Financing options for first investment?? "10-99" with Low Credit

[Matthew Griffin]

Recently I purchased my first investment property (all cash) and my funding option fell through. What additional option would be worth looking into?

The following are the details of the investment...

Purchase Price: $17,500

Rehab: $60,000

ARV: $125,000

Market Rent: $1,000/month

Area: Downtown Macon, Ga

My details:

Low Credit Score

10-99 (1 year of tax returns)

$20,000 liquid to use as needed.

Any advice on what options may be available?

[Philip Joseph]

You are running into a common issue with these low value properties in Macon and other areas. Many brokers/banks and hard money lenders will not finance under $100k. The best bet is to get funding from a private investor who trust you. Option 2 is to partner with someone who has the money. Figure out terms that work for both of you. Option 3, keep trying local banks. You might find a local bank willing to finance the deal. I find local banks to be more flexible when it comes to terms. Option 4, pull equity out of your primary home to open a HELOC. Use the HELOC to complete the rehab, but make sure you have a bank that will do a cash out refi based on the $125k ARV before starting the rehab.

Long term, you may need to bundle multiple properties. What I do now is buy, fix and hold a few properties. Once I get 3 or 4 properties completed, I cash out refi them as a package deal. since the value is usually over $300k, I've never had an issue finding a local bank to finance the deal. They will usually only do 75% of the appraised ARV. Good luck!