Conventional lending for out of state investor in Memphis TN

11 Replies

Folks - I need your help on something. When exploring buying through an agent in Memphis TN, i am running into the following challenge. One of the lenders I talked to said the property has to be in a good condition for them to lend including proper functioning of all major equipment, no holes in carpet, no broken windows etc. If I intend to buy a property from an agent, the intent is to buy a good deal and spend some money on rehabbing before renting out. How do I do this if the lender won't close? What are others doing in this scenario?

Use a hard money lender and refi once rehab is done.


You'll need to find private money initially, get the home fixed up and then go back later for a conventional loan.  Look for private money from friends or family initially.  From their you may need to look for a hard money lender.  If it were that easy to get loans for homes that won't pass inspections I'm sure many more people would be doing it.

I'm sure you'll get many responses but if you don't get anything that suits what you are looking for give me a call again.


This is why people go the turnkey route.  There are no lenders you will find that will allow you to buy a home needing repairs to the extent that it is not is livable move on condition.  if it was that easy everyone would do it that way,  unfortunately it's not.  

Good luck 

Everyone - thanks for your response.

Curt - I completely agree with you and would definitely prefer the turnkey approach. But I am finding properties disproportionally priced on turnkeys and my numbers are going for a toss. Just this morning I posted a deal for $120k where rental value was advertised $1295. But when I posted here everyone opined saying $1095 is a more reasonable rent in the neighborhood. When I plugged in that value I ended up with a dismal $52 per month. So I would appreciate if you an advise me on how I can find a turnkey deal where everyone including the tk provider as well as me make money. Right now it seems slanted towards one direction.

@Abdul Azeez

Two choices.

  1. You can buy cash, rehab then refi into a traditional loan.
  2. Or you can buy a property that's in good condition using a traditional loan.

@Abdul Azeez
Have you checked the rehab loan? Not sure if it's called 203k or what not...
I haven't been able to use that option since every deal I tried I lost the bid. Also, I didn't try it in Memphis so not certain if that is an option for lenders.
@Graham Parham - do you have that available for Memphis?

To my knowledge 203k is used for principal residence. The rehab loan is called homestyle renovation loan and based on conversation with one lender yesterday is only given to seasoned investors for out of state investing.

@Abdul Azeez If you have the cash for a 20% down traditional loan and its a 1-unit property, then you should be able to get the Fannie HomeStyle renovation mortgage, even as an investor.

upen - thanks. Now that we have confirmed that it can be done. can anyone PM me lender references?

@Abdul Azeez

Which turn key companies have you dealt with so far, and what is cost range for any SFR that meets your criteria?

@Abdul Azeez I have an option called delayed financing. Here is how it works:

1. I identify a property that is below market value and provide a full Scope of Work 

2. Your lender orders a pre-appraisal to determine the value of the property post-renovation

3. You purchase the home cash & renovate the home cash *we have fully renovation department on staff.

4. In most cases the same appraiser who did the pre-appraisal re-apprises the property

5. Upon closing you can receive up to 75% LTV

6. We can help mange the property for you!

*in many cases my clients get 100% of their investment back at closing! Some people are calling this an alternative to the turn-key

The down side is you are the owner of the property so you are taking some risk. If the renovation is extensive, you could run into some unexpected repairs like a broken sewer line, or mold that is found when the cabinets are ripped out. This is rare but any investor looking to not buy turnkey should be aware of the risk.

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