Complete Guide to Visio’s Residential Rental Loans

Posted by Hannah Lapin on Oct 18, 2021 3:26:38 PM

hand holding keys in front of a house

Visio Lending is the nation’s premier lender for buy and hold investors — offering flexible, long-term loans for SFR rentals and vacation rentals. Our flagship Rental360 loan product is underwritten based on property level cash flow and borrower credit, rather than the borrower’s personal income. This innovative lending criteria, as well as our optionality, make us the ideal financing product for the self-employed investor or the investor that is building a portfolio of rental properties.

Let’s take a deeper look at our loan programs and product offerings and how they can be tailored to your individual needs.

 

 

What Fits in the Visio Box?

We’ve coined the term “Visio Box” to describe our niche market and when our rental loan programs would be a good choice for borrowers. Here’s a brief overview of what fits into (and what doesn’t fit into) the Visio Box in terms of residential property, borrower, and loan type.

Property

  • We lend on rent-ready, residential rental properties including 1-4 units, condos, townhomes, and vacation rentals.
  • We do not lend on owner-occupied properties, non-warrantable condos, 2nd homes, rent by the rooms, or group homes.

Borrower

  • We lend to real estate investors either as an individual or corporate entity.
  • We do not lend to trusts, non-profits, foreign nationals, or owner-occupiers.

Loan Type

  • We will finance single asset rental loans for long-term and short-term rentals.
  • We do not finance non-recourse loans or cross-collateralized loans.

 

 

 

Why Buy & Hold Investors Love Visio

At Visio Lending, we strive to be the fastest, simplest, and most dependable mortgage lender that enables investors to grow their rental and vacation rental portfolios, improve cash flow, and build their wealth.

Here are just some of the key features that make Visio the leading lender for SFR rental real estate investors:

 

 

Visio’s Loan Programs are Tailored to Investors

We stand out from local banks and government financing by creating and tailoring loan programs specifically for professional investors: 

  • We use a streamlined qualification process emphasizing property-level cash flow.
  • We offer full 30-year amortizing loans with no balloon payments.
  • We simplify the documentation with no personal DTI or tax returns.
  • We offer prepayment penalty and rate buy-downs so investors can customize their loan to meet their investment strategies.

 

 

Visio is a Direct, Private Lender

While most lenders are reselling someone else’s loan product, Visio Lending is one of the very few direct lenders to rental investors. Why should you care? By cutting out the middlemen (yes, that’s right…“men” as in often more than one of them), you get a better loan product and a smoother borrowing experience. Over the past decade, we’ve closed more rental loans than anyone in the United States.

 

 

Visio is Highly Specialized in Rental Loans

At Visio Lending, unlike many of our competitors, we only do one thing: finance rental properties. We pride ourselves on our laser-focus and expertise, which simply cannot be matched. Think about it: would you go to a podiatrist for a headache? Or a tax attorney for a divorce? There is something to be said for going to a specialist for the specialty you need.

Besides enabling us to become the market leader in rental loan originations, there are other benefits of financing your rental loans through a rental loan-focused lender.  Many real estate investors not only own rental properties, but also fix and flip houses as an investment strategy There is one particularly compelling reason to finance rentals and fix and flips with different lenders: cross-default provisions.

Essentially, through a cross-default provision, if a borrower fails to pay interest or principal on time for one loan, then the lender has the right to default that borrower on all of their loans with that lender, creating an almost domino effect. Flipping homes is an investment strategy that is subject to market conditions, and sometimes even the best flippers can default on their flips, which could affect all of their rental properties if they are under the same lender.

Opting to finance your rental properties through a specialized rental lender is just a good practice in protecting your assets, similar to the concept of investing through a Series LLC.

 

 

Loan Programs Overview

Below is a consolidated overview of our Single Asset, Vacation Rental, and Rental360 2-8 Loan Programs.

 

Single Asset & Vacation Rentals

  • Description: Long-term finance for physically stabilized 1-4 unit residential and vacation rental properties.
  • Use Case: Rate & Term Refinance, Cash-Out Refinance, Purchase
  • Loan Terms: 30 years, no balloons

 

Rental360 2-8

  • Description: Great rates and terms on 2-8 unit mixed-use and 5-8 unit multi-family properties.
  • Use Case: Rate & Term Refinance, Cash-Out Refinance, Purchase
  • Loan Terms: 30 years, no balloons

 

 

Visio Product Use Cases

Visio investors come to us either to purchase a new rental or refinance an existing one.

Cash-Out Refinance

A cash-out refinance is when you replace your mortgage with a new loan for a higher amount, and the difference in cash is yours. Investors use cash-out refis to:

  • Renovate existing rental properties
  • Buy another investment property
  • Finance a flip

Purchase

We often help investors grow their rental portfolios by financing their purchases. May investors:

  • Purchase already rented properties
  • Purchase rent-ready properties

 

 

Visio Investor Strategies

Visio investors tend to hold onto their properties for the foreseeable future or come in with a solid exit strategy. We’ve coined these strategies: the permanent rental and transitional rental strategies, respectively. Our loan programs are easily tailored to either one of these strategies.

