Can’t seem to find financing as new investor.

Member since 2023 · 32 posts · 6 votes

I read all these articles and videos where ppl swear up and down you can get financing as a new investor with low down payments or dscr loans etc. but I’m finding they all have road block catches. Not sure how anyone starting out can break in without being rich or cash heavy. I have been looking into buying in Milwaukee Wi, things there are affordable I have $28k saved up and a lot of the duplexes there are around $60k-300k but how am I suppose to get financing when lenders are requiring a minimum of $175k loans, 9.8% interest rates, and want you to have a buffer of 6 months savings for mortgage. Like why can’t I just get financing for a $80k duplex so I can get my feet wet? Or maybe I’m just so unknowledgable I don’t know how to do it. Anyone else having issues finding adequate lenders for starters?

0 Reply

164 views

Most Popular Reply

Christopher Jason LloydBusiness Member

Real Estate Broker · Newport News, VA · Member since 2020 · 95 posts · 83 votes

Hey Quincy,

I know this can be extremely frustrating. All the big wins on social media and the podcasts certainly set an unrealistic expectation.

If you are willing to move and be a little uncomfortable for a few years, househacking would be the best way (in my opinion) to get in for low money down. Buy small multis or singles with ADUs that need work. Fix them up while living there and rent out the units to help reduce your mortgage. Take the money saved and pay into a separate account each month until you have a downpayment for the next one. Rinse and repeat a few times and watch it appreciate. Then you could sell, take out a HELOC, or refinance to pull the cash out. Bam, you now have capital and experience.

You could also try subto. Just know if you want low money down and you do owner finance/subto/lease options, you will need to do direct to seller advertising and have a good real estate attorney.

Axiom Property Group4.934 Reviews

Website View Page

4 Reply

See this reply in the discussion

28 Replies

Jump to latestLatest

Sort by

Erik EstradaBusiness Member
Lender · Member since 2022 · 6k+ posts · 1k+ votes
3y
Quote from @Quincy Jones:

I read all these articles and videos where ppl swear up and down you can get financing as a new investor with low down payments or dscr loans etc. but I’m finding they all have road block catches. Not sure how anyone starting out can break in without being rich or cash heavy. I have been looking into buying in Milwaukee Wi, things there are affordable I have $28k saved up and a lot of the duplexes there are around $60k-300k but how am I suppose to get financing when lenders are requiring a minimum of $175k loans, 9.8% interest rates, and want you to have a buffer of 6 months savings for mortgage. Like why can’t I just get financing for a $80k duplex so I can get my feet wet? Or maybe I’m just so unknowledgable I don’t know how to do it. Anyone else having issues finding adequate lenders for starters?

Hey Quincy,
Sounds like you are very eager to get into re investing. That's great news!
As exciting as real estate investing is, it is also very risky. Lenders are very tight in this market so requirements are much higher. But to be honest you are better off having enough cash reserves, and a higher DP. You minimize your risk of being over leveraged, and barely making ends meet with the rental income.
Most DSCR lenders have a minimum loan amount of $100k with a handful at $75k and $50k for a blanket mortgage. 25% down is required.
Would you lend your own money to someone that is planning to buy an investment property, but has no experience managing one? You are basically financing a business.
[email protected]818-269-7983
LuxePrivate Investments LLC 572 Reviews
Website View Page
1 Reply
Quincy Jones
OP
Member since 2023 · 32 posts · 6 votes
3y
Quote from @Erik Estrada:

Quote from @Quincy Jones:

I read all these articles and videos where ppl swear up and down you can get financing as a new investor with low down payments or dscr loans etc. but I’m finding they all have road block catches. Not sure how anyone starting out can break in without being rich or cash heavy. I have been looking into buying in Milwaukee Wi, things there are affordable I have $28k saved up and a lot of the duplexes there are around $60k-300k but how am I suppose to get financing when lenders are requiring a minimum of $175k loans, 9.8% interest rates, and want you to have a buffer of 6 months savings for mortgage. Like why can’t I just get financing for a $80k duplex so I can get my feet wet? Or maybe I’m just so unknowledgable I don’t know how to do it. Anyone else having issues finding adequate lenders for starters?

Hey Quincy,
Sounds like you are very eager to get into re investing. That's great news!
As exciting as real estate investing is, it is also very risky. Lenders are very tight in this market so requirements are much higher. But to be honest you are better off having enough cash reserves, and a higher DP. You minimize your risk of being over leveraged, and barely making ends meet with the rental income.
Most DSCR lenders have a minimum loan amount of $100k with a handful at $75k and $50k for a blanket mortgage. 25% down is required.
Would you lend your own money to someone that is planning to buy an investment property, but has no experience managing one? You are basically financing a business.
My beef isnt with the lenders themselves it’s with the misinformation and the lack of actual information needed to make sure you have the resources to apply.

