from that company and its predecossors who Chaz worked for.  They also did up to 10 loans including your residence.


Tell Chaz that Bryce Wheeler said to call her.

Bryce

brycewheeler

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Reply with quote  #3 
I have one or two more that I could dig out of file if anyone desparate.  They used to go for more than 4 loans.  Not as good a lender tho and service not as good.  Chaz works out of office on Saxony Road in Encinitas and has a good partner and a good staff oriented toward good service.  They have been great for me.

Bryce
larrywww

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Reply with quote  #4 
Sounds like a great find, Bryce.
Thanks for sharing!
brycewheeler

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Reply with quote  #5 
I probably should have added that Wintrust does loans in many states.  They have made many loans for me in both California and Georgia, all over the 4 usual limit.


bryce
mlreits

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Reply with quote  #6 
Based on my experience, a mortgage broker or a smaller bank aka portfolio lender should be able to get you loans 5 to 10 without any issues. I've done it.

Refinance on rate and terms is also doable. Cash-out refinance is up to 6 mortgages before you'll have to go with a commercial loan aka ARM product. I would make a few phone calls to some mover and shakers in your market. They should be able to give you the right referrals.

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Minh

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larrywww

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Reply with quote  #7 
Yes, but, with all due respect:

You are in the hottest market in California.

And when Bruce Norris---with his portfolio----can't even get a line of credit for 3 months, even when the money being borrowed is absolutely dirt cheap---Well, you know something is out of whack.  The Inland Empire is also a cheaper area---and that is where Norris was seeking to refinance.

I am not sure which bank(s) you are dealing with--but I have heard that the Asian banks tend to be more flexible and receptive--which, of course, is not a bad thing.

Right now refinances may be more common, but I know alot of investors who got run around the block several years ago and haven't tried again until recently.


mlreits

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Reply with quote  #8 
We were able to obtain our 5th purchase loan in 18 days in early 2013. It was a short sale and we had 21 days to close. Our mortgage broker is fantastic.

I've also done cash-out refinance with Homestreet bank. With respect to refinance/cash-out refinance, it may takes a little longer, 45-60 days, but it pays to work with the right bank/mortgage broker based on my experience. Of course, it varies from market to market.

With respect to Chinese banks, they put you on ARMs. No 30-year fixed. Loans with no docs. 50-60% LTV at the most. 

With respect to Bruce, I was surprised to hear about it in his April 2017 newsletter. Based on the numbers, he's right that our market doesn't have much upside from here. According to his newsletter, the area that have been seeing the highest growth is the southeast. FL being number one followed by GA, SC and NC. This may explain why he moved his investing to FL.

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Minh

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larrywww

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Reply with quote  #9 
About Florida---that may have been true when Bruce invested.

But I rather think he got in just before they slammed the door shut.

If you look at Fannie Mae's delinquency, I think Bruce said in early 2015 it accounted for something like 25% of their losses.  (I think he may have been thinking about the 4th quarter of 2014 since figures may not have been available when he invested---but no matter).

The odd thing is that the other I took a look at Fannie Mae's report---and what I believe I found was that Florida accounted for something like 6% in the latest report---and California was now the leader----I seem to recall the number was like 19%.  (That assumes I was looking at the right chart---hard to do since they have a ton of charts).

Which I found to be kind of weird----I was on the verge of thinking that Florida was the new promised land.   But the window of opportunity Bruce took probably has passed---I think.

Although there is that stray remark by Bruce that, in the long run, Texas and Florida are going to attract all the migration, etc

But then again I haven't really researched this---and it doesn't matter to me---I'm not gong to Florida.
brycewheeler

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Reply with quote  #10 
On my 10 loans, all have been with 25% down, interest ranging from 3.75% to 4.75%, last two loans were at 4.5% a few months ago, property in Peachtree City, a suburb south of Atlanta, Georgia (a planned community like Irvine CA).  The 3.75% rate was on Calif. homes in north San Diego county three or four years ago.

Bryce
kdog171717

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Reply with quote  #11 
Any fresh advice on this? Currently looking for a couple new loans with 7 current mortgages. Larry, did you try Wintrust?
larrywww

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Reply with quote  #12 
Jeff and Bryce appear to be the experts on this topic.   I wish I had tried to do this earlier in the cycle, but I was busy doing other things.  I really have no information at this point.
brycewheeler

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Reply with quote  #13 
Larry.  Maybe you missed my post on Wintrust Mortgage.  They make up to 10 loans and loan in California as well as many other states.   I have had quite a few loans from Wintrust and a predecessor company with Chaz Hinz as Loan Officer  (858) 922-0645  located in Encinitas, Calif. 92024.  I have had several loans from Chaz in California and Georgia and  they are very professional and competent with competitive rates.  They count your current residence as one loan if you have one and will make 9 more rentals or whatever.

Bryce
brycewheeler

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Reply with quote  #14 
larry.  I am sorry.  My message should have been high-lighted to Kdog 171717.

He said he had 7 mortgages and wanted two more.  He asked in his post if you had tried Wintrust.