 

The Permanent Rental Strategy

Permanent rentals are the rental properties investors want to hold onto long-term. Through this investment strategy, investors are often looking to build a legacy of rental properties. These investors are more interested in the long-term costs associated with the loan and are willing to pay more upfront money in order to save in the long run.

 

The Transitional Rental Strategy

Transitional rental investors are focused on flexibility and market conditions. They want to be able to sell when the time is right and are more interested in spending the lowest possible amount upfront.

 

 

 

How to Customize Your Visio Loan

We often ask customers “which flavor of Visio loan would you like?” similar to a large selection at an ice cream shop. You can pick and choose your unique blend of a Visio loan by selecting your rate structure, origination fee, and prepayment penalty to work best for your investment needs.

 

Rate Structures

 

5/1 ARM

 

A 5/1 ARM is a mortgage loan with a fixed mortgage interest rate for the first five years and then switches to an adjustable rate for the remainder of its term.

  • Strategy best for: Transitional Rental
  • Use when: You want the flexibility to sell your property immediately if need be. Investors who select the 5/1 ARM structure are typically planning to sell their property within five years.
  • Pair with: Our low origination fee options and our low prepayment penalties to minimize your upfront costs.

 

7/1 ARM

A 7/1 ARM is a mortgage loan with a fixed mortgage interest rate for the first seven years and then switches to an adjustable rate for the remainder of its term.

  • Strategy best for: Transitional Rental
  • Use when: You want the flexibility to sell your property soon but want to wait on the best market conditions. Investors who select the 7/1 ARM structure are typically planning to sell their property within seven years.
  • Pair with: Our low origination fee options and our low prepayment penalties to minimize your upfront costs.

 

 

30-Yr Fixed

A 30-yr fixed mortgage is a mortgage loan with a fixed mortgage interest rate for the full 30-year life of the loan.

  • Strategy best for: Permanent Rental
  • Use when: You want to hold onto your property long-term and pass it down to your children. This is the set it and forget it financing option.
  • Pair with: Our higher origination fee options and our standard prepayment penalties to minimize your costs over the life of the loan.

 

Origination Fees

 

No Points

This option eliminates an origination fee, yet increases your rate.

  • Strategy best for: Transitional Rental
  • Pair with: Our 5/1 ARM or 7/1 ARM rate structure and our low prepayment penalties for the most flexibility.

 

1 Point

1% is our standard fee.

  • Strategy best for: Transitional Rental or Permanent Rental
  • Pair with: Any of our rate structures or prepayment penalties. Keeping the standard choice does not affect your loan.

 

2-4 Points

With these options, borrowers can pay more money upfront to take basis points off their interest rates.

  • Strategy best for: Permanent Rental
  • Pair with: Our 30-yr fixed rate structure and standard origination fee. Lowering your rate over 30 years will save you money over the life of the loan.

 

 

Prepayment Penalties

 

5/4/3/2/1

 

This is our standard prepayment penalty structure. With this option, you pay a 5% fee if you pay off the loan in year one, a 4% fee in year 2, and so on.

  • Strategy best for: Permanent Rental
  • Pair with: Our 30-year fixed rate structure and our higher origination fees to save money over 30 years.

 

3/2/1

With this option, you pay a 3% fee in year one, a 2% fee in year two, and so on. After three years, the prepayment penalty will go away.

  • Strategy best for: Transitional Rental
  • Pair with: Either our 5/1 ARM or 7/1 ARM and lower origination fees to optimize the transitional rental strategy.

 

3/0/0

With this option, you pay a 3% fee in year one and then the prepayment penalty goes away after that.

  • Strategy best for: Transitional Rental
  • Pair with: This one is best for the 5/1 ARM so you can sell the property within 5 years. Also, consider paying no origination fees to maximize your exit profit.

 

 

Familiarize Yourself with Visio Investor Strategies

Between the rate structures, prepayment penalties, and origination fees, there are a lot of options strategic investors can use to their advantage. We designed this quiz so you can test your knowledge on some of the common use cases:

Get a Rental Loan That’s Perfect for You Today

Whether you are looking to grow a large rental portfolio for long-term wealth or you are looking to tap into equity based on market conditions, Visio Lending has the right loan program for you. We’ve originated over $1.5 billion in loans and have the tools and expertise to help you be successful.

Contact us Today to Start Your Loan

 

Editor's Note: This post was originally published in October 2021 and has been updated in February 2022 for freshness and accuracy. 

Topics: Real Estate Investor Tools

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