How to get a mortgage for a low priced rental

8 Replies

Hello All, new to BP but loving it!

A friend of the family has dropped a great opportunity in my lap to buy a 3/1.5 that is 2 blocks from me that has solid tenants and cash flow and I estimate the FMV is around $75k.

My challenge is that the purchase price is $61k, what they owe, so after the 20% down, the mortgage would only be $48k which the banks I've checked with so far have all said is too small and would cost too much.

Is it just a matter of continuing to beat the bush for a mortgage company that will write it or should I look at other options/strategies? 

Thanks for your help!

Hello Kurt,

Keep asking around with different lenders- my bank had said they would do a conventional 30 yr fixed loan on anything worth $50k or more.  Maybe rephrase what you are asking your bank- it could be just a misunderstanding and they think the value/price is $48k.  

Kelly

Thanks for the info! Never though about it that way before. :)

Thank you Kelly for the feedback, and I'll keep beating the bush. In all my inquiries, I always lead with the $61k purchase prices, but I'll be alert if the rep doesn't seem to be on the same page.

There are some lenders that will lend on small amounts. However you may have to seek outside of your area for find one. Maybe even in some city withing driving distance from you. 

your local bank is your best bet.  if you are doing all your business with them they will often do it as a favor to you as a valued customer of theirs.  

As Rhett said, try local. Credit unions are probably your best bet.

@Kurt Milliron perhaps you could try a credit union if you haven't already, they seem much more willing to do business and build relationships than other banks that I've encountered, though I know everyone's experience my be different.

Thank you all for the direction and encouragement! I will hunt that mortgage down and bag it!

Live long and prosper!

Join the Largest Real Estate Investing Community

Basic membership is free, forever.