PURCHASE AMOUNT TO SMALL TO FINANCE

23 Replies

I found 2 bedroom 1 bath cottage style house. It needs roughly about $1,200 worth of work (my newbie opinion). So lets just say $5,000 to be safe. The property would be an awesome acquisition. The problem is that no one will finance the property because it doesn't meet their minimum $75,000. Coming in at a whooping $20,000, and rent in the area for an apartment that size being $950 a month, you can see why I say this would be a great acquisition. If someone could please point me in the a direction that may be able to solve my problem, I would be eternally grateful. 

75K is a high minimum for lenders and not standard. 

Not to hard to find loans under 75K, you just need to talk to more lenders

Semi private lenders will do this.   talk to Peak Asset Lending in KC  

@Alexander Felice   banks generally wont fool with stuff this low unless you have existing relationships with them.. the cost and risk of having a default far out weight what a bank can make on a 15 to 20k mortgage.

but i have seen small local commerial banks do these for local citizens that own 10 to 50 homes and its their cottage industry so to speak

I would make a list of small local community banks and credit unions, starting with the ones you already have existing accounts with. This is what I did, called about 40 local banks and credit unions, found numerous who would do terms that no other traditional lenders I spoke with could or would do.  

I found a great article from Nathan Brooks that helped a lot. It said all the things you guys are saying. I'm going to put a package together to walk around to all the local backs and email to the backs out of compute distance. I'll plan to do it tomorrow and update you guys on how it goes. The link to the article is below if you guys want to take a look. 

https://www.biggerpockets.com/blog/2014/12/03/30k-rental-property-real-estate-profit-finance-cheap/

Originally posted by @Jay Hinrichs :

Semi private lenders will do this.   talk to Peak Asset Lending in KC  

@Alexander Felice  banks generally wont fool with stuff this low unless you have existing relationships with them.. the cost and risk of having a default far out weight what a bank can make on a 15 to 20k mortgage.

but i have seen small local commerial banks do these for local citizens that own 10 to 50 homes and its their cottage industry so to speak

I have NINE loans under 75K and I work at a bank, while it's true banks would prefer to do larger loans, they do small ones every single day. 

Bank of America will do a 50K mortgage, so will Wells Fargo, I would call neither of them local banks. 

Certainly not all banks will do them, as OP as found, but rare they are absolutely not. 

I just signed a 60k mortgage through UWM 20 minutes ago. 

Originally posted by @Alexander Felice :
Originally posted by @Jay Hinrichs:

Semi private lenders will do this.   talk to Peak Asset Lending in KC  

@Alexander Felice  banks generally wont fool with stuff this low unless you have existing relationships with them.. the cost and risk of having a default far out weight what a bank can make on a 15 to 20k mortgage.

but i have seen small local commerial banks do these for local citizens that own 10 to 50 homes and its their cottage industry so to speak

I have NINE loans under 75K and I work at a bank, while it's true banks would prefer to do larger loans, they do small ones every single day. 

Bank of America will do a 50K mortgage, so will Wells Fargo, I would call neither of them local banks. 

Certainly not all banks will do them, as OP as found, but rare they are absolutely not. 

I just signed a 60k mortgage through UWM 20 minutes ago. 

 He is talking 20k not 50 to 75k. I get that. 

Originally posted by @Jay Hinrichs :
Originally posted by @Alexander Felice:
Originally posted by @Jay Hinrichs:

Semi private lenders will do this.   talk to Peak Asset Lending in KC  

@Alexander Felice  banks generally wont fool with stuff this low unless you have existing relationships with them.. the cost and risk of having a default far out weight what a bank can make on a 15 to 20k mortgage.

but i have seen small local commerial banks do these for local citizens that own 10 to 50 homes and its their cottage industry so to speak

I have NINE loans under 75K and I work at a bank, while it's true banks would prefer to do larger loans, they do small ones every single day. 

Bank of America will do a 50K mortgage, so will Wells Fargo, I would call neither of them local banks. 

Certainly not all banks will do them, as OP as found, but rare they are absolutely not. 

I just signed a 60k mortgage through UWM 20 minutes ago. 

 He is talking 20k not 50 to 75k. I get that. 

OOPS! I misread the math

in that case you're correct. No bank is going to touch 20k for a mortgage LOL 

Originally posted by @Alexander Felice :
Originally posted by @Jay Hinrichs:
Originally posted by @Alexander Felice:
Originally posted by @Jay Hinrichs:

Semi private lenders will do this.   talk to Peak Asset Lending in KC  

@Alexander Felice  banks generally wont fool with stuff this low unless you have existing relationships with them.. the cost and risk of having a default far out weight what a bank can make on a 15 to 20k mortgage.

but i have seen small local commerial banks do these for local citizens that own 10 to 50 homes and its their cottage industry so to speak

I have NINE loans under 75K and I work at a bank, while it's true banks would prefer to do larger loans, they do small ones every single day. 

