Sub $50k mortgages?

Question

Hey guys,

I'm looking at purchasing a small 855 square foot 2BR house for $20,000 that needs about another $15,000-20,000 put into it in improvements.  Once rehab is complete I'll want to finance the property to pull out my cash.  Being that it will be below $50,000 (or at 50 if I can pull extra cash out :) ), will a bank finance this property?  I'm not very experienced in this space and would love to do more of these low dollar rentals in the future.  Any help would be greatly appreciated.

Eric

Scott Schultz · Answer

Never deal with big banks, they dont know how to deal with small stuff, only Small Local Banks, even some Regionals are not great, Check Bankrate.com and look at what banks are the best capitalized, in your local market,  if the bank is strong, they will be conservative, but they are also the most flexable, because the Feds are not breating down theur neck. set up a Meeting with the commercial lender, show them what you are working on, what you have done, and have 3 years of taxes with you, so they see you are prepared for the meeting. Good Luck!

Michael Wentzel · Answer

@Eric Neeb

I have used a similar strategy to acquire 17 properties in the last 3 years. In the beginning we used a regional bank for the purchase and the refinance. Now we usually use private lending to acquire and rehab the properties and then refinance them. So seek out a good local/ regional bank to work with you.

Mike

Walter Shatford · Answer

Try Bank of America

Eric Neeb · Answer

Great info James and Scott!  Much appreciated.

James Wise · Answer

@Eric Neeb

The amount of lenders who will take on such a loan is small but there are those who will do it.

Citizens bank and MB Financial are two companies that clients of mine have used in the sub 50k space.

Eric Neeb · Answer

Scott, do you deal with a small local bank or are you dealing with a bigger regional/national bank?

Scott Schultz · Answer

I can get them all day long, no problems here, just not secondary market, go the the commercial lender, they can do just about anything if you and/or the property fit the bill.

John Carpenter · Answer

My bank does, but there seem to be a lot of comments around here that small mortgages are hard to get.  Just look at your smaller, local banks.  I've had several under $50k.  The smallest mortgage I've had was just under $24k.

Sub $50k mortgages?

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