Hard to find financing on Property less than 100k!

13 Replies

Is it just me or is it extremely rare to find a conventional loan for about $50,000? I have been going to all the banks in my area, and all of the online banks available to me through bigger pockets and so far, not one of them will extend me financing for a 50000 4-unit with 30% down. It is extremely frustrating that i could buy a car(depreciating asset) for the exact same amount of money, but because it is real estate, no one wants to have a loan that small. I am just starting into the real estate investing world, does anyone have any suggestions? if i was to get a hard money loan, would i be stuck in the same position not being able to find a Refi? 

I ran into that problem as well.  I resorted to private funding, but eventually had the cash on my own to make it happen.  Good luck though.  I know it can be hard to find financing for property like that.

I had a house financed for 62k but they added an additional 3 percent fee in the closing cost because was so low.  It was BS in my book but just cost of doing business I guess.  This was in Altoona pa where lots of lower priced homes so local bank used to small loans so that did help.  Not sure about your area but I would just talk to local banks.  The one I used is local bank and now goong back to them again for another loan so I let them know looking for long term relationship.  That might help.

I might suggest looking at a HELOC on your primary. It's a great way to have access to cash in these situations. You could role the property into a commercial loan down the road.

@Shawn C Steider the reason banks don't typically lend on a loan of $50k or less is the standard home loan minimum is 50k and they don't make any money on anything lower. 

The only way they make money is higher interest and charges and the. It becomes predatory lending.

@Chris Mason can probably provide better guidance and there are a few articles on this here on BiggerPockets.

Options are;

- HML

- HELOC and buy with cash then BRRR

- Refinance another property and buy with cash then do BRRR

- Borrow from friends and family 

@Shawn C Steider we buy a lot of low end properties in the Pittsburgh market under 50k and refinance them without any issue. If you are in this market let me know. They will lend to local seasoned investors.  

@Shawn C Steider you'll barely find a HML for that. Best bet, find someone else with $ close to you, and consider a peer to peer loan to make up the difference, also negotiate the price down to 35k cash offer close on property as is.

Originally posted by @Shawn C Steider :

Is it just me or is it extremely rare to find a conventional loan for about $50,000? I have been going to all the banks in my area, and all of the online banks available to me through bigger pockets and so far, not one of them will extend me financing for a 50000 4-unit with 30% down. It is extremely frustrating that i could buy a car(depreciating asset) for the exact same amount of money, but because it is real estate, no one wants to have a loan that small. I am just starting into the real estate investing world, does anyone have any suggestions? if i was to get a hard money loan, would i be stuck in the same position not being able to find a Refi? 

 Hi Shawn,

Usually it's not the best idea to trust the listing agent, but in this case it is. I've answered similar questions before, I'll skip the reasons for this round and go right to the solution:

Find a few <$50k properties in that zip code or county, and call the listing agents. They already know about the "$50k issue," and if they are any good they already have a lender solution that'll get the home sold and them paid (what's the point of taking that listing otherwise?).

With that in mind, call those agents and say that you're eager write an offer but your lender will not go that low in terms of loan amount and your agent doesn't know anyone that will either. They will merrily respond with "oh you've got to talk to my gal Sally at XYZ Bank! Here's her number..." and boom problem solved. 

Classic example of a problem we do NOT have in Oakland. :P

@Shawn C Steider I am having the same problem. I wanted to do a cash-out refinance and put down on another rental property but the property value/purchase price seems too low to finance. I have a property that is only valued at 70k and balance of 21k.