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blue-raven-group · 2 years ago

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All You Need To Know About Investment Property Loans

Investing in a property is always beneficial as the rates keep on increasing and people often do that to secure their future. Some people prioritize investing in a property and plan to buy a piece of property by taking a loan. There are many lenders that provide investment property loans in California or anywhere else but you must have enough knowledge about them.

What is an investment property loan? An investment is given by a lender if the person wants to buy any piece of property with the intention of earning a return from the investment later. You can buy a town home, condo, or multi-unit property with an investment property loan and later rent it or sell it to earn some profit. While choosing investment loan providers you must make sure that the lender is offering low-interest rates and its offers fit your needs. Why should you rely on investment property loans? Investing in a property or multiple properties can have its benefits. Most people look forward to taking investment loans in Los Angeles anywhere else and buying a property so that they can rent it and receive income from the investment they’ve made. Apart from that, there’s also the potential to make more money over time through the appreciation of your investment. In addition to cash flow and tax benefits such as depreciation, there are also many different tax advantages. You can also take advantage of the recently bought property when it comes to long-term profits. Eligibility criteria for investment loans Investment loans require different interest rates as to buy a single-family home, you may have to pay only 15% as the down payment. On the other hand, to buy a large piece of property, you may get interest rates up to 25%. Good credit score — In order to get an investment property loan, you must have a good credit score. However, it also depends on the lender whether your credit score would matter or not and the loan type, terms, and investment also affect your situation. Cash reserves — Some lenders often ask for cash reserves so you must have at least six months of cash reserves with closing costs. If your situation is unique, like if you’ve already bought a few properties, you can face other outcomes. Downpayment — You won’t get an investment property loan if you can’t pay at least a 15% down payment. Some lenders also ask for 20% but it will not get further than that. Proof of income — All eligible candidates have to show proof of their income. You may be asked to provide two years of tax returns or salary slips but it all depends on the lender. If you’re looking for the best investment property loans in San Diego, you can contact “Blue Raven Group”. The firm specializes in decline files, bank statement loan florida, and DSCR Loans. They will ask for minimum documents and there’s no need to show them your income proofs.

#dscr loan illinois #bank statement loan florida #bank statement loan Washington

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chrisvarneyus · 5 years ago

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Small Apartment Loans: The Best Options for Borrowers

What Investors Should Know About ‘Small’ Apartment Loans

While there’s nothing small about millions of dollars, in the multifamily finance industry, apartment loans ranging from $1 million to $7 million are generally considered to be ‘small’ loans. This isn’t to minimize the importance of these loans to the investment market-- simply to differentiate them from the $10, $20, and $30+ million loans that are often offered to larger institutional investors. In fact, in terms of loan origination, these ‘small loans’ are perhaps the fastest-growing segment of the multifamily financing market.

For instance, in 2018, Freddie Mac originated $8.3 billion in loans through its Small Balance Loan program, one of the most popular small apartment loan products on the market. That’s up from $7.8 billion in 2017, a 6% year-over-year increase. Fannie Mae also originates billions of dollars of loans each year with its SBL alternative, the Fannie Mae Small Loan. While Fannie and Freddie aren’t the only options in town for small-balance investors, they’re often the best choice. In this article, we’ll review Fannie and Freddie’s small apartment loan options, while also taking a look at CMBS loans and other relevant financing options.

Why Small Apartment Loans Are Important for Investors

While it’s true that a lot of loan programs start at $1-3 million, that doesn’t mean they’re ideal for loans of that size. In fact, even if a lender states that a loan product or program begins at $1-3 million (or a similar amount), they may be less likely to agree to finance these ‘smaller’ loans. This is due to the fact that they’ll generally be putting the same amount of effort to underwrite and originate these loans while receiving a smaller payout, as most lenders are compensated based on a percentage of the total loan amount. In addition, application fees for many standard multifamily loans can very steep. For example, Freddie Mac Conventional Loans generally have application fees of between $12,000 and $15,000, while Fannie Mae DUS Loans typically require a $20,500 application deposit and an additional $3,000 in processing fees. Both Fannie and Freddie’s Small Loan programs have fees that are approximately half that amount, leading to significant savings for borrowers.