But I see your point about lenders being cautious. If only they were that cautious when they were handing out loans to anyone in 2008.

Well I got a lot to learn still. But I’m really trying to figure out what’s actually true and what’s fantasy. It seems the people getting loans with lower down payments etc. are ppl with experience and a reputation or relationship with these lenders?
1 Reply
Matthew Paul
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
3y
If it were easy .............everybody would be doing it .
3 Reply
Erik EstradaBusiness Member
Lender · Member since 2022 · 6k+ posts · 1k+ votes
3y
Quote from @Quincy Jones:

Quote from @Erik Estrada:

Quote from @Quincy Jones:

I read all these articles and videos where ppl swear up and down you can get financing as a new investor with low down payments or dscr loans etc. but I’m finding they all have road block catches. Not sure how anyone starting out can break in without being rich or cash heavy. I have been looking into buying in Milwaukee Wi, things there are affordable I have $28k saved up and a lot of the duplexes there are around $60k-300k but how am I suppose to get financing when lenders are requiring a minimum of $175k loans, 9.8% interest rates, and want you to have a buffer of 6 months savings for mortgage. Like why can’t I just get financing for a $80k duplex so I can get my feet wet? Or maybe I’m just so unknowledgable I don’t know how to do it. Anyone else having issues finding adequate lenders for starters?

Hey Quincy,
Sounds like you are very eager to get into re investing. That's great news!
As exciting as real estate investing is, it is also very risky. Lenders are very tight in this market so requirements are much higher. But to be honest you are better off having enough cash reserves, and a higher DP. You minimize your risk of being over leveraged, and barely making ends meet with the rental income.
Most DSCR lenders have a minimum loan amount of $100k with a handful at $75k and $50k for a blanket mortgage. 25% down is required.
Would you lend your own money to someone that is planning to buy an investment property, but has no experience managing one? You are basically financing a business.
My beef isnt with the lenders themselves it’s with the misinformation and the lack of actual information needed to make sure you have the resources to apply.

But I see your point about lenders being cautious. If only they were that cautious when they were handing out loans to anyone in 2008.

Well I got a lot to learn still. But I’m really trying to figure out what’s actually true and what’s fantasy. It seems the people getting loans with lower down payments etc. are ppl with experience and a reputation or relationship with these lenders?

The lower DP on an investment loan will be for someone experienced. You may also do some creative financing by getting the seller to carry in second position, but you risk being over leveraged.
For an experienced investor you may put as low as 10% down on a hard money loan, with a handful doing 100% financing.
Long term financing will require a minimum of 20% down on an investment property. Anything else is fiction
[email protected]818-269-7983
LuxePrivate Investments LLC 572 Reviews
Website View Page
2 Reply
Quincy Jones
OP
Member since 2023 · 32 posts · 6 votes
3y
Quote from @Matthew Paul:

If it were easy .............everybody would be doing it .

Cool story.
0 Reply
Quincy Jones
OP
Member since 2023 · 32 posts · 6 votes
3y
Quote from @Erik Estrada:

Quote from @Quincy Jones:

Quote from @Erik Estrada:

Quote from @Quincy Jones:

I read all these articles and videos where ppl swear up and down you can get financing as a new investor with low down payments or dscr loans etc. but I’m finding they all have road block catches. Not sure how anyone starting out can break in without being rich or cash heavy. I have been looking into buying in Milwaukee Wi, things there are affordable I have $28k saved up and a lot of the duplexes there are around $60k-300k but how am I suppose to get financing when lenders are requiring a minimum of $175k loans, 9.8% interest rates, and want you to have a buffer of 6 months savings for mortgage. Like why can’t I just get financing for a $80k duplex so I can get my feet wet? Or maybe I’m just so unknowledgable I don’t know how to do it. Anyone else having issues finding adequate lenders for starters?

Hey Quincy,
Sounds like you are very eager to get into re investing. That's great news!
As exciting as real estate investing is, it is also very risky. Lenders are very tight in this market so requirements are much higher. But to be honest you are better off having enough cash reserves, and a higher DP. You minimize your risk of being over leveraged, and barely making ends meet with the rental income.
Most DSCR lenders have a minimum loan amount of $100k with a handful at $75k and $50k for a blanket mortgage. 25% down is required.
Would you lend your own money to someone that is planning to buy an investment property, but has no experience managing one? You are basically financing a business.
My beef isnt with the lenders themselves it’s with the misinformation and the lack of actual information needed to make sure you have the resources to apply.

