First Time Investor, Out of State, Under $75,000 - Cant Find Lender

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First Time Investor, Out of State, Under $75,000 - Cant Find Lender

Aron Mandel
Investor · Boca Raton, Palm Beach County · Member since 2026 · 11 posts · 21 votes

I have a deal that I am in contract on and the lender I thought I was going to use backed out. 

It seems for the criteria of, First Time Investor, Out of State, Under $75,000 for purchase and rehab combined, is difficult to find a lender on.

This deal is in Alabama. Its a 60k purchase 10k rehab the ARV is around 100k+.

Looking for a short term had money loan for purchase and rehab or just purchase. I don't mind paying rehab out of pocket.

Any recommendations for a lender for this type of deal?

Thank You

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Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
6mo

@Aron Mandel

no offense intended, but 60K purchase 10K rehab seems... at a minimum very high risk, and potentially... unlikely.  10K doesn't go very far these days.

do you have a robust team or network there?  where are you located?

i know this wasn't your question, but we see new investors buy in challenging areas to start, and very often things don't meet their expectations... so trying to help if I can.

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  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    6mo

    @Aron Mandel

    no offense intended, but 60K purchase 10K rehab seems... at a minimum very high risk, and potentially... unlikely.  10K doesn't go very far these days.

    do you have a robust team or network there?  where are you located?

    i know this wasn't your question, but we see new investors buy in challenging areas to start, and very often things don't meet their expectations... so trying to help if I can.

    2Reply
  • Aron Mandel
    OP
    Investor · Boca Raton, Palm Beach County · Member since 2026 · 11 posts · 21 votes
    6mo

    Yes, I have everything set up there. It was a foreclosure. Its in decent shape, needs minor touchups.

    0Reply
  • Frankie VozziBusiness Member
    Member since 2025 · 392 posts · 98 votes
    6mo

    You’re running into a pretty common issue with that price point.

    A lot of lenders won’t go that low on loan size, especially for first-time investors and out-of-state deals even if the numbers make sense.

    The deal itself sounds solid though, especially with that spread, Are you planning to flip it, or hold after the rehab?

    [email protected]516-888-7750
    0Reply
    • Aron Mandel
      OP
      Investor · Boca Raton, Palm Beach County · Member since 2026 · 11 posts · 21 votes
      6mo
      Quote from @Frankie Vozzi:

      You’re running into a pretty common issue with that price point.

      A lot of lenders won’t go that low on loan size, especially for first-time investors and out-of-state deals even if the numbers make sense.

      The deal itself sounds solid though, especially with that spread, Are you planning to flip it, or hold after the rehab?


       Hold

      0Reply
  • Mike GrudzienPro Member
    Lender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes
    6mo

    The 3 items in your title set up the perfect "don't lend" stack.

    0Reply
  • Mike GrudzienPro Member
    Lender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes
    6mo

    Have you tried working with family and friends?

    0Reply
  • Tanya Brewer
    Lender · Scottsdale, AZ · Member since 2026 · 18 posts · 15 votes
    6mo

    Mike nailed it, that combo is the exact profile that gets kicked back by every lender in the system. It\u2019s not the deal, it\u2019s the file.

    Most DSCR shops have $75k or $100k minimums. A handful go to $50k but you\u2019ll eat a low balance hit of 50 to 100 bps on top of base rate, and the closing costs on a loan that small basically eat any benefit. If you\u2019re buying at $60k and putting 20% down you\u2019re looking at a $48k loan. That\u2019s below every non-QM lender we work with. Conventional investment property has the same issue, nobody wants to underwrite a $48k file when the work is the same as a $300k one. Layer on out of state first time investor and it just makes the file harder to place.

    At this price point your best bet is a local bank or credit union near the property. They portfolio their own loans so they don\u2019t have the same minimums. Seller financing is worth asking about too. Hard money works if you\u2019re doing the rehab and have a clear refi plan after, but on a $60k purchase the points and fees are going to eat you alive so run those numbers first.

    0Reply
  • Doug SmithPro Member
    Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
    6mo

    I'm sure you're a great guy, but there are a couple of things happening here. First, we have investors that have trusted us over the years and they expect a certain yield. Once a loan gets down below $100K, how we're structured, we would struggle to meet that yield for our investors. Second, we have to protect our investor capital. It's just a fact that newer, inexperienced investors default at a much higher rate, so we don't lend our investors' money in deals where we can't get comfortable with the experience level. Add to that the fact that you're trying to manage an out-of-state flip deal and that has a high chance of not going well. This might have to be a "family and friends" deal, because lenders like us with lots of lending experience, a formal credit background, and investor funds to protect will likely pass on the transaction. I do wish you well. 

