The Beginner’s Guide to Financing Rental Properties
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- čas přidán 19. 06. 2024
- Financing rental properties may not be at the top of your to-do list when getting started in real estate investing. You may be more focused on deal-finding, networking, or figuring out how to analyze a real estate deal. But you can't get a deal if there’s no way to fund it, and that’s why rental property financing is one of the most important steps when buying a rental property.
Henry Washington started out just like most real estate rookies. After getting his first property under contract, he walked to the local bank, got financing, and didn’t think much about it after that. But, as Henry has expanded his portfolio, he’s begun to take on different types of loans, opening him up to a whole new world of real estate financing.
Henry gives a short (but sweet) masterclass on the four most common types of real estate financing and how you can use them to get your first (or next) deal under contract. If you’re still struggling to find the right lender for your deal, click the links below to get access to investor-friendly lenders in your area.
Mortgage Lenders: www.biggerpockets.com/loans?u...
Hard Money Lenders: www.biggerpockets.com/real-es...
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Join BiggerPockets for FREE 👇
www.biggerpockets.com/signup?...
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Hear Henry On The “On The Market” Podcast:
Spotify: open.spotify.com/show/2NlzZ9N...
Apple Podcasts: podcasts.apple.com/us/podcast...
BiggerPockets: www.biggerpockets.com/podcast...
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Check out Last Week’s Episode on Finding Off-Market Properties:
• How to Find Off-Market...
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Connect with Lenders, Agents, Contractors, and More:
www.biggerpockets.com/real-es...
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What Newbies Should Know About Financing Investment Properties:
www.biggerpockets.com/blog/fi...
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Investment Property Loans-The Ultimate Guide to Funding Your Deals:
www.biggerpockets.com/blog/20...
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4 Options to Help You Finance Your First Rental Property:
www.biggerpockets.com/blog/fi...
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Follow Henry on Instagram:
@thehenrywashington or / thehenrywashington
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Connect with Henry on BiggerPockets:
www.biggerpockets.com/users/h...
0:00 Rental Property Financing 101
1:13 What Are Your Financing Options?
2:18 4 Types of Real Estate Financing
3:22 1. Conventional Loans
6:08 2. Hard Money Loans
10:26 3. Private Money Loans
13:52 4. Small Bank Loans/Commercial Loans
19:22 How Do You Fund Your Deals?
Henry’s voice is soothing as hell while educating and dropping knowledge. I appreciate y’all :)
Once he said you can borrow the down payment, I knew there is ALWAYS a way to finance if you a good deal because the lenders are gonna want in on the deal!
Thank you so much for this information. My husband (software engineer) and I (nurse) ended up with an "accidental" rental property and now we are looking to invest in more properties. I had no idea how we were going to do this. Your video was great!
Thx for breaking it down Henry so helpful!
Video was more educational and succinct than I expected, thank you.
I'll be subbing and bingeing for a while, hope you the best with your investments and life!
Thank you, Henry! This is super helpful, and love your vibe. You guys are a treasure-house.
the option that i usually use is similar to a bridge loan, each bank i work with calls it something different but the basics of what i do is i use my house(which is paid off) as collateral for the down payment and then take the rest of the loan out of the property im buying, i have 1 payment and no out of pocket cost and then once its finished i can either sell and recoup my money or i can refinance and clear the debt from my house so i can move onto the next
i like the small bank portfolio lender loans. Especially since I am new to the game and building up. Thanks for putting out great useful content! Much appreciated
Your voice is easy to listen to and understand. Thank you!
Super helpful and straight forward. Thank you!
As a lender I'm investing heavily into this space in Los Angeles. Working with like-minded people that also love RE investing gets me fired up. Let's go!
Are you open to finance others to either own part equity or earn interest on the rental property?
This was INCREDIBLY helpful man. Great job breakin it down for us new investors. 10-10
One of the best real estate videos i’ve watched. Great content. Thanks
I LOVED your breakdown. So thorough. Thanks so much 😊
High value information. Thank you, Mr. Henry Washington. God Bless🙏
that was simply amazing information. easy to understand. mic was great. it was organized well. thank you!!
you're the man! love the simple breakdown
Thank you so much for sharing so much valuable information. I am shopping around how to finance my first investment, this is very helpful!
All this information was super helpful! Thanks for sharing!
Man.. this is a great video. Been focusing on hard and private money for BRRR’s. This helps 👏
Wow! Henry's AWESOME he's an EXCELLENT Teacher 👌 w/EXCELLENT explanation manner I Appreciate ya 😀 😊 🙏
Thank you so much for these amazing advices!
