Ideas on $25K loan for multi-family working captial?

Question

It would be helpful to me at this time, to have about $25K in working capital for work on one of my multi-family properties. This relative to my situation, is a super modest amount of funds. It probably be best as a friends-and-family type loan, but I don’t have anyone around me that is an appropriate lender.

If I have to, I can put the funds in myself, but its inconvenient, and would come from investments that would need to be sold, taxed, etc. I seem to be “landlocked” for any borrowing at this time.

I did go to the bank that holds three three commercial loans for my apartments. The thing about this bank, is that they seem like they are ready to s*** their pants at any moment, fearing I am going to default on them. That’s the vibe they give off.

And I don’t really get it, as I’ve been paying these three loans for 7 years, without any incident of any kind, ever. I am not badly leveraged. The LTV of the loans I’d conservatively gauge at about 35 percent. These are not risky loans, by any means in my mind. However, this is a conservative regional bank, that is on the NASDAQ, so maybe that’s the issue?

I did approach them about a year ago about getting $25k credit line per property, and the response I got was basically no. That for them to consider it, they would want to order three appraisals, and then the loans would all have to be cross collateralized over the three properties, and it seemed over the top and costly way to borrow $75K. So I didn’t pursue it any further.

A asked around on other options. Given that I am self employed, a few personal loan options, did preliminary asking about my situation, and they got lost in the weeds with how my real estate income looks so dismal on tax returns.

Then I spoke to a company that does business lines of credit, based on personal FICO scores. They were fine with my score (about 740), but have issue with the percentage of personal credit I am utilizing, so that discussion also petered out.

Apparently, I have a lending profile right now, that is not attractive to mainstream lending programs.

Any advice?

Bill B. · Answer

Don’t forget heloc, DSCR, 2nd on primary, borrow from retirement accounts, credit card cash advance, property reserves, home improvement store credit, etc etc. Heck, just pay for all the improvements with a credit card.

It does scare me that you don’t have 25k laying around if you’re using so little leverage. But assuming thsi is something you plan to pay back in 2-3 months the interest rate shouldn’t matter. Go with any of the above sources. Meanwhile, switch banks. This is the kind of thing the bank you keep all your operating funds in should be happy to help you with.

Elias Halvorson · Answer

Do a personal loan. The fees for a refinance / cashout would be ridiculous compared to the amount of money you're seeking. Local banks, credit union, or SOFI.com are all good options for personal loans.

Jason Wray · Answer

You can do a cash out refinance an pull the cash out of any of your properties. You can also take our a personal loan up to $50K that "does not" require a property or a lien. You can take out up to 75% LTV on your properties.

Some banks are not set up to offer solid refinance or LOC options.

Deven Ziertman · Answer

For $25K to fund some working capital on your multi-family property, here are a few options to consider. If your property is bringing in good rental income, a HELOC or a DSCR loan could work, as both use rental income to qualify. You could also explore a personal loan from a bank or credit union, especially if you have a decent credit score. For short-term needs, using credit cards could help, just make sure you can pay it off quickly. Another option is borrowing from your retirement account, if that’s available.

If none of these fit, you might want to think about a second lien on your primary residence or finding a lender who's more flexible with their terms. Don’t forget, sometimes switching banks or using a mortgage broker can open up more possibilities.

Tom S. · Answer

@Michael Klinger  Just curious, what loan product did you end up choosing for this?

Magnus Wikström · Answer

Do an unsecured credit line based on your cashflow of the business.

Eric Goldman · Answer

yea id do a personal loan for 25k. ive done that a few times.

Michael Klinger · Answer

Thanks. All my properties are true multi-family, More than 5 units per building. Interesting information, though.

Michael Ohara · Answer

@Michael Klinger Sending you a connection request about this.

Tom S. · Answer

@Michael Klinger  As others posted, SoFi and Discover personal loans are good options and I've used them in the past.  2-3 business days from application to funds in my checking account.  No fees, no pre-pay. Both offered up to $40k, 12-14% rate which is higher but not bad for an unsecured personal loan.  Especially if using the funds short term, there's not too much interest.

Ideas on $25K loan for multi-family working captial?

Ideas on $25K loan for multi-family working captial?

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