Hello BP, my name is Phil, I'm new to the world of Real Estate investing. I have been doing a lot of reading about the industry, listening to podcasts and just really soaking up all info I can.
I'm interested in doing some rehabs or new builds in "low income" areas. Wondering what, if any, is the minimum amount most lenders will write a mortgage for. I.E., if I were to rehab a home and put it on the market for 60, 70, or 80,000 would a "qualified" buyer have a problem getting a mortgage loan for that amount??
We once got a mortgage for $39,000. That being said, many lenders might shy away from smaller loans (I know some national lenders such as B2R have a minimum of $50,000). But that doesn't mean they're not out there. I would think at the $60-80,000 mark, there should be enough lenders for a borrower to be able to find a lender if they are qualified. Just remember, at that price point, most of the buyers are investors.
The $50k minimum comes from loan programs by Fannie, Freddie, Ginnie. Local banks and credit unions or a lender who holds their own loans may have lower limits as stated. In Texas there are folks who have gotten loans as low as $35k.
As stated, at the sale prices you are talking about you are probably not facing a barrier to financing. If a borrower needed to use a $50k min loan, they could limit the down payment, take the loan and simply prepay post close. It sounds dumb, I know but that is what they could do or they could use the extra money for something else.
@AndrewSyrios thank you for your response. Been a long time since I’ve been back on BiggerPockets. Been working and raising a family.
With that being said I don’t have a lot of cash to get started. My plan is to keep my credit score moving upward toward a point where I’ll be able to get a line of credit from my credit union. 100, maybe $150,000 to start. Where do you think my score needs to be in order to get a line of credit in this range?
Also, do you see this as a good way to get started flipping in low to mid income areas. I have certain areas in mind to get started in and would like to cater to the demographics of those areas.