AssetAvenue, an online lender for real estate investors, just announced its new loan for rental properties such as single-family homes, two to four unit condos and townhomes.
This announcement came just a couple weeks after the revelation that FirstKey Mortgage, a subsidiary of FirstKey Holdings, which is indirectly majority-owned by funds managed by Cerberus Capital Management, will reportedly be ending a lending program designed to serve smaller investors interested in buying single-family rental properties.
Because the loans will be more commercial than normal, the company will put a premium on an individual’s debt-service coverage ratio, rather than their debt-to-income ratio. Approval will primarily be based more on a property’s rental income, and less on personal earnings.
“Since its inception in 2013, AssetAvenue’s commitment to entrepreneurs has been unwavering, and our new rental loan product is a natural extension of that,” AssetAvenue chief executive officer Varun Pathria said.
“We are focused on the person who wants to invest in real estate, plain and simple,” Pathria said. “We give them the resources, tools and frictionless financing they need to be successful.”
The new loan is available in 44 states across the U.S., and prepayment penalties expire after three years. Here are some details about the 30-year fixed-rate loan:
- Loan Amount: $75,000 - $1 million
- Loan-to-Value Ratio: Up to 75%
- Markets: Primary and Secondary
- Lien Position: First Lien
- Interest Rates: 6.5 - 7.5%
- Broker Fees: Protected
- Other Terms: Will consider borrowers with special situations and foreign nationals
For comparison, FirstKey’s loans also ranged from $75,000 to $1 million for express single property loans, and did not have a prepayment penalty. Now, FirstKey plans to eliminate those programs, reportedly due to high infrastructure costs dragging on the business.