Investor · Pemberton, NJ · Member since 2015 · 17 posts · 3 votes
Hi all,
I am an out-of-state investor who previously lived in the area, and have owned a rental property in Dearborn, MI, for several years. I am now interested in expanding my holdings into Redford, MI or the surrounding area.
My question today is regarding whether most properties in the area are being purchased in cash, or if there are banks (lenders) in the area that are willing to lend on properties valued at about $60k. Considering a scenario of putting down 25% on such a property, you're looking at financing only about $45k - less than most banks are willing to work with in my experience. Considering that the majority of properties in this area are valued <<$100k, and out-of-state investing is not uncommon in the area, I'm curious whether lenders in the area are more willing to work with these low value loans on investment properties. I've also considered a cash purchase, and then move to do a cash-out refi once a tenant is in place, but I'd rather not tie up such a significant chunk of capital for the duration if its not necessary.
Any experience or suggestions from those familiar with the area would be greatly appreciated.
Real Estate Agent · Port Huron, MI · Member since 2012 · 295 posts · 82 votes
10y
For homes around 50K or less a lot of people are paying with cash, above 50K a lot of people use loans. As for a loan I know personally that CitiMortgage would give you a loan in that amount. @Thomas Smith
I don't know the area as I'm in California, but I do know that many people are using cash to purchase properties and then immediately taking a percentage of the money back out. It's called delayed financing.
Real Estate Agent · Port Huron, MI · Member since 2012 · 295 posts · 82 votes
10y
For homes around 50K or less a lot of people are paying with cash, above 50K a lot of people use loans. As for a loan I know personally that CitiMortgage would give you a loan in that amount. @Thomas Smith
Investor · Pemberton, NJ · Member since 2015 · 17 posts · 3 votes
10y
Thanks @Jeff Trevarthen and @Richard Ball. I was expecting I may need to use a delayed financing approach as you mentioned, based on several of the BP podcasts. I'll check into CitiMortgage, I'd definitely prefer to not have to hold up such a significant chunk of cash for 6+ months before being able to refi.
Lender · San Jose, CA · Member since 2014 · 122 posts · 27 votes
10y
@Thomas Smith Actually you don't need to wait six months. You can start immediately after purchase. Here's an article I wrote about a year ago regarding this very strategy.
If your property is in Michigan, there's a group that I used to broker to called United Wholesale Mortgage. They are really good, and can do delayed financing, but I'm not sure if they do Retail. I'm sure you could call them.
Investor · Almont, MI · Member since 2015 · 360 posts · 302 votes
10y
Just keep in mind that delayed financing will only give you a percentage of the purchase price and maybe some of the rehab money...it is not based on the ARV like a loan taken out after the seasoning period (for example 6 months) would be. That doesn't work well for properties that are well below the ARV (such as in Michigan where we are buying properties for $30K that are worth $70-80K and $110K+ at ARV).
Congrats on finding the hotspot of SE MI - I've helped a ton of investors this year acquire rental properties in Redford. Are you looking in 48239 or 48240 zip code? Email me anytime with questions on the market or regarding purchasing.