Freddie Mac Small Balance Loans: An Excellent Option for Borrowers in Larger Markets

As we just mentioned, the Freddie Mac Small Balance Loan program, also known as the SBL program, is an increasingly popular choice for small multifamily borrowers. These loans range in size from $1 million to $7.5 million, meaning that they fit perfectly into the small balance niche. They also offer a great degree of flexibility for borrowers, as they offer fixed-rate, floating-rate, and interest-only loan options with a variety of term lengths. SBL program rates are slightly lower for borrowers in “Top Markets,” such as New York City or Los Angeles while being higher for borrowers in so-called “Standard,” “Small,” and “Very Small” markets. Therefore, Small Balance Loans are generally a better deal for borrowers looking to finance properties in major MSAs. In addition, it should be noted that SBL pricing is further divided by region (Freddie Mac has divided the U.S. into five regions for the purpose of the SBL program), with slightly different interest rates for each region.

Typical terms include:

Loan Sizing: $1 million minimum, $7.5 million maximum

Uses: Purchases or refinances of stabilized multifamily properties

Amortization: Up to 30 years

Maximum LTV: 80% for Top and Standard Markets, 75% LTV for purchases and up to 70% for refinances in Small/Very Small Markets

Minimum DSCR: 1.20x for Top Markets, 1.25x for Standard Markets, 1.30x for Small Markets, 1.40x for Very Small Markets

Recourse: Loans are typically non-recourse with standard carve-outs

Terms: 20-year hybrid adjustable-rate loan with a 5, 7, or 10-year initial fixed-rate period, or a 5, 7, or 10-year fixed-rate loan (partial and full-term interest-only loan options are also available)

Borrower Requirements: Borrowers usually need a net worth of at least 100% of the loan amount and liquidity equal to 10% of the loan amount (adjustable based on various factors)

Timing: Closing generally occurs 45-60 days post-application

Fannie Mae Small Loans: A Great Choice for Borrowers in Smaller Markets

The Fannie Mae Small Loan is Fannie Mae’s most popular option for small apartment financing. It shares a lot in common with the Freddie Mac SBL program but offers a few features that Small Balance Loans do not. For instance, Fannie Mae Small Loans permit borrowers to utilize 30-year fully-amortizing loan terms, meaning that they may not need to refinance their loan before the property is fully paid off. In addition, these loans can be used for manufactured housing communities and housing cooperatives, while SBL loans typically cannot. Perhaps most importantly, rates are generally lower in smaller markets when compared to the SBL program, which can be extremely beneficial for those looking to finance properties outside major MSAs.

Typical terms include:

Size: $750,000 minimum, $6 million maximum

Terms: 5-30 year fixed-rate terms, with floating-rate, partial and full-term interest-only and hybrid ARM options available

Amortization: Up to 30 years

Maximum LTV: 80%, 75% for refinances

Minimum DSCR: 1.25x

Recourse: Loans are generally non-recourse with standard carve-outs

Prepayment Options: Graduated step-downs or yield maintenance

Eligible Properties: Conventional apartment properties, affordable properties and manufactured housing communities (MHCs) with 50+ pad sites

Borrower Requirements: Borrowers usually need a net worth of at least 100% of the loan amount and liquidity equal to 6 months of mortgage payments (principal and interest)

Commercial Limits: Commercial space is limited 35% of the project's rentable area and must not contribute more than 20% of the property’s effective gross income

Timing: Closing generally occurs 45-60 days post-application

CMBS Loans: Ideal for Lower Net Worth Borrowers

For those who don’t quite fit inside the agency box, CMBS financing (also known as conduit financing) remains a viable alternative for those seeking small apartment loans. CMBS loans generally start at $2 million, but in rare situations, certain lenders may be able to offer loans as low as $1 million. Conduit loans are generally ideal for situations in which a borrower doesn’t have a particularly high net worth (e.g. 50% of the total loan amount), or has a lower than ideal credit score). They can also be utilized for unconventional properties, such as a 50/50 mixed-used residential/commercial project (unlike Fannie and Freddie, CMBS can be used for all income-producing commercial property types).

