Financing single family homes!

9 Replies

Im looking to invest in single family homes in the 30 to 50k range. I want to use a traditional bank loan for max cash flow, but the problem I have ran into is most banks won’t cover loans that small.  

Wanting to see if anyone has any advice as to how they would finance deals in that price range? I would like to stay away from hard money lending  and seller financing if possible but I am open to anything. 

Thanks 

Look into local banks and credit unions (or local to whichever town you are investing in). They can be a little more flexible with their terms. Also try to find banks that do their own underwriting and keep their loans in house. If there are houses in that price point, someone is doing financing on them. You just have to find that lender. 

@Ryan Luke Thomas Klamer

Of course! I am happy to help. In the past I had only purchased SFHs with conventional financing. I had to change strategies this year because my husband and I are both newly self-employed now and banks don't love that. We were recently able to take advantage of owner financing on a duplex purchase, so that was really nice.

With the exception of the duplex, our properties are B+ or higher.  We could have bought lower end properties and cashflowed better, but we decided to go with slightly higher end stuff. 

@Cassi Justiz

Wow that’s very impressive! I hope to be in your shoes in the next couple years. Getting to the point of self employment must be a huge milestone in you and your husbands life! 

Thanks again I had trouble getting bigger branch banks like bbt to help out with smaller deals.

I’ll try my luck with a credit union and look around the smaller more local branches till I find something compatible with what I’m looking for.

As others have said the bigger banks often times won't even bother with these tiny amounts.  However a smaller local community bank might, but it will take visiting 3 or more to find the right fit for you.

@Brent Paul

Thanks for the response 

Is that how you started? Was with smaller properties and local banks? 

I’ve been talking about getting my first property for so long, Ive just been collecting pay checks in savings until I’m able to afford it and trying to educate myself as much as possible for when I’m ready.

@Ryan Luke Thomas Klamer

My first and 2nd property were financed through big banks with 3.5% and 5% down.  But the houses were higher priced than you are looking at.   However after that I started talking to smaller banks and found a few that would work with me.  Not every bank will.  But it doesn't hurt to at the very least call around to your local banks and meet with a banker.  Worst they can say is no.  In which case you go to the next one.

Do you have money to put down?  It's possible they might want 20% down  10k on a 50k house.  If you can do that it could open more doors for you.

@Brent Paul

I see that's the plan that I will stick with. Yes sir I want to keep my options open so I'm saving up for a 10k down payment like you mentioned and then wanted to have an extra 5 to 10 for any rehab or PITI payments to be safe.

Been hardcore saving for almost 2 years and I think I will finally be ready in three to six months. Savings definitely been slow as I have a big family one girl  and three boys but wouldn’t have it any other way.

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