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The Landlording Show - Episode 14 - Finance For Your Investment Property

Welcome to The Landlording Show. I’m your host, Tim Harstead. Today, we're kicking off a series where we'll dive deep into acquiring properties. Next week, we’ll analyze properties with a seasoned broker, but today we focus on a crucial element: financing your investment properties. Joining us is Laura Dantuma from femmeCAPITAL. Laura, it's great to have you. Could you tell us a bit about yourself and femmeCAPITAL?

Laura Dantuma: Thanks for having me, Tim. femmeCAPITAL started three years ago. I bring 33 years of experience, having built and sold my first mortgage company. With femmeCAPITAL, I wanted to align my lending expertise with a passion for bridging the gap between women and capital. While we lend to everyone, we have a special focus on empowering women with financial opportunities.

Tim: That's fantastic. Our viewers are mainly investors looking at properties from single-family rentals to larger, aspirational projects. Could you explain the different loan options available for investment properties?

Laura: Certainly, there’s a lot to cover. For commercial multifamily properties, SBA loans are a significant option, alongside conventional loans from banks that often keep these loans in-house. Then, there’s government-sponsored lending like Fannie and Freddie for smaller units, bridge financing, hard money, financing, and construction financing.

Tim: How does SBA lending work? Is it mainly for larger properties?

Laura: Not necessarily. SBA loans can be ideal for properties starting from four units upwards. They're divided into two types: 7A loans for business purposes like refinancing debt or purchasing equipment, and 504 loans, which are primarily for acquiring real estate.

Tim: What are the advantages of SBA loans compared to conventional commercial loans?

Laura: SBA loans often require only 10% down, which can free up capital for improvements or reserves. They provide more flexibility, allowing financing for capital improvements and operating capital. Conventional loans typically require a 30% down payment in today’s market.

Tim: Transitioning a bit, what are some common pitfalls you see with investors, especially in financing?

Laura: A major issue is underestimating the need for reserves. Many fail because they don’t have sufficient funds to cover vacancies or unexpected repairs. It’s crucial to have a financial buffer to manage such risks effectively.

Tim: Great insights. Lastly, if our listeners are considering a loan, what should they expect in terms of the process and timeline for closing?

Laura: The process can vary, but typically, you're looking at about 60 days on average to close. However, complications like obtaining necessary documents from sellers can extend that timeline. It's important to have all your financials and property details in order as early as possible to facilitate a smoother transaction.

Tim: Thank you, Laura, for such valuable information. And to our listeners, make sure to check out Laura at femmeCAPITAL if you're considering financing options for your investments. Laura, any final thoughts?

Laura: Just that I’m here to help, whether you’re just starting to explore investment opportunities or you’re ready to dive in. Feel free to reach out—I’m just a call away.

Tim: Awesome. Thank you all for tuning in. We'll see you in the next episode. Stay informed and invest wisely!