Investment Property Financing

I first started investing in real estate in 1994. Back then, even though I was clueless, I knew that real estte was going to be my ticket to cash flow and most importantly, passive income.

I started with creative financing strategies just because I didn’t have much cash and that seemed to be the way to go. Then I found a bank that was friendly to investors and they made almost all of my investor loans for many years.

Then a few years ago, it seems like the mortgage business went crazy. Wall Street was slicing and dicing up mortgages and selling them off as “derivatives.” I have a friend that works in the secondary marketing department of a mortgage company and that’s ahe does all day is sell off millions of dollars worth of mortgages to Wall Street buyers all day long.

It seemed like the rules really relaxed for a few years. Stated income loans were ok – even for real estate investors. And then 100% financing became available from regular lenders. I even did a few 80/20 loans where you got an 80% first mortgage and then a 20% second mortgage at the same time.  The interest rate was high on the second mortgage but hey, it was 100% investment property financing!

Then, last year the whole thing fell apart. The lenders took away all that stuff and made it even harder to get financing.

It seems to me that the whole cycle has completed. Come full circle. Because now, as a real estate investor, my best bet for financing is to hook up with a portfolio lender. A small bank or credit union that can get to know me, my business and fund all my deals.

Right back to the way I did it in the beginning.

I just found this video on YouTube about investment property financing. The person does a good job of quickly identifying all the reasons why it’s so tough to get investment property financing.

She brings up a great alternative that I agree with – using portfolio lenders. Portfolio lenders don’t have to follow the rules of conventional financing which you’ll see in the video.

Instead, they have all sorts of cool programs like blanket loans, business lines of credit, investor loans in your LLC that do not report to your personal credit report. Take a look at the video. The lady has an investment property financing  course I just bought and I’m going through it right now. I’ll have a detailed review up in a couple of days.

I hope it helps!