    0Reply
  • Robin SimonBusiness Member
    Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
    6mo
    Quote from @Aron Mandel:

    I have a deal that I am in contract on and the lender I thought I was going to use backed out. 

    It seems for the criteria of, First Time Investor, Out of State, Under $75,000 for purchase and rehab combined, is difficult to find a lender on.

    This deal is in Alabama. Its a 60k purchase 10k rehab the ARV is around 100k+.

    Looking for a short term had money loan for purchase and rehab or just purchase. I don't mind paying rehab out of pocket.

    Any recommendations for a lender for this type of deal?

    Thank You


     Hi Aron, while it will be challenging at this size (as other commentors have noted), it shouldn't be impossible. Your best bet is a mortgage broker that has connections with lots of hard money lenders and can find one for this specific scenario

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    0Reply
  • Eric M.
    Member since 2023 · 34 posts · 13 votes
    6mo

    Chances are the rehab will cost more than your estimate of $10k, especially since this is your first project, so you will likely need the extra $$$. Second - if it's a long term hold, why not put a few thousand extra into replacing items that will likely be upcoming capital expenses, HVAC update, windows, etc. The extra $30 month will make little difference to your cash flow (it might even increase your rental rate) and the expenditure will also increase your basis for depreciation.

    0Reply
  • Jimmy LieuBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
    6mo
    Quote from @Aron Mandel:

    I have a deal that I am in contract on and the lender I thought I was going to use backed out. 

    It seems for the criteria of, First Time Investor, Out of State, Under $75,000 for purchase and rehab combined, is difficult to find a lender on.

    This deal is in Alabama. Its a 60k purchase 10k rehab the ARV is around 100k+.

    Looking for a short term had money loan for purchase and rehab or just purchase. I don't mind paying rehab out of pocket.

    Any recommendations for a lender for this type of deal?

    Thank You

    Hi Aron! You’re in a pretty normal spot for that size deal—sub-$100K flips in smaller markets almost always push you into hard money or private money, especially as a first-time out-of-state investor. Traditional lenders usually won’t touch that profile or that loan size because it’s too small and too short-term, even if the numbers look solid like yours (60K purchase, 10K rehab, 100K+ ARV is actually a clean little spread for a lender, just not bank-friendly). Most investors in this situation go straight to private or hard money lenders that specifically do fix-and-flips in that range, and they’ll usually fund based on ARV and rehab scope rather than your experience level, though rates and points will be higher since you’re new. The key is just making sure your deal package is tight because lenders want to see clear comps, exit strategy, and rehab breakdown so they can feel comfortable on the risk side. This is actually a pretty common setup in markets like Alabama where you can still find low entry price flips and solid rent-to-value spreads, but you just have to lean into short-term capital sources to get them done. Once you get one or two deals completed, your lender options usually open up a lot more because experience starts to matter just as much as the deal itself.
    [email protected]614-300-7535
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  • Tienna Matthews
    Financial Advisor · Tallahassee, Americas · Member since 2025 · 25 posts · 10 votes
    5mo

    Aron, 

    Lowering the purchase price is the best move. That's what approves the deal in the eyes of a lender. Increasing the rehab budget doesn't really help lenders feel safer because it doesn't create real equity the same way a lower purchase price does. 

    0Reply
  • Lucas Thomas
    Member since 2023 · 112 posts · 70 votes
    5mo

    Hello!

    I am a specialty mortgage broker!

    I have done sub-100k loans all over the country. 

    Are you trying to DSCR or Rehab into a DSCR? 

    Thank you!

    L. Thomas
    0Reply
    • Melinda G.
      Tampa, FL · Member since 2017 · 6 posts · 0 votes
      1mo

      Looking for a sub-70k dscr loan based on a rental property we own here in Tampa. Is this something you work with?

      Thanks

      Melinda

      0Reply
  • John Lopez
    Member since 2026 · 12 posts · 2 votes
    5mo

    Hi Aron, 

    Great to hear from you here in this forum. I think the input from others is sufficient to understand the challenges of this deal including new investor, rehab amount can change and go over 10k easily, return for investor is challenging and also, for this loan amount, it's not even sometimes worth the hustle to be first position on title, go through underwriting and due diligence etc. Think about this, as a lender, are you going to do a 75k loan or a 250k loan for the same work? However, there is always an option and that is the idea of being an investor, how you overcome these challenges. I do deploy capital and also broker loans through my advisory firm and I'd like to chat with you and offer you an option that might help you. I have helped people starting from scratch (even with no downpayment) to do their first property and become a real estate investor. Let me know. I am positive I have an option for you but of course nothing is set on stone until we review your whole situation. Talk to you soon. 

