How to BRRRR under 100K in value?

11 Replies

How does someone BRRRR properties that are under 100 K in value? The lenders I have talked to want the property to appraise for at least 100 K for the 30 year refinance loan. I know in many areas 100 K property as a joke, but there are still plenty of areas out there were properties will rent very well and the after repair value is less than 100 K.

Well like they say, different strokes for different folks. If your seeking a 30 year term then you need to look at areas that have a greater value of $100k. If not you can go the private money route but you need to see if your numbers make sense with PM. I would reach out to your local community banks they tend to loan their own money and loan on smaller loans like $50k properties. 

Originally posted by @Arsen Atanasovski :

Well like they say, different strokes for different folks. If your seeking a 30 year term then you need to look at areas that have a greater value of $100k. If not you can go the private money route but you need to see if your numbers make sense with PM. I would reach out to your local community banks they tend to loan their own money and loan on smaller loans like $50k properties. 

 Thanks for your input. Do you have a workaround?

Your fastest workaround would be to seek seller financing when I was in the market buying properties at these prices ranges I did a few seller financing and worked out great!

Originally posted by @Arsen Atanasovski :

Your fastest workaround would be to seek seller financing when I was in the market buying properties at these prices ranges I did a few seller financing and worked out great!

 I have been doing seller financing for years. Hopefully a lender that has a workaround will chime in. I agree that owner financing can and has been a useful tool, but not as easy to find seller willing to finance as people might think.
Again thanks for the input😁

@Joe S. Hey Joe! Keep calling around. I’ve talked to mortgage brokers that do not have a minimum mortgage amount - you just need to find the right one. The ones who don’t are doing so from my understanding because of “high cost lending” and the closing costs being greater than 1% of the total price - something like that. But there are brokers out there that can offer 30 years without minimum loan amounts.

Originally posted by @Grayson Spittel :

@Joe S. Hey Joe! Keep calling around. I’ve talked to mortgage brokers that do not have a minimum mortgage amount - you just need to find the right one. The ones who don’t are doing so from my understanding because of “high cost lending” and the closing costs being greater than 1% of the total price - something like that. But there are brokers out there that can offer 30 years without minimum loan amounts.

 Does the lenders you have found that does not have a minimum lien and outside of your state? 

@Joe S...as an investor, I can't say I'm huge fan of rental real estate with values under 100k as these, in my experience, are not located in great areas, don't appreciate and experience significant vacancy and maintenance.  From a lending perspective, I understand the reasoning why lenders have a minimum but not all lenders have a minimum.  A private lender who doesn't have the ability to sell the loan to FNMA however takes on some level of interest rate risk when lending at longer terms, i.e. 30 years.  That said, expect lenders willing to make loans at lower amounts and longer terms to have higher rates.

What city are you specifically targeting?

Originally posted by @Patrick Prunty :

@Joe S...as an investor, I can't say I'm huge fan of rental real estate with values under 100k as these, in my experience, are not located in great areas, don't appreciate and experience significant vacancy and maintenance.  From a lending perspective, I understand the reasoning why lenders have a minimum but not all lenders have a minimum.  A private lender who doesn't have the ability to sell the loan to FNMA however takes on some level of interest rate risk when lending at longer terms, i.e. 30 years.  That said, expect lenders willing to make loans at lower amounts and longer terms to have higher rates.

What city are you specifically targeting?

I am investing in or near San Antonio Texas. Most of them are well over 100 K easy. I’m also investing in Mississippi area. The Mississippi properties some of them are a little under 100,000.

Hi @Patrick. Our market in South MS is actually a great area for under $100k investment properties. They're closely approaching the $100k value, but our target rent in our market is $1200-ish. I'm all in on all of my BRRRRs for right under $100k (and flips as well).


Originally posted by @Patrick Prunty :

@Joe S...as an investor, I can't say I'm huge fan of rental real estate with values under 100k as these, in my experience, are not located in great areas, don't appreciate and experience significant vacancy and maintenance.  From a lending perspective, I understand the reasoning why lenders have a minimum but not all lenders have a minimum.  A private lender who doesn't have the ability to sell the loan to FNMA however takes on some level of interest rate risk when lending at longer terms, i.e. 30 years.  That said, expect lenders willing to make loans at lower amounts and longer terms to have higher rates.

What city are you specifically targeting?

 

In Mississippi you can usually get financing for anything over 50K. Since before this year I was able to find 3/2 houses with two-car garages for 35K the way I did BRRRR was first pay cash for house. After a year I would get a first place HELOC from Wells Fargo (most banks won't give HELOCs to rental properties) and then use that money to buy my next house. I bought my first investment property in 2011 and just bought my 11th property.

Originally posted by @Pat Heidingsfelder :
Hi @Patrick. Our market in South MS is actually a great area for under $100k investment properties. They're closely approaching the $100k value, but our target rent in our market is $1200-ish. I'm all in on all of my BRRRRs for right under $100k (and flips as well).


Originally posted by @Patrick Prunty:

@Joe S...as an investor, I can't say I'm huge fan of rental real estate with values under 100k as these, in my experience, are not located in great areas, don't appreciate and experience significant vacancy and maintenance.  From a lending perspective, I understand the reasoning why lenders have a minimum but not all lenders have a minimum.  A private lender who doesn't have the ability to sell the loan to FNMA however takes on some level of interest rate risk when lending at longer terms, i.e. 30 years.  That said, expect lenders willing to make loans at lower amounts and longer terms to have higher rates.

What city are you specifically targeting?

 

Why do you do if on your refinance the property does not appraise for at least 100k?