Fix and Flip or BRRRR Bridge loan funding in 'rural' areas

[Stephanie Southerland]

Looking for Bridge loan lenders for fix and flip or Brrrr properties. Some lenders are pulling out of 'rural' areas either completely or requiring up to 40% down, and I am wondering if there are any out there that specialize for a more rural type of market? 

[Bobby Feinman]

@Stephanie Southerland

I understand and sympathize with your situation. I can assist you if the property will be a short term rental property in an established vacation market. Is that the case?

Bobby

[Robin Simon]

Quote from @Stephanie Southerland:

Looking for Bridge loan lenders for fix and flip or Brrrr properties. Some lenders are pulling out of 'rural' areas either completely or requiring up to 40% down, and I am wondering if there are any out there that specialize for a more rural type of market? 

 Its definitely become a "case by case" type situation for lenders on rural properties in the current environment, if you have a really strong deal exceptions are always there to be made

[Mike Klarman]

I closed a rural deal in ARI last month.  You need to look for lenders from those states where the rural properties are popular: COL, ARI, Washington State.

[Stephanie Southerland]

Quote from @Bobby Feinman:

@Stephanie Southerland

I understand and sympathize with your situation. I can assist you if the property will be a short term rental property in an established vacation market. Is that the case?

Bobby

 No, this one will be a long term rental. I am looking to rehab and rent out and then refinance. I have the refinance part figured out, however, my normal hard money lender is low on cash right now due to construction taking longer and the capital returns aren't coming back as quickly as usual. Thanks for weighing in, if I do need vacation home financing for something else, in a market like that, I will keep you in mind. :)

[Bobby Feinman]

where is the property located?

[Mike Klarman]

If the property is in Arizona, I know a lender who does rural in that state.  Send me a message.

[Stephanie Southerland]

Quote from @Mike Klarman:

I closed a rural deal in ARI last month.  You need to look for lenders from those states where the rural properties are popular: COL, ARI, Washington State.

I typically use a hard money lender for something like this, however, as I mentioned in another reply, they are running short on return of capital to keep it flowing right now due to builders not able to finish projects quick enough. Some lenders that do bridge loans are getting out of rural markets, but I definitely need to find a lender specializing, in the purchase and rehab funds where I can refinance after renovations are done. Some are now only doing 60% LTV and some are pulling out of markets like mine. It's strange to me because we didn't get hit as hard in our area in the last downturn because we never were as inflated, and it's just like that still. We are a very stable market. I definitely agree that lenders in our own state, or states like Arizona with spread out towns and cities will have a better understanding of our driving market forces. Thanks for the input. Who do you recommend?

[Stephanie Southerland]

Quote from @Mike Klarman:

If the property is in Arizona, I know a lender who does rural in that state.  Send me a message.

 will do, thanks!

[Stephanie Southerland]

Quote from @Robin Simon:

Quote from @Stephanie Southerland:

Looking for Bridge loan lenders for fix and flip or Brrrr properties. Some lenders are pulling out of 'rural' areas either completely or requiring up to 40% down, and I am wondering if there are any out there that specialize for a more rural type of market? 

 Its definitely become a "case by case" type situation for lenders on rural properties in the current environment, if you have a really strong deal exceptions are always there to be made

 Thanks for commenting, How would you suggest that I make my case? I have my experience to back up myself as a risk, however, I suppose the market data over the past 14 years may help, along with the strong employment base of my area? Would you suggest that I put some kind of report together? I feel like I am wasting my breath when I get on the phone with lenders when they don't want to dive into a specific market and rule out all rural markets. As an agent and an investor, I want to provide safe and affordable housing, and it's much needed in rural as well as in metro areas. 

[Robin Simon]

I would look for standard single family homes (anything multi unit or unique makes comps tougher) that can be backed up with strong recent sales comps and low net adjustments on an appraisal. Every lender is different, but generally we are OK with more rural properties that are SFR, not too too rural, and have an appraisal with three recent comps that are A) less than five miles away B) sold somewhat recently, last few months and C) net adjustments less than 20%, preferably less than 10%. Its also best if its cash flowing (DSCR >1) and in a decent sweet spot of value (not too small nor too big, I'd aim for properties worth somewhere between $250k - $450k for rural)