    John. 

    0Reply
  • Vijay FriedmanBusiness Member
    Miami, FL · Member since 2026 · 766 posts · 124 votes
    5mo
    Quote from @Aron Mandel:

    I have a deal that I am in contract on and the lender I thought I was going to use backed out. 

    It seems for the criteria of, First Time Investor, Out of State, Under $75,000 for purchase and rehab combined, is difficult to find a lender on.

    This deal is in Alabama. Its a 60k purchase 10k rehab the ARV is around 100k+.

    Looking for a short term had money loan for purchase and rehab or just purchase. I don't mind paying rehab out of pocket.

    Any recommendations for a lender for this type of deal?

    Thank You

    @Aron Mandel

    This is a common issue with first-time investor RTL deals — the numbers may make sense, but the loan size is too small for a lot of hard money lenders.

    The three items likely causing the lender issue are:

    • first-time investor
    • out-of-state borrower
    • purchase + rehab under $75k

    Since the purchase is $60k with $10k rehab and ARV around $100k+, I'd look for lenders that specifically allow small-balance fix-and-flip loans or local/private lenders in Alabama. Some national hard money lenders may pass simply because the loan amount is below their minimum, even if the deal itself is okay.

    If you can pay rehab out of pocket, you may have better luck asking for purchase-only bridge financing or a private short-term note instead of full purchase + rehab funding. 

    786-656-0387
    DreamPoint Capital
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    0Reply
  • Robert EllisBusiness Member
    Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
    4mo
    Quote from @Aron Mandel:

    I have a deal that I am in contract on and the lender I thought I was going to use backed out. 

    It seems for the criteria of, First Time Investor, Out of State, Under $75,000 for purchase and rehab combined, is difficult to find a lender on.

    This deal is in Alabama. Its a 60k purchase 10k rehab the ARV is around 100k+.

    Looking for a short term had money loan for purchase and rehab or just purchase. I don't mind paying rehab out of pocket.

    Any recommendations for a lender for this type of deal?

    Thank You


    I've seen this happen more than once, and the lender backing out is sometimes the least important part of the story.

    I used to think financing problems were deal problems.

    What surprised me was that financing problems often expose execution risk.

    The combination of first-time investor, out-of-state property, and a very small loan amount isn't just difficult for lenders. It's difficult operationally too.

    The acquisition usually isn't what hurts investors on these deals.

    It's finding out six months later that the rehab budget was light, the local team wasn't as strong as expected, or the property needed more capital than planned.

    I've learned to pay attention when multiple lenders pass on the same file.

    Sometimes they're seeing risk that isn't obvious yet.

    Most investors focus on getting the deal closed.

    I'd focus on what happens if the rehab costs double or the refinance doesn't work exactly as planned.

    If the property needed another $20,000 after closing, would you still want to own it?

    [email protected]786-494-6766
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  • James Driscoll
    Banker · MA · Member since 2026 · 120 posts · 35 votes
    1mo

    The loan size is the actual problem here. Most hard money lenders have a floor around $75K-$100K on the loan amount, so a $60K purchase where you're only borrowing a portion of that knocks you out before they even look at your experience level or location. Where you can have luck is with local community banks or credit unions in Alabama that do portfolio lending, since they're not selling into the secondary market and can make exceptions on loan size. They'll likely cap you at 65-70% LTV and want to see the deal underwrites, but they exist and they do these. Worth focusing your search there rather than on national hard money platforms that are built for bigger deals.

    James Driscoll

    0Reply
  • Danny Gonzalez
    Real Estate Broker · Member since 2024 · 134 posts · 62 votes
    1mo

    @Aron Mandel $60K purchase / $10K rehab with ~$100K+ ARV can work, but lenders hate thin first-time OOS deals under $75K because appraisal + closing costs eat the equity. Hard money / private on the purchase+rehab with a clear exit (refi or sale) is usually the path; DSCR after rehab only if rents and reserves pencil. Did the deal close, or are you still stuck on the short-term piece?

    0Reply
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    4w

    Is your credit score above 740? There are a few lenders that have a $50k minimum

    [email protected]818-269-7983
    LuxePrivate Investments LLC 570 Reviews
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