Refinancing low purchase price properties

11 Replies

My husband (Joshua) and I are new to real estate investing in Rochester and looking to make our first purchase. Recently I've been looking at single family homes in the 30-35k range where we could earn a bit of sweat equity. From previous attempts to buy a property I've learned that lenders are unable to offer mortgages for this price as closing cost are too great a percentage of the purchase price. 


So my question is, if we were able to purchase a property at this price in cash, would we be able to refinance in the future to use the equity towards another property or do the same type rules apply? 

-Andrea 

@Joshua Curry It is unlikely that you'll be able to get them financed traditionally.  Maybe if you had two or more you could do a blanket loan where they put the properties into the same mortgage.  

More likely you'll need to find a private lender or hard money lender. If you know someone who has money in or could put money into a self-directed IRA, they could provide financing and you could offer an attractive rate, say 8%. That is a lot more than a traditional mortgage, but if they numbers work then it may still make sense.

Ditto to Larry's comments.  There a couple lenders out there that will go down that low per property but usually have a $50k loan minimum or $50k property value.  So if the after repair value is north of $50k we would be okay otherwise you need to do this two or three times with cash and then you can do a cashout refinance of those 2-3 properties to buy more.  Let me know if you have follow up questions.

@JJ Bliss and @Larry T. thanks for the responses! 

I have one other question about refinancing multiple properties under the same loan. Is this a common thing that most banks will do or would we need to go to special lenders for something like this?
  

I wouldn't say special banks/lenders just personal preference of the bank.  I have done them with big banks like US Bank and small local banks.  Look for lenders that offer blanket or portfolio loans and DM me if you want some suggestions.

There are likely some smaller local community banks in the area.  Talk to them about multiple properties serving as collateral for one large loan.    

canandaigua national bank will do up to 5 houses on one mortgage. 

Canandaigua National Bank has a portfolio loan package that will finance that amount. My wife and I purchased our first SFR for $34,000 using it. We ended up financing $28,000. Contact Aaron Lazenby in the Pittsford branch. He was great to work with.

Honestly I’m not sure. I don’t see why not.

I would reach out to Majuwa Kowai-Bell also at Genesse Regional Bank. They will finance and refinance under $50k properties. Feel free to DM me for his contact info, as I cannot post it here.

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