But I see your point about lenders being cautious. If only they were that cautious when they were handing out loans to anyone in 2008.

Well I got a lot to learn still. But I’m really trying to figure out what’s actually true and what’s fantasy. It seems the people getting loans with lower down payments etc. are ppl with experience and a reputation or relationship with these lenders?

The lower DP on an investment loan will be for someone experienced. You may also do some creative financing by getting the seller to carry in second position, but you risk being over leveraged.
For an experienced investor you may put as low as 10% down on a hard money loan, with a handful doing 100% financing.
Long term financing will require a minimum of 20% down on an investment property. Anything else is fiction
I see. I wish this information was given out so I would know ahead of time. This helps a lot! I can better prepare now! Thank you so much really appreciate it.
0 Reply
Carrie Matuga
Lender · Riverside, CA · Member since 2017 · 248 posts · 98 votes
3y
@Quincy Jones - First, congrats on having saved the 28K downpayment. I think if it were me, I'd try to have a minimum of $50K saved. It give you options to be able to have a 20-25% downpayment and reserves. The other option is to consider how you could do a value-add. You might be able to get away with a smaller dollar amount of downpayment and then have the bridge loan cover 100% of the construction. It's not as easy as it sounds - you'd need to find a contractor and manage the work and likely refinance into a longer term loan when it is stabilized. This usually takes 6-8 months to be conservative all in between construction, approvals, finding a renter, going through a refinance. It can be challenging to oversee all of this, but it is a way to force equity. You may not be able to get all of your money out, but often a portion so that you end up with less money in downpayment from your savings vs. the value you added and then you can scale to the next project.
2 Reply
Christopher Jason LloydBusiness Member
Real Estate Broker · Newport News, VA · Member since 2020 · 95 posts · 83 votes
3y
Hey Quincy,
I know this can be extremely frustrating. All the big wins on social media and the podcasts certainly set an unrealistic expectation.
If you are willing to move and be a little uncomfortable for a few years, househacking would be the best way (in my opinion) to get in for low money down. Buy small multis or singles with ADUs that need work. Fix them up while living there and rent out the units to help reduce your mortgage. Take the money saved and pay into a separate account each month until you have a downpayment for the next one. Rinse and repeat a few times and watch it appreciate. Then you could sell, take out a HELOC, or refinance to pull the cash out. Bam, you now have capital and experience.
You could also try subto. Just know if you want low money down and you do owner finance/subto/lease options, you will need to do direct to seller advertising and have a good real estate attorney.
Axiom Property Group4.934 Reviews
Website View Page
4 Reply
Quincy Jones
OP
Member since 2023 · 32 posts · 6 votes
3y
Quote from @Carrie Matuga:

@Quincy Jones - First, congrats on having saved the 28K downpayment. I think if it were me, I'd try to have a minimum of $50K saved. It give you options to be able to have a 20-25% downpayment and reserves. The other option is to consider how you could do a value-add. You might be able to get away with a smaller dollar amount of downpayment and then have the bridge loan cover 100% of the construction. It's not as easy as it sounds - you'd need to find a contractor and manage the work and likely refinance into a longer term loan when it is stabilized. This usually takes 6-8 months to be conservative all in between construction, approvals, finding a renter, going through a refinance. It can be challenging to oversee all of this, but it is a way to force equity. You may not be able to get all of your money out, but often a portion so that you end up with less money in downpayment from your savings vs. the value you added and then you can scale to the next project.

Yes I do need more which I found that I can use my IRA also, which is great! I'm also weary about what's going on in the housing market right now with high interest rates housing will go down immensely in prices. Hopefully renting demand will increase due to lack of ability to buy housing.
I think I just found a loan officer that’s well versed in unconventional loans and can help me secure a small loan for my first investment :D thank you for your reply!
1 Reply
Quincy Jones
OP
Member since 2023 · 32 posts · 6 votes
3y
Quote from @Christopher Jason Lloyd:

Hey Quincy,
I know this can be extremely frustrating. All the big wins on social media and the podcasts certainly set an unrealistic expectation.
If you are willing to move and be a little uncomfortable for a few years, househacking would be the best way (in my opinion) to get in for low money down. Buy small multis or singles with ADUs that need work. Fix them up while living there and rent out the units to help reduce your mortgage. Take the money saved and pay into a separate account each month until you have a downpayment for the next one. Rinse and repeat a few times and watch it appreciate. Then you could sell, take out a HELOC, or refinance to pull the cash out. Bam, you now have capital and experience.
You could also try subto. Just know if you want low money down and you do owner finance/subto/lease options, you will need to do direct to seller advertising and have a good real estate attorney.

