Washington, NJ · Member since 2017 · 7 posts · 0 votes
Hey I currently have 2 rental properties(2 families) in NJ. I am currently looking at a 5 unit plus a single family home(2 lots next to each other). Both need work, most likely around 10K per unit plus new roof on 5 unit. the 5 units have brand new furnaces and water heaters. I have credit score around 830. I have 40K to use. What are my options for loans? I have looked at 203K(but this will be non owner occupied so cant use that) I have also looked at fannie mae homestyle. Does anyone know any other options and what are my best options? I'm new to this style of loans. I have started doing research already and will continue to. But if you can point me in the right direction it would be appreciated. Thank you
Investor · Charlotte, NC · Member since 2016 · 374 posts · 189 votes
9y
I would move into the 5 unit for a few months and get an owner occupied loan personally. Call it a camping adventure for the family. How much money are we talking here?
Allentown, PA · Member since 2014 · 264 posts · 120 votes
9y
Depending on your payback time line, you could get a hardmoney loan. If you or the wife has a 401K, I believe that you can withdraw half of that, and you pay yourself back the interest, you should talk to your employer about any specif rules that they have for the loan.
Are you getting a mortgage for the purchase? I would think that the bank would extend you a line of credit as well...
Another option would be equity loans on the existing rental properites...
Investor · Minnetonka, MN · Member since 2016 · 123 posts · 86 votes
9y
SFH as well as 2, 3, and 4-plexes are considered residential for financing purposes while properties that have 5 or more units are generally handled by the commercial department of your favorite bank.
Many lenders won't touch a rehab project - you'll have to check with smaller local banks to gauge their interest in such a deal.
Without putting down 20-25% you will most likely have to get creative with the financing to pick this up.
Is owner financing a possibility? If the seller owns these properties free and clear you might work out a deal with them where you put some money down and use the rest of your $40k for rehab. Once the properties are completely rehabbed, they should appraise for more than you paid. Go to the banks that said "no" earlier and show them the finished, rented properties and see if you can get a loan at 80-90% LTV of the new appraised value. Hopefully that is enough to pay back the seller and give you some of your capital back.
If owner financing is not possible, try: Friends/family? A partner? Hard money?
If nothing else, offer it as a wholesale deal to another investor and make a commission?