Rochester, NY · Member since 2013 · 101 posts · 48 votes
9y
They legally cannot deny a loan for a property in a given area, that is an illegal practice called redlining. However, they can set a minimum amount they are willing to finance (Usually around 50k) and since most of those properties fall under that, they can get away with loaning out money to them.
Now as to why? Because they are bad areas to own property in! I know a few wholesalers who've wholesaled the same house multiple times! Investors ignore the warning signs, only see the $$$$ and buy properties that are very hard to find good tenants. Good tenants don't want to live in those areas. Section 8 & DSS will pay for them to live in better areas, so the really run down streets are usually all cash tenants.
I would look at what the banks are saying as good advice. Stick to areas that you can get a mortgage on a house, you'll end up making more money in the long term, and you'll have far fewer headaches!
Rental Property Investor · Rochester, NY · Member since 2016 · 303 posts · 154 votes
9y
hi @Raju T. which banks have you been dealing with? I generally use upstate bank and a hard money lender. They are pretty easy going. I buy all over the city
Flipper · Toronto, Ontario · Member since 2015 · 22 posts · 4 votes
9y
Yes, I went to Rochester last summer and I heard from realtor that banks wont lend and my only option is private lenders. So I am curious to know the reason. I Live in Canada.
Rochester, NY · Member since 2013 · 101 posts · 48 votes
9y
They legally cannot deny a loan for a property in a given area, that is an illegal practice called redlining. However, they can set a minimum amount they are willing to finance (Usually around 50k) and since most of those properties fall under that, they can get away with loaning out money to them.
Now as to why? Because they are bad areas to own property in! I know a few wholesalers who've wholesaled the same house multiple times! Investors ignore the warning signs, only see the $$$$ and buy properties that are very hard to find good tenants. Good tenants don't want to live in those areas. Section 8 & DSS will pay for them to live in better areas, so the really run down streets are usually all cash tenants.
I would look at what the banks are saying as good advice. Stick to areas that you can get a mortgage on a house, you'll end up making more money in the long term, and you'll have far fewer headaches!