Investor · Chattanooga