Buying a home/investment property that banks won’t touch

4 Replies

Hey, I’m a long time lurker of bp and the information found on here is simply amazing. At the moment my wife and I are looking to purchase our first home (a fixer upper) in a nice neighborhood but the home has foundation issues such as leaning walls, cracked bricks, etc. I’m a masonry contractor and specialize in brick and foundation repairs so the repairs aren’t an issue at all it’s just that no bank wants to finance a home needing those kind of repairs. So that’s the background and my question is how does a young person with not much credit history get a loan for something like that? Also I have 10k for a down payment, the house is only 50k and comparable homes in the neighborhood that are in decent shape but need an update are selling for 100-140k so it would be a great investment but I’m looking forward to hearing some insight from people with experience in this sort of thing. Thanks!

Hi @Kain Stevens welcome to BP!

This is why folks go with private lenders or hard money lenders. They are more willing to lend on distressed property. Look at finding a family or friend that can lend the money, get a first lien position on the property, and then you can refi in 6-12 months to pay them off.

@Kain Stevens Have you looked into first time homebuyer owner occupant renovation loans such as a FHA 203k loan? Those can be a great way to purchase a home that needs work at favorable terms.

Research that type of loan and see if it works for you and your situation. If it does, then search your local area for lenders or brokers that specialize in these types of loans and contact them for a consultation.

Hey, thanks for the quick replies and I’ve looked at my options from private lenders like lendingone however they said that a loan that small would usually be done by a hard money lender so that’s an area that I’m researching at the moment.

Also as far as the 203k loan ive looked it up a bit and most wont finance homes with foundation issues but that is a great route to take if I can find a lender will to work with me and my father asked about doing a refinance on his paid off house to buy it but I’m not sure how that would work so I’ll have to look it up a bit more

You Dad is going to be your best bet here. If he can pull the equity out of his home to purchase this one in cash you will be in good shape. You could make a payment to him equal to his payment and put your 10k into the house. Once you have it to the point a bank will lend on it you put a mortgage on it and pay your Dad back. If you want to get more cash out than you originally paid you will need to hold the property for a seasoning period and have It reappraised.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here