Bank of America will do a 50K mortgage, so will Wells Fargo, I would call neither of them local banks. 

Certainly not all banks will do them, as OP as found, but rare they are absolutely not. 

I just signed a 60k mortgage through UWM 20 minutes ago. 

 He is talking 20k not 50 to 75k. I get that. 

OOPS! I misread the math

in that case you're correct. No bank is going to touch 20k for a mortgage LOL 

 In some small mid west farm towns the local community banks will take a swing at these but ONLY for locals. like I said. I know a few of these mom pop shops throughout Indy ( rural)

Originally posted by @Jay Hinrichs :
Originally posted by @Alexander Felice:
Originally posted by @Jay Hinrichs:
Originally posted by @Alexander Felice:
Originally posted by @Jay Hinrichs:

Semi private lenders will do this.   talk to Peak Asset Lending in KC  

@Alexander Felice  banks generally wont fool with stuff this low unless you have existing relationships with them.. the cost and risk of having a default far out weight what a bank can make on a 15 to 20k mortgage.

but i have seen small local commerial banks do these for local citizens that own 10 to 50 homes and its their cottage industry so to speak

I have NINE loans under 75K and I work at a bank, while it's true banks would prefer to do larger loans, they do small ones every single day. 

Bank of America will do a 50K mortgage, so will Wells Fargo, I would call neither of them local banks. 

Certainly not all banks will do them, as OP as found, but rare they are absolutely not. 

I just signed a 60k mortgage through UWM 20 minutes ago. 

 He is talking 20k not 50 to 75k. I get that. 

OOPS! I misread the math

in that case you're correct. No bank is going to touch 20k for a mortgage LOL 

 In some small mid west farm towns the local community banks will take a swing at these but ONLY for locals. like I said. I know a few of these mom pop shops throughout Indy ( rural)

 At that point it seems easier to find a private lender and with these numbers that's probably the best way to go. Do a short AM and get it done. 

You can try First National Bank. I used the Laplace branch on a $50k loan. I was having trouble finding a bank to do it and they had no issues. Robert Laiche was my banker there.

@Courtney Kimbrough . Smallest “large” bank that will do small loans that I’ve found is US bank and their minimum is 35k

At 20k loan amount the only bank that will touch that is a local bank and likely they’ll only lend to locals, as @Jay Hinrichs said.

I know some local banks in one of the markets I invest in and they have no minimums for loan amounts. They just care about LTV, credit and income of the property (and areas of the property).

A direct quote from the banking officer at one of these banks was “we prefer loans to be over 20k”. But they’ll do lower loans, so that gives you an idea.

@Courtney Kimbrough , I'm here in the New Orleans area also (will send a PM).  Hancock-Whitney will do mortgages for either $25K or $30K (forget which).  Or at least they did a couple years ago.  Though I realize that is still higher than the cost of the house.  However, they can be finicky and difficult with non-owner occupied loans.

You should also look into rolling the construction numbers into the loan to make it a higher amount.  Fidelity Homestead did that for me a few years ago.  I don't know what their minimum loan requirements are but, after rolling in the constructions costs and accounting for my 20% down payment, the actual loan amount was something like $48K.

And that's the other thing to keep in mind.  I think a bank's minimum loan amount is going to be AFTER you pay the 20-30% down payment they will require for a non-owner occupied property.

If you have decent credit, you might be better offer trying to get a personal loan, since it is such a relatively small amount.

@Courtney Kimbrough good luck finding a lender for this property. If nothing else, your search will be informative and may result in relationships with those banks you can leverage in the future.

Consider asking to roll the rehab budget into the total amount you're asking for.  This seems to be a strategy that some investors are following, I'll defer to @Alexander Felice for his insight on the process.  He's written a great article on how he uses this very strategy.

Best of luck and be sure to keep us posted on your progress.

-Andrew

At just $20k why not a personal loan. I did a signature loan for a condo I purchased for $18k in 2015. I paid 9%, but with no loan fees, its not a bad deal. I later just put the balance on a HELOC then paid it off after a refi of another property I BRRRR'ed.

Also I have 4 mortgages under $75k including one for a $30k purchase through a local credit union that lends inhouse up to $120k. This is another condo, but the credit union's niche is lending on old mill houses common in Upstate South Carolina which generally sell for less than $75k and often under $50k.