Texas Investment Property Loans - Changes on the Way

Texas investment property loans - acquiring rental property

As of midnight march 13ths I lost 2 deals due to Wall Street. Yes Wall Street has drastically cut back on 2nd liens , particularly the high LTV loans (90-100%) that I have been doing for investors for several years. What does this mean? It means that the days of the 0 down investment property mortgage is probably over, at least for now.

I want to talk about one strategy that I personally use to acquire rental property. I never really thought it was a great idea to buy rental property with a 0 down loan, unless you were purchasing at a minimum of 80% of market value, which most buyers fell short.

When buying rental property how do you eliminate 98% of buyers (not hard to do these days with subprime fallout?) Find properties that are not lendable by conventional Wall Street mortgages. Properties that the appraisal would read below average or have any roof or foundation damage are good candidates. Bottom line, if you would move your dear old Granny in the house it's probably ok, if not you have found your bargain.

0 down investment property funding-putting the pieces together

Now that you have found you deal, get your financing. I'm going to keep it simple.

1. Get a local bank loan (most require 10-20% of the total cost of purchase and repair).

2. Use secured or non-secured lines of credit. You will be surprised what your bank will allow if your credit is good, 680 or better.

3. HARD MONEY, yes my company will find these loans. Typically rehab/hard money will 65 – 75% of ARV (after rehab loan to value). These are short term loans, 12-15% interest.

The conclusion is "Rehab to Rental". Simply refinance your hard money note at 75% of current value of your property. It's called a rate/term refinance, most of my lenders do not have a title seasoning issue with this loan. You now have 25% equity the day your renter moves in, you have a much better rate than a typical (now in the past) 0 down loan and you still have less cash in your property than if you had purchased 0 down because all closing costs are rolled into the loan.

My website below explains more.