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Many casual real estate investors finance their SFR rentals through traditional consumer mortgages. These investors buy their first home and then rent it out when they are ready to buy their next home. But when you are a professional investor looking to grow your portfolio of rental properties, there are essentially three financing options: agency loans (Fannie/Freddie), local banks, or an alternative lender such as Visio Lending. Let’s look at all three options:
Agency loans are the least expensive type of loan, yet the most complicated to obtain. Lenders typically underwrite agency loans based on a holistic review of an investor’s cash flow, including income from stable employment and rental properties. These loans have some drawbacks for investors including:
Some real estate investors have success financing their rental properties with local or regional banks who retain the loans in their portfolios. Because banks plan to retain loans rather than sell them, they can be more flexible on underwriting in exchange for higher rates and fees. Banks, however, cannot portfolio 30-year loans, so they typically write five-year loans on 15, 20, or 25 amortizations. Some of the drawbacks of working with a bank are:
Visio Lending’s loan programs are designed to help real estate investors grow their portfolios of SFR rentals. We underwrite our loans based on credit score, including depth of credit, LTV and property level cash flow (DSCR). Buy and hold investors love working with Visio because of our:
Check out our blog post, "Loan Programs Available for SFR Properties" to learn more about financing in the single family residential space. Check out our blog category "The Visio Box" to learn more about how Visio tailors our loan programs to meet the needs of investors.