Yes you are 100% correct, it's very misleading but I'm happy that I have good people like you on this forum that have helped bring me better information and insight!moving is not an option I'm married and my career is in Cali however I've discovered that I can use my IRA as reserves which is a huge help! Interest rates for me will be 10.5% but the housing where I'M buying is so affordable that it won't be a burden and I can refinance when rates go down!

1 Reply
Steve K.
Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
3y
The lending environment has shifted dramatically recently (and is still extremely dynamic currently). So if the articles and videos that you're referencing are even a few weeks old, they may be out of date. I recommend finding a great local lender and building a relationship with them, then getting your info directly from them rather than articles and videos.
2 Reply
Melissa Nash
Rental Property Investor · Orange County, CA · Member since 2016 · 740 posts · 529 votes
3y
Can you qualify for a conventional loan? thats the easiest loan to get.
0 Reply
River SavaPro Member
Lender · USA · Member since 2022 · 1k+ posts · 1k+ votes
3y
Hi Quincy - There are some out there with better rates. I just sent you a DM to point you in the right direction
[email protected]
0 Reply
Rebecca KnoxBusiness Member
Specialist · Milwaukee, WI · Member since 2014 · 1k+ posts · 1k+ votes
3y
Quincy Jones--is this the same Quincy Jones related to Giovanni? If so, look at the lender thread in Brew City REI Club--most lend at 50k min.
I have used Landmark CU for several loans under 100k however, they have told me they are moving away from commercial lending on SFRs and prefer duplexes or better. I also did a 35k loan for a house with The Equitable Bank. There's many, many lenders that lend for less than 175k min. If you're local to Milwaukee, come to our mixer on Tuesday (posted under BiggerPockets events)---there will be lots of brokers, banks, credit unions and lenders there.
Captain Save-A-Home LLC
Website View Page
1 Reply
Quincy Jones
OP
Member since 2023 · 32 posts · 6 votes
3y
Quote from @Steve K.:

The lending environment has shifted dramatically recently (and is still extremely dynamic currently). So if the articles and videos that you're referencing are even a few weeks old, they may be out of date. I recommend finding a great local lender and building a relationship with them, then getting your info directly from them rather than articles and videos.
For reals? That ridiculous!
0 Reply
Jake Handler
Real Estate Agent · Morristown, NJ · Member since 2020 · 207 posts · 128 votes
3y
Quote from @Matthew Paul:

If it were easy .............everybody would be doing it .

Comment of the year
0 Reply
Mina MannPro Member
Member since 2022 · 4 posts · 2 votes
3y
try investing in another state like Louisiana just to get your feet wet. Louisiana market is way cheaper than Milwaukee. Contact me 318 518 5285.
0 Reply
Mina MannPro Member
Member since 2022 · 4 posts · 2 votes
3y
Quote from @Quincy Jones:

I read all these articles and videos where ppl swear up and down you can get financing as a new investor with low down payments or dscr loans etc. but I’m finding they all have road block catches. Not sure how anyone starting out can break in without being rich or cash heavy. I have been looking into buying in Milwaukee Wi, things there are affordable I have $28k saved up and a lot of the duplexes there are around $60k-300k but how am I suppose to get financing when lenders are requiring a minimum of $175k loans, 9.8% interest rates, and want you to have a buffer of 6 months savings for mortgage. Like why can’t I just get financing for a $80k duplex so I can get my feet wet? Or maybe I’m just so unknowledgable I don’t know how to do it. Anyone else having issues finding adequate lenders for starters?

try to invest in another state like Louisiana, where market is way cheaper than Milwaukee. contact me I will be happy to help. 318 5185285
0 Reply
Quincy Jones
OP
Member since 2023 · 32 posts · 6 votes
3y
Quote from @Mina Mann:

Quote from @Quincy Jones:

I read all these articles and videos where ppl swear up and down you can get financing as a new investor with low down payments or dscr loans etc. but I’m finding they all have road block catches. Not sure how anyone starting out can break in without being rich or cash heavy. I have been looking into buying in Milwaukee Wi, things there are affordable I have $28k saved up and a lot of the duplexes there are around $60k-300k but how am I suppose to get financing when lenders are requiring a minimum of $175k loans, 9.8% interest rates, and want you to have a buffer of 6 months savings for mortgage. Like why can’t I just get financing for a $80k duplex so I can get my feet wet? Or maybe I’m just so unknowledgable I don’t know how to do it. Anyone else having issues finding adequate lenders for starters?

try to invest in another state like Louisiana, where market is way cheaper than Milwaukee. contact me I will be happy to help. 318 5185285

I can Afford Milwaukee, my issue is that Im having problems getting lenders to be serious and not ghost me after Ive sent them all my information. I need financing.
0 Reply
Quincy Jones
OP
Member since 2023 · 32 posts · 6 votes
3y
Quote from @Melissa Nash:

Can you qualify for a conventional loan? thats the easiest loan to get.

