I am currently eyeing a couple of individual SFH properties and a small 8-unit SFH portfolio. All of these SFHs cashflow great and have high CoC returns. They need minimal rehab to get to market. However, nearly every lender I've spoken to has a hard minimum of 50k-75k loan value, except for 1 which charges 15% to loan value in closing costs. I am planning on scaling out in this area very quickly, but it would not make sense without leverage.
Does anyone know a private lender, local bank, or credit union that can facilitate these transactions with reasonable fees?
Investor · Jackson, MS · Member since 2014 · 1k+ posts · 769 votes
2y
You have to have air conditioning to go section 8, but it doesn't have to be central air. I had a 2/1 that passed inspection that just had window units. There was one in every room, though. That was the one house I bought in the 39204 zip code. Oftentimes the 2/1 and 3/1 houses don't even have the ductwork for central heat and air. I put in ductwork for central heat in that house but since the window units all worked I didn't put in central air. They have some very weird heating units in those houses and I don't trust them. I also rewired the house because these older homes have nickel wiring which isn't safe. I did not realize about the wiring until I had already moved a family in with three small children. I put them up for a couple of days in a Hilton Garden's hotel suite while we put in new copper wiring. I don't think they ever enjoyed such luxury!
As someone from out of state, Jackson scares me as an investor. It has the outward appearance of a blighted market, on par with places like Gary, IN or Detroit, MI. The shear volume of tax liens that I saw on auction there a month or so back was stunning. Visually, it looked as though 50-60% of some neighborhoods were up for tax auction. Even now there are SFH available as tax forfeited properties for a couple thousand dollars. To me, this speaks volumes about the local market. I am sure locals would be able to sift through the area to find the gems in the rough, but I can see why out of staters need to yield caution.
They do need to be cautious and I certainly wouldn't buy any property at auction.com or buy tax liens. You absolutely have to check out properties for things like foundation problems and mold. Buying sight unseen is out of the question no matter how cheap the property. However, whether vacancies are going to be a problem depends on the property manager. My properties have never sat for more than a couple of weeks. Jackson does have a declining population, however, which is likely why you won't see much appreciation.
I am currently eyeing a couple of individual SFH properties and a small 8-unit SFH portfolio. All of these SFHs cashflow great and have high CoC returns. They need minimal rehab to get to market. However, nearly every lender I've spoken to has a hard minimum of 50k-75k loan value, except for 1 which charges 15% to loan value in closing costs. I am planning on scaling out in this area very quickly, but it would not make sense without leverage.
Does anyone know a private lender, local bank, or credit union that can facilitate these transactions with reasonable fees?
Thanks in advance!
Hey Jonathan,
I am aware of one lender that can do it, but they would still require 10k down, but fees are reasonable. Are you hoping to purchase without an appraisal or would you be okay doing those as well?