Sorry for mix-up.  Just trying to help.

Bryce
larrywww

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Reply with quote  #15 

No problem, Bryce.  But it raises to my mind some interesting further questions.

Someone said that Bruce Norris has predicted a recession by next year at some point---and that will happen all the sooner if the Trump Administration starts raising interest rates.  (They have apparently eliminated the current Fed Chairwoman from the running---and she was very conservative about raising rates).

Of course, there are numerous factors that might affect the ultimate outcome.  My own feeling is that the exit door is looking better and better.

I wasn't able to hear Bruce at the apartment conference----and I think it will be very interesting to hear what he says in December (at both SDCIA and NSDREI).

I wouldn't be surprised to hear more of a "curtain going down" type message as we get closer to next year----does anyone disagree?

Refinance is something I would have loved to do early in the cycle.  But my honest feeling is that the exit door is looking better and better.  Obviously, if you are planning a "buy and hold" strategy---you will see things differently---understandably.

Homeloanwisdom

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Reply with quote  #16 

Do you want to finance up 10 properties in California?

 You will of course want the best rate possible which are loans at bank quality rates.  The rules pertaining to 10 financed properties are set by Fannie Mae & Freddie Mac rules which nearly all bankers and institutional lenders abide by.  

 Exclusions to the 10 financed properties are:

  • Multifamily of 5 units of greater
  • Commercial
  • Vacant land
  • Exclude primary residence if it is the subject property for loan (refi or purchase)
  • Exclusion if subject property is already owned by Fannie or Freddie prior to 4/2010 (I need to double check date if this comes up) as this is the date for HARP

 

What are the hang-ups and why does it get more difficult for each additional property you own?

Primarily it is the financial reserves that are required for each additional property, the loan-to-values get less and credit requirement (FICO Score) gets higher.

 Reserves:

Subject property X 6months PITI

Plus

2% of aggregate of unpaid balances of if borrower has 1 to 4 financed properties

Or

4% of aggregate of unpaid balances of if borrower has 5 to 6 financed properties

Or

6% of aggregate of unpaid balances of if borrower has 7 to 10 financed properties

+++ exclude primary residence from above

 Example if you own 8 financed properties:

NEW Subject PITI is $2000/month x 6 months =   $12,000                                                        

Other properties unpaid balance are $1,500,000 (exclude primary residence) x 6% =          $90,000

 Thus if you would need $150,000 in above example (I can use % of 401K & IRAs in lieu of cask reserves)

 

FICO Scores

680+ for up to 6 financed properties

720 + for 7 to 10 financed properties

 

Loan-to-Values (rate/term & Cash-Out)

65% to 75% depending on type of property

 

If the property you desire to finance is in California give a call or send me an email. I’d love to talk to you.  No cost or obligation, we can go through the numbers and qualifying issues to see if we can you a bank quality(best terms) loan. I'm a SDCIA sponsor and have done several transactions with members in the past few years. 




 

 


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Thom MacFarlane
Banker-Broker NMLS #282091
thom@sibloans.com 858-485-0462
@theloanhelpdesk



Jeff

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Reply with quote  #17 

Thom did my refinance when nobody else could help me (12 properties).  If your homes are in CA, I would definitely start with Thom!

 

...and if your homes are in other states, don't give up!  I recently found a credit union in UTAH that would refinance by 11th and 12th house--and let me take cash out up to 90% LTV. 

90%!

Lenders that understand the value of seasoned investors are out there!


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Please God, make the second million easier...
Jeff

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Reply with quote  #18 

I will NEVER understand the logic behind this restriction.  WHY is a borrower with 11 cash flowing properties, with an average LTV of 70%, with an equity position of well over half a million dollars...a HIGHER risk than someone with 1 property (which may only have a few tens of thousands in equity).

Why would banks rather lend to a complete newbie landlord on his first house, than to a seasoned landlord with a bunch of experience and "skin in the game"?

 

I am not just whining here, I actually am curious at the thinking behind these restrictions.  Do banks REALLY lower their risk by excluding possibly the most successful and responsible investors that have demonstrated their knowhow?

 

I just can't believe that the actuarial data back this up. 


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Please God, make the second million easier...
Jeff

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Reply with quote  #19 
(855) 446-3179     

Finance of America 

This bank will do any number of houses but:

1.  Each house must cashflow pretty heavily (better than my houses) 

2.  Current rate right now is 6.125% (and that is with a buy down)

 

So if you want to have 20 or 30 houses this is your Bank (just be prepared for sticker shock)

 

 


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Please God, make the second million easier...
brycewheeler

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Reply with quote  #20 
Jeff.  Thanks for tip on Finance of America.

You said current interest rate was 6.125% with buy down.   What is normal interest rate for them with no buy-down? if you happen to know?  And  is that for a 30 year fixed loan?

You also mentioned required "cashflow pretty heavily". Does that mean 30% or 40% down?

or tough reserve requirement?

Thanks ahead for any response.

Bryce
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