Banks offer - Posted by ray

Posted by Ed Garcia on July 21, 2002 at 21:41:23:

James,

Yes, I would seek out a local community bank. This is a bank that has to compete with Washington Mutual, Bank of America, and Well Fargo, and since it can’t compete cost wise, it can be a little more flexible with it’s underwriting criteria.

Ed Garcia

Banks offer - Posted by ray

Posted by ray on July 19, 2002 at 17:35:00:

i posted this question on another discussion board before I found this one which appears to be closer related to my question.

As a newbie with excellent credit I went to the bank today to ask about their requirements for single family investment properties.

They offered:
Maximum financing of 85% of cost
A 1% Fee
10-15 year ammortization schedule with the note maturing in 3 to 5 years.
Interest rate tied to T Bills and at todays rate the 3 year would be 6.5% and the 5 year would be 7.0%.

This is a bank I already do personal banking with. Is this a good deal? a reasonalble deal?

Anyplace I can go to get more info on what I should expect out there?

Thanks for any help and advice

Re: Banks offer - Posted by Ed Garcia

Posted by Ed Garcia on July 20, 2002 at 12:51:16:

Ray,

Just remember one thing, you can do anything that you’re big enough to do.

Everything is NEGOTIABLE. However, after saying that, you have to be able to negotiate intelligently.

For example if you were to take a deal to a bank that was full retail market and ask them to finance at 100% and it has a break even debt service or cash flow. You would have a ruff time.

On the other hand, if you bought a deal lets say at 70% LTV and asked them to finance it for a 100% of the purchase price, and could demonstrate a nice positive cash flow, now you have a deal that really makes sense.

So financing is not carved in stone. The important thing to do is learn the language. Try to understand the difference between a portfolio lender and various other lenders.

Ed Garcia

Re: Banks offer - Posted by James Buster

Posted by James Buster on July 21, 2002 at 20:23:37:

>On the other hand, if you bought a deal lets say at
>70% LTV and asked them to finance it for a 100% of
>the purchase price, and could demonstrate a nice
>positive cash flow, now you have a deal that really
>makes sense.

Would you have to have to go to smaller banks or mortgage companies to do that? Scuttlebutt is that banks, even portfolio lenders like Washington Mutual, never do equity lending. While from my POV there’s no difference in the lender’s position between a 100% buy/30% cash down and a 70% buy, banks don’t seem to see it that way.