In terms of application fees, smaller CMBS loans can often is more expensive than comparable agency financing. For instance, lender legal fees generally cost borrowers $15,000 for loans under $5 million, and can often go up to $30,000 for borrowers seeking more than $5 million. Origination fees can often range from $7,000 to $10,000, with additional costs for servicing set-up and other expenses.

Typical CMBS terms include:

Size: $2 million+

Term: 5, 7, and 10-year fixed-rate loans (adjustable-rate loans are available but rarely used)

Amortization: 25- 30 years

Maximum LTV: 75%-80%

Minimum DSCR: 1.25x

Recourse: Non-recourse with standard carve-outs

Prepayment: Yield maintenance or defeasance

Commercial Limits: Commercial space is limited to 25% of a project’s gross income (exceptions can be made on an individual basis)

Other Options: Banks and HUD/FHA Multifamily Loans

Of course, agency loans and CMBS aren’t the only loan options when it comes to acquiring or refinancing ‘smaller’ apartment properties. Bank loans are another option, but they usually aren’t the best choice if a borrower can qualify for CMBS or agency debt, due to the fact that these loans are generally full-recourse financial instruments.

HUD multifamily financing is another great choice-- but these loans can be difficult to get, especially for smaller borrowers. HUD generally prefers borrowers with a lot of multifamily experience, extremely strong financials-- and, for borrowers who do qualify, loans can often take between 6 and 10 months to close. While they technically start at $2 million (with some exceptions) for HUD 221(d)(4) construction and substantial rehabilitation loans, and $1 million for HUD 223(f) purchase and refinance loans, in practice, they generally aren’t a good fit for borrowers looking for less than $4-5 million in financing.

from Loan News https://www.multifamily.loans/apartment-finance-blog/small-apartment-loans-the-best-options-for-borrowers

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acomcapital · 2 months ago

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DSCR Loans in Los Angeles: A Guide for Real Estate Investors

DSCR Loans in Los Angeles is a common way for real estate buyers to get money. It stands for Debt Service Coverage Ratio. Instead of the borrower's credit score, this type of loan is based on how much money the property makes. As a result, investors who own rental homes or want to buy them are sure to like them.

What are DSCR Loans?

The property's yearly debt service to its net operating income (NOI) is used to decide if it meets the requirements for a DSCR loan. Most of the time, a DSCR of 1.25 or higher is thought to be better. The property's income is enough to pay off its bills and then some.

Benefits of DSCR Loans in Los Angeles

Most of the time, DSCR loans have less strict credit requirements than regular mortgages. This could be very helpful for buyers whose credit isn't perfect.

DSCR loans are based on how much money the property can make, not on how much money the client has. These bonds are perfect for investors who own or plan to own properties that bring in regular cash.

The loan-to-value (LTV) number for DSCR loans is usually higher than for regular mortgages. For buyers who need a bigger loan to cover the cost of the property, this could be helpful.

DSCR Loan Lenders in Los Angeles

There are many DSCR loan lenders in Los Angeles, and each one gives borrowers a variety of ways to pay back their loans. Before you decide, get quotes from a few different lenders and compare their terms, fees, and interest rates. There are a lot of different types of properties that lenders may specialize in, such as business real estate and multifamily homes.

Important information About How to Apply for a DSCR Loan

To get a DSCR loan, you need to know how much money the business makes in net operating income (NOI). Tax records and rent files, as well as other property revenue documents, must be easy to find.

The principal amount, the interest rate, and the length of time you have to pay back your loan are the three main things that decide how much you have to pay each year.

Credit doesn't matter much when it comes to standard mortgages, but it can still affect your interest rate and other loan terms.

For a DSCR loan to be approved, the condition of the land is one of several things that must be met. Lenders may ask for a review to find out how much the property is worth and what kind of shape it is in.

Conclusion

A DSCR loan in the Los Angeles area could be very helpful for real estate owners. If you want to make an informed choice about how to finance your next investment property, you need to read the terms of these loans very carefully.

ACOM Capital

Website:- https://acom-capital.com

Email:- [email protected]

Contact:- +1 844-855-6267

#DSCR Loan Los Angeles #DSCR Loan Lenders Los Angeles #ACOM Capital

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