AWESOME info and your logo is freakking GENIUS man. Thank y0u for sharing!
I am excited to start following you. this video is fantastic. The small local bank loan is fantastic. That's the goal
Great breakdown information of loan options! Thank you
This is a great video. Appreciate how simple and straightforward the info is. Awesome work!
That was very helpful information. Thank you for sharing it.
Extreeemely helpful info! Thank you so much!!
Thank you sir this video was very helpful.
Thank you for explaining the different options for financing a deal.
Thanks so much for breaking down the financing options. To this newbie, it seems much more achievable when you understand the process.
Finally an episode that's worth listening to and not inflated with high achieving lies. Great episode
Great video. Just recently getting into this and this was great info. Thanks!
I love the way you explain things!
Great presentation. I learned a lot. Thank you.
I'm only 13, but I've been trying to learn about financing. I don't really understand some of the terminology, but I kind of get the point. Hard money loans, and commercial loans seem to catch my eye, and seem to be the best option for where I live. It would help if you made a video about terminology such as what does mortgage, lender, and real-estate...
You're awesome! You will be wealthy starting this early. I wish my 13 year old granddaughter had your mentality. Blessings!
Keep up the great work!!
Invest EARLY & OFTEN biggest piece of advise😊
Go for a PML 🔥
Keep up that mindset, this is sooo good for you to be learning this at your age.
Keep striving kid by 25 with that mentality you will be a millionaire
very helpful brother just to grasp the general options for me moving forward
Very helpful video. Thank you!
Awesome video Henry. Thank you.
Super helpful! I knew of the first three but commercial is news to me. I’ve always been weary of ARM mortgages but happy to hear there’s a cap on increase. Is it possible to refinance out of commercial to conventional (at some point) if the bank offers both?
Thank you Henry for such a valuable information. I have a question about hard money loan, how long typically do they loan the money for? I appreciate your help! Thanks again!
Super helpful! Thank you.
Super helpful and timely video. 👍
Appreciate the info my man💪🏽
Great video! Thank you.
This video was very informative and I appreciate how you broke down the details. Thank you! I joined BiggerPockets a month now and looking forward to great things as I start my real estate investment journey.
exact video I was looking for.
Great information. Thank you.
Mucha información super valiosa, gracias por compartir. Cada vez le voy entendiendo más de como funciona los bienes y raíces para empezar a invertir...
Thanks for this great content!
Small banking is genius! Thank you for the information sir.
Thank you so much for sharing your knowledge. I have one question, If you use a commercial loan you get amortized for thirty years but have to pay back the bank usually in 10-15 years. So normally a cashflow of $400 won’t be enough to pay the balloon payment at the end of the commercial loan. So does that mean you have to keep refinancing to make things work? Thanks in advance for your response
You the man, Henry!
Thank you for this breakdown Henry! Definitely helped understand the in-depths of financing options
Good stuff! Thanks!
I have a question, I would like to know if is better to apply for an investment loan in the state where the property is locate or if it can be in any state? because we're investing in a different state than the state we live in. Thank you, so much!!
Great explanation of solutions to buying, especially first deals. I just put my first deal together and am approved for a commercial loan . Waiting on the inspection!!!
Thanks for the information 🙏
Welcome!
Well done 🎉
Great info
Can you provide the Hard Money Lender calculation formula in order for one to know what the profit will be, the repayment cost back to the lender, etc.
Thx!
Will smaller bank, should you let them know that you have a property or no?
Should one use the same lender with a prior property which will show what you bring to the take?
Is there a specific website to use to obtain a list for smaller banks?
Can y'all do an episode on buying real estate in a land contract deal?
Can a private lender be a bank such as a smaller bank?
Is there a calculation formula for private lending?
Hey Henry with the Small Bank/Commerical loans do I have to have an LLC? Or can I be an individual?
Could I use a hard money loan for the 20% down payment. Then use the bank to finance the rest?
great video
Henery much respect man. Awesome content. Very very informative.. thank you for that man!
1/ Private Lenders in need of; Are you open to finance others to either own part equity or earn interest on the rental property?
If I get the loan in a small bank , can I refinance after that 3 to 5 years in a conventional bank with 30 years fixed to avoid that adjustable rates ?
Hey Question: When you borrow the down payment from a private lender how fast do they usually expect you to pay them back? Because wouldn't they want it back quicker than the bank which is tough with a rental?
