Status Update on Financing

So, sixty days into the financin search. Let's see where we stand...

FHA 203K is out. The main program is only for owner-occupants now. The loophole for a non-profit requires that the housing rehab entity be in the non-profit for two years before applying.

USDA financing...no window. Main program is for owner-occupants only. The provision for rental housing providers requires a multi-unit property, and appears to require the borrower to live in one unit.

Conventional - nearly every conventional lender I approached is still holding to the 4 properties/4 mortgages or less requirement even though Fannie Mae loosened up the requirements.

HomePath/Homesteps - referred to them as the holy grail or investor financing. Supposedly have a 10% down program. That's only for the first investment. With more than 4 properties, they want 25% down and --- get this --- 3 to 6 months reserve for payments for every property I own! In my book, they are the antithesis of a creative lender.

Found at least one portfolio lender that would lend even though I have more than 4 properties/mortgages, but they won't allow secondary borrowing of any kind. The down payment requirement was 25% to 30%, and it had to come from my cash. They would not even allow a partner to put up the funding unless they were on the loan and deed. The potential private lenders I've approached do not want to be on the 1st mortgage, nor on the deed.

Most every portfolio lender I've uncovered is really a hard money lender which I won't use. It appears that basically, banks aren't really lending on mortgages. If they can't sell the mortgage, they won't offer it. It may not help my financing situation, but it's certainly illuminating to see how our banking system is really doing business now. Once upon a time a bank took in your money as a deposit and lent it out in the form of loans. Apparently, that's not happening right now...perhaps on credit cards, but not on mortgages.

My recent foray was to look at Farmers Home Administration loans. They are clearly owner-occupant only. The loan must be for the primary residence and no other dwellings can be owned.

My plan is to keep digging into some more banks, but really need to turn my attention to private lenders. Anyone want to put $84,000 to work or know someone who does?

Views the Palm Springs Property and Chatted with the Agent About Financing

Went to view the Palm Springs house yesterday and chatted with the Realtor about the financing situation. I clarified that with more than 4 properties, most conventional lenders won't touch me.

He confirmed that the real estate industry is really up in arms because the stimulous money (you remember...that nearly 1 trillions dollars given to the banks...) is not being used for what was required of it. Banks are doing everything but lending.

He's going to scan his network of contacts to see if he can find any creative lenders with portfolio loans. Better yet, I suggested, individuals who might be interested in getting a good return. Divide and conquer - 10 people willing to lend $10,000 will put the deal together, although that would be logistically messy!

My next stop is the Farmers Home Administration to see what their current state of lending affairs is for rural communities, but non-owner buyers.