I guess it all depends on how many properties you can buy at 75% or less of appraised value.
I’d negotiate with both. See if you can get rid of the 2 points from the one lender, and see what the other guy will do about downpayment.
If you can get your hands on lots of the above mentioned properties, and can get rid of the charged points, and have decent cashflow on a lease or seller financing, then go for it! Borrow (in pieces) that $500k, at which point your income will be up, so they might extend more. Then see the other guy.
I’m a part timer and just bought my fourth rehab. I contacted a lender because I thought I may want to L/O this one when finished. My credit score is very high and I have high, steady income. Lender said they’d loan 75% of appraised value (regardless of purchase price), 2 points, 9.9%, 20 year amortization. Said with my credit and income they’d probably extend $500K as long as I made “smart” purchases. This seems to be kind of a cross between hard money and conventional lending. I can walk away from closing with a check and positive cash flow. Is this loan a good deal?
Additionally, commercial loan officer at a local bank is calling me periodically and wants my business. I deposited a large check in his bank after selling my last rehab and he struck up a conversation with me. His rates and terms are cheaper but loan would be based on purchase price (or appraisal if lower than purchase price) and would require down payment.
I’m having trouble deciding what to do - any comments?
Glenn-PA