16 Replies

Hello BP Members,

Does anyone know any national lenders that will loan on a 40K property? I am new to investing in the Kansas City Area, and I am looking at a property in the 40K range. I can purchase the whole thing cash but that would take all of my cash, I would prefer to finance it and keep some free cash to find other deals.

Any advice would be appreciated!

@Steven Barros It's unlikely that any of the big guys will lend below $50k. That seems to be the bottom end.

I have had success with a smaller community bank who don't sell their loans up to Fannie and Freddie. That would be my advice. Good luck.

@Aaron Mercer

 Thats what i have found in my research, I may have to do some digging on local bank there...

Find local community banks with fewer than 10 branches. Or pay it with cash and do a refi. The big thing with sub-50k properties is very few people will take offers with financing contingency, aka most buyers are offering cash and a 2 week close. So, with financing, it is unlikely your offer will be accepted. What is the condition of the prospective property? Lenders will usually only finance properties that have been stabilized, aka rehabbed / rent ready done and leased out with a year lease. Unless you are buying turnkey, the chance of you securing a loan for a property that needs work is low. It seems like you are also an out of state investor. That fact makes borrowing even more difficult in a market you don't have ties with, so you might have to really call around. Of course there are exceptions, such as if you are buying a package deal from a bank's foreclosure, or sometimes banks are willing to finance their own foreclosures that are being professionally managed.  

My suggestion would be local credit unions or even private lenders.  Good luck!

@Steven Barros  I agree with @Nazz Wang but you will also face the downside she mentioned - show performance for 6 months or so - and you will still then only get the loan if the property values for over $50k. Another downside of refinancing lower priced properties is that you may only be able to get around 70% of the value back out. You will generally need to leave more equity in a refi property.

Yes @Aaron Mercer is right that with refi loans, your Loan to value is lower. You can think about how you can generate equity, perhaps by rehabbing it?

Thank You All! The property is tenant occupied, and according to the owner it has been for 4 years. 

Question, How long would i have to wait to refi? I am not opposed to getting 70% out and leaving 30 in.

@Nazz Wang

@Aaron Mercer

Depends on the lender. For some I get 80% for others I get 65%, different rates and terms. Really, do your homework and call around. Expect to call at least 20-50 lenders.

@Steven Barros

We are restricted from listing actual lenders here, but there are at least 2 banks that specialize in lending to IRAs and 401k plans. Do a google search for non-recourse solo 401k and IRA lenders and they among others should come up.

I would be delighted to assist.  We (SRC) fund transactions with a range between $15-250,000.00 W.A.C.

If I may be of assistance on a short-term basis ~ 9 months max please contact me at your convenience.  Private fund, simple and service our portfolio in North Kansas City.  Please consider SRC for traditional fix and flip opportunities or transactional funding as well.

Thank you,

@Steven Barros why don't you call around and report back you findings? It depends on your finances and I don't know you. Now, let's not be lazy... Do your share of your homework.

@Steven Barros -I have a local community bank here in Kansas City that I have done sub $50k loans with without a problem.  Send me a PM and I can get you their contact info.

I also know a lender that does sub 50k loans.  It is who I have used for my last 3 investment properties.  PM me and ill be more then happy to give you his contact info.

Do you invest using an LLC? I have spoken to several local banks in KC though not specifically less than $50k but same cash out refi principle. What I found was that commercial loans are so much less regulated than personal loans therefore making the terms more flexible. Also the community bank using a commercial loan doesn't resell to a larger bank or Fannie and Freddie therefore making the terms even more flexible. My recent process was to google community banks in Lee's Summit. Then started talking to the commercial lending officer. All very willing to do biz differently. I would recommend going to visit the banker and know your plan. Hope that helps some. Good luck!

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