Not sure. Probably not since at the time I am unemployed (I work in animation and the entertainment industry is on its head right now). Thats why Im looking at DSCR loans. I have enough of a 20% for a down payment in the area im looking at.
0 Reply
Marcus Auerbach
Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
3y
Quote from @Quincy Jones:

Quote from @Mina Mann:

Quote from @Quincy Jones:

I read all these articles and videos where ppl swear up and down you can get financing as a new investor with low down payments or dscr loans etc. but I’m finding they all have road block catches. Not sure how anyone starting out can break in without being rich or cash heavy. I have been looking into buying in Milwaukee Wi, things there are affordable I have $28k saved up and a lot of the duplexes there are around $60k-300k but how am I suppose to get financing when lenders are requiring a minimum of $175k loans, 9.8% interest rates, and want you to have a buffer of 6 months savings for mortgage. Like why can’t I just get financing for a $80k duplex so I can get my feet wet? Or maybe I’m just so unknowledgable I don’t know how to do it. Anyone else having issues finding adequate lenders for starters?

try to invest in another state like Louisiana, where market is way cheaper than Milwaukee. contact me I will be happy to help. 318 5185285

I can Afford Milwaukee, my issue is that Im having problems getting lenders to be serious and not ghost me after Ive sent them all my information. I need financing.

Loan officers get paid when you close on your loan, so if they really ghost you, you must have given them a reason? I don't want to speculate, what that is, but if you have good credit, a solid down payment and a business plan + a experienced PM they will be happy to fund you.
0 Reply
Quincy Jones
OP
Member since 2023 · 32 posts · 6 votes
3y
Quote from @Marcus Auerbach:

Quote from @Quincy Jones:

Quote from @Mina Mann:

Quote from @Quincy Jones:

I read all these articles and videos where ppl swear up and down you can get financing as a new investor with low down payments or dscr loans etc. but I’m finding they all have road block catches. Not sure how anyone starting out can break in without being rich or cash heavy. I have been looking into buying in Milwaukee Wi, things there are affordable I have $28k saved up and a lot of the duplexes there are around $60k-300k but how am I suppose to get financing when lenders are requiring a minimum of $175k loans, 9.8% interest rates, and want you to have a buffer of 6 months savings for mortgage. Like why can’t I just get financing for a $80k duplex so I can get my feet wet? Or maybe I’m just so unknowledgable I don’t know how to do it. Anyone else having issues finding adequate lenders for starters?

try to invest in another state like Louisiana, where market is way cheaper than Milwaukee. contact me I will be happy to help. 318 5185285

I can Afford Milwaukee, my issue is that Im having problems getting lenders to be serious and not ghost me after Ive sent them all my information. I need financing.

Loan officers get paid when you close on your loan, so if they really ghost you, you must have given them a reason? I don't want to speculate, what that is, but if you have good credit, a solid down payment and a business plan + a experienced PM they will be happy to fund you.

I got an email back from one because I closed my account. He states I needed to send him my bank statements. I literally sent him a screen shot of the sent bank statements I sent. 🤷🏽‍♀️

Im not the only person that has this issue. There are a plethora of ppl that complain about the same thing. I’m thinking that maybe they just lay attention to the people that are looking to borrow high amounts over the ppl that are trying to start out so they can make more money. Or maybe they don’t have great work ethics 🤷🏽‍♀️ I’m literally doing everything they tell me the same day we speak. So that it’s on my end is questionable. I think you are assuming these people are professional lol, because not all loan officers are.

0 Reply
Quincy Jones
OP
Member since 2023 · 32 posts · 6 votes
2y
Quote from @River Sava:

Hi Quincy - There are some out there with better rates. I just sent you a DM to point you in the right direction

Thank you! Im just seeing these now....I almost had financing but then loan officer ghosted. Per the Usual.
0 Reply
Vadim F.
Investor · Member since 2020 · 337 posts · 213 votes
2y
@Quincy Jones if you are on a W2, you can get a conventional 30yr loan. You would need a DSCR if you are self employed and don't have 2 yrs of tax of returns or cannot qualify for a conventional loan.
0 Reply
Vadim F.
Investor · Member since 2020 · 337 posts · 213 votes
2y
Also, DSCR require you to have 6mo reserves available incase your property is unable to generate income.
0 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.