Advice needed on financing condo deal

11 Replies

Whats up BP. I have a deal here in the Bay Area that im currently in contract on and I would love to see if I could get some advice on my current situation.
I have an off market condo in contract. Purchase price 65k. Rehab 5k. ARV 90k.
My play was NOT to flip this. Instead it is to buy (using cash), rehab, rent, and slap financing on it once completed. So by using a conventional 30yr loan at 75% LTV(90k ARV), I get to cash out approx 67k (for discussion purposes closing costs, etc will be left out). The condo has going rent rates at $1299/month. After PITI + HOA it cash flows a little over $400/month. Everything regarding the HOA's approval for a rental is checked off.
SO HERE'S THE CHALLENGE- the condo complex has more than 50% of the units as rentals. Also I heard that the HOA may have been in recent litigation. Due to these two reasons, I have been told that conventional financing will not work.
MY QUESTION TO YOU- does anyone know of any other lenders that will lend on buy and hold condos in this situation?
I know Lending Home at one time had a buy and hold product where the interest rate was more attractive than hard money, but it has been dc'd. Ive talked to a couple hard money lenders as well and they did not do longer term plays. So any help would be greatly appreciated! Thanks to all in advance.

Wait a second you are buying a condo in bay area for 65k and getting a rent for 1200 ? 

If I would you I will do due delgance first it looks like you have that's not typically happens in the area wit housing crisis area

Hi @Mike Nelson ,

You're probably looking at a 5/1 ARM with a rate in the high 4s. 75% or 80% LTV, maybe even 70% depending on how bad it is. A "portfolio" loan product for a "non-warrantable" condo.

Hi @Rahul Bhatt ,

Recent litigation, too many rentals, etc, means no one can get a Fannie loan on it. Typical owner occupants, that whole combination (litigation+renters+LTV+ARM) scares them off. Leaving an extremely small pool of buyers. Supply and demand do their thing, and before you know it prices for that particular condo development plummet.

The funny thing is that the condo owners probably thought they were helping themselves with all the law suits and allowing rentals and all that. The lawyers don't care about all the wiped out equity, they still get paid.

@Brent Coombs Your response has nothing to do with my question. Please read the entire post before feeling inclined to share your thoughts. You contribute no solutions and are out of context. My finances are more than 'sorted'. Im buying cash. Im just looking for a lender who can help me place financing on it after the work is completed to get my cash out. If that cant happen, im still good. Im in it for 70k when its worth 90k. I can always sell it. Selling is not my ideal, but a solid plan B. 

@Mike Nelson You will have a hard time finding a non-warrantable condo loan for that value. Typical non-warrantable condo loans are 7/1 ARM, 80% (Owner occupy) or 60% (investment) with a loan min of $100K.