That was so helpful, thank you!
What are some of the local small banks in California ?
hi I have a duplex with tenants on both side...in January 2023 it will be 1 year, by the way it a FHA loan,, I will refinance to a conventional loan...so I can get another FHA loan,,,to buy another duplex....
I just got presapproved for a sfr. i would like any suggestions of how to use my loan to buy low and update the proprty?
Does bigger pockets work in Canada?
how about a beachfront, city center appartment from 50k newly built that they rent out for you? Scandic Resort.
You can put less than 20% down on a conventional loan, but you will get PMI tacked on to your monthly payment.
Henry is awesome! We need more Henry on BP!
What is an example of a small bank/commercial lender? This is new to me
How do you qualify in terms of income vs loan
So what are Fannie Mae and Freddie Mac loans considered? Conventional?
Is a hard money lender like a loan shark in the sense? I want to finance my 1st rental property and don’t want to go conventional
DTI is also important. It wasn’t mentioned.
Conventional Loans are useful for buy and hold and that's really what bigger pockets preaches. Hard money, Private money, and Commercial loans are really only tools for flipping houses or refinancing into a conventional loan. Wouldn't it be nice if a lender could combine all these products and services and allow a you to borrow %100 of a home's value plus rehab costs and then turn around and let you refinance or sell with them once you've added value to the property?
Yes!!!!!! That's what I need.
There are some out there that will do exactly that, as long as you have the credit and resume to back it up.
I need about 40k to partner up on a deal but not sure where to get the money.
Great info! We want to buy rentals that need a bit of work but starting out we don't have the rehab money, will a commercial lender allow us to borrow that money too?
Get an LLC first so your personal assets are protected. Then use the LLC business to get loans.
Some will but, you may need to have someone attached to the deal, who has experience in this kind of a project at first.
Typically, they want to see three successfully fix and flip properties on their resume within the last three years.
What about FHA loans?
Are HELOCs normally acceptable to small banks for outside funding for the down payments? Or do you have other suggestions for down payments? I’m in a pretty expensive market(middle Tennessee) which puts many deals out of reach due to large down payments. It is the main reason I haven’t pursued investment properties more aggressively
I love Tennessee! Hope you were able to get your situation figured out. If you ever need funding on any deals hit me up. I'd be happy to help!
So I am a first timer here and looking into purchasing my first investment property. It is a cash deal and I am trying to find a commercial back that will finance it. When I ask about cash deal financing the folks on the phone are lost. Other than cash deal financing, is there different lingo so they know what I am asking about? Thank you
Hit me up, I can help you with funding your real estate deal. We do fix and flip loans.
Which category does a FHA loan fall under?
None of them ,Just another way of financing if you say you gonna live there with a low 3.5% down payment, usually lower rates and backed by the government
Thanks for this. I am just getting started and finding out interest rates are poop right now. The lenders I have spoken with suggested a cash out refinance or HELOC on my primary residence to help purchase my first deal. Thoughts on either?
I'm right there with ya. My other follow up question along these lines is, if we do a heloc and can't buy a full property 100% cash with it. Will having a partial mortgage loan AND heloc be way too much? Would really need to rely on your renters asap to get you out of that hole if so!
housing market is crazy. shed = 150k
I have to say this is a fantastic series and as a newbie, this is gold.
Has anyone had issues getting a deal financed if you have 1 late payment on your credit report but have a high score of 720+?
How do I get 200k as a nobody for 25% down on a 9 unit??
I’ve heard of crowdfunding. Get to networking and meeting the people with the money. Whether this is through your local REIA meetings or local real estate investors group See what they’re willing to invest and in return you provide a return on their investment via your calculations.
@@KeronBryce what’s a REIA?
This is sort of what I was wondering, like what about other miscellaneous sources like 401k loans or home equity lines of credit?
@@joeymak2000 Real Estate Investors Association
@@KeronBryce what’s a good return on the crowd funding route
Do any of these lenders have a net worth minimum? Some lenders want you to have a million dollars net worth before lending over a million dollars. Thank you
This is a great point! Lenders could require net worth, liquidity, credit and other minimums. However, you can have someone that checks all of these boxes sponsor the loan for you even if you do not fit the criteria yourself. Feel free to message me if you have questions!
This is why I dislike bigger pockets, no where did you mention non qm loans or dti which is way more important than a credit score
Not if you do creative or seller finance
Any lenders in Alberta Canada