Where do you all go for smaller mortgages? Like $50k

Question

Looking to invest in rental property in the midwest where there are tons of sub-$70k properties which means I need a $50k mortgage, but doesn't seem like anyone wants to deal with that.

Bob Okenwa · Answer

Where in the midwest? Reaching out to agents and investors where you're trying to find such properties will probably get you going in the right direction.

Caroline Gerardo · Answer

IRS taxes 2021 2022 w-2 income 2023 same line of work, Debt to Income ratio below 43, very high FICO, 25% cash down, liquid assets in checking, vest in your name no LLC

It is possible full doc. The problem is Federal High Cost and HOEPA laws- lenders are restricted from charging more than 3% in points and fees and with a small loan the flat fees are the same as for a larger loan. Flat origination and processing fees of $1200, appraisal $450, title/escrow/attorney/recording ... Loan officer makes almost nothing for the same labor of a larger loan. You need to be organized and responsive.

Bundling several together does not make it easier or better or cheaper.

Kerry Noble Jr · Answer

The smaller banks.....savings and loans institutions etc

Jay Hurst · Answer

You can get 30 year financing on a non-owner occupied. It will just need to be a full doc loan meaning you prove your income with tax returns/pay stubs. You will also pay a higher rate and more points then you would say a 150k loan but you can find it.

Doug Smith · Answer

That's a tough call. I'm not sure what financing a $50K home would look like. I'm not trying to be evasive. It's just been a very, very long time since I've done a real estate deal with collateral that small.

Andrew Nesbitt · Answer

So would my best course of action maybe to buy 4 or 5 $50k SFHs with owner financing and then get some kind of blanket loan to refinance later on down the road?

Eliott Elias · Answer

This is going to be virtually impossible to find on a 30 year note. You may be able to find a Private Money Lender to do this.

Dave Skow · Answer

@Andrew Nesbitt- thanks - there are lenders that will make 50K loans ...try smaller / local credit unions and banks

Doug Smith · Answer

You're usually going to a community bank or a private individual to finance those deals. The reason that lenders like us can't is that we're paid on percentages, so when we get much below $100K, the revenue from the deal doesn't clear our costs by much. We struggle to hit revenue targets below $100K.

Where do you all go for smaller mortgages? Like $50k

Where do you all go for smaller mortgages? Like $50k

Most Popular Reply

10 Replies