trouble with hard money lenders

[Jerome C Brown]

I'm having trouble with trying to find hard money lenders to lend to me because of the amounts of my purchase. The amounts of the purchase price of the properties that I'm pursuing are only $20,000 with a $15,000 rehab as well as a $14,000 and I keep getting denied because they only lend between $70-100k . I live in a landlord market and the properties are very very cheap here so cheap i want to get out of wholesaling an purchase. i have one under contract for $5k are there any lenders that will lend to me on the low end. im willing to go over and beyond and put my blood sweat in tears in my business just looking for some guidance

[Jeremy Schultheiss]

What kind of a return are you looking to offer? I may have someone that would be interested. 

[Taylor Dasch]

That is pretty standard from the Hard Money Lenders I have contacted. I would try a private lender, they would be more willing to loan on smaller amounts.

[Michael Kinsella]

@Jerome C Brown

As @Taylor Dasch suggested above, a private individual lender would be more willing to loan on smaller amounts.

The issue for HMLs at those dollar amounts is that foreclosure/legal costs make loans that small not worth it to them.

You may be able to find a private lender at a local REIA event - it should be someone you trust.

[Mike Klarman]

You gotta remember the bank is not going to make enough to pay a bill on a loan amount of 30k.  They will spend more in labor than they will receive in commission.

Those small deals you need a cash source and maybe seller financing.

[Jerome C Brown]

Quote from @Taylor Dasch:

That is pretty standard from the Hard Money Lenders I have contacted. I would try a private lender, they would be more willing to loan on smaller amounts.

 I thought hard money lenders were same thing ok so do I just look for private lenders my credit is fair not that high 

[Taylor Dasch]

Quote from @Jerome C Brown:

Quote from @Taylor Dasch:

That is pretty standard from the Hard Money Lenders I have contacted. I would try a private lender, they would be more willing to loan on smaller amounts.

 I thought hard money lenders were same thing ok so do I just look for private lenders my credit is fair not that high 

Yes they are a little different, A hard money lender is like a loan company that provides short term loans and they have a criteria on what type of property they will lend on, LTV %, LTC, etc.

A Private Lender may have these criteria as well but will likely be less strict and better terms, I see a private lender as a partner that if you do good for they will continue to lend to you and may have even better terms when you do a few successful deals with them.

[Tom S.]

@Jerome C Brown  You can also consider a few reputable personal loan lenders, for those amounts.  I've recently used Sofi lending for a $50k personal loan, smooth application process and one day approval.  Funds in my checking account the next business day after that.  Best part, no fees at all, and no-prepay penalty!  I used them for a few months at 1% interest per month (12% annual), so only paid about $1500 in interest for the use of the money.

Discover personal loans also offered similar terms, but only to $35k.

Not sure on their minimum credit scores, but I found them straight forward and easy to work with.

[Jerome C Brown]

Quote from @Tom S.:

@Jerome C Brown  You can also consider a few reputable personal loan lenders, for those amounts.  I've recently used Sofi lending for a $50k personal loan, smooth application process and one day approval.  Funds in my checking account the next business day after that.  Best part, no fees at all, and no-prepay penalty!  I used them for a few months at 1% interest per month (12% annual), so only paid about $1500 in interest for the use of the money.

Discover personal loans also offered similar terms, but only to $35k.

Not sure on their minimum credit scores, but I found them straight forward and easy to work with.

 thank you for this information i am going to try them out 

[Ken Vesely]

That is one of the biggest disconnects in the market - 

20k property, lets say it needs 100k in work to complete it

you go in there, gut the 20k property now its worth 5k? 7k? 

what is there to lend on based on these numbers (assuming you know that the avg cost to a lender for a foreclosure is 15k per property no matter what the size of the loan) 

How attractive does a 20k purchase now look to you if you were a lender? 

[Chris Seveney]

@Jerome C Brown

It costs the same for a lender to originate a $1M loan as a $20k loan - 2 points on $1M is $20,000 - two points on a $20k loan is $400

There is no money and only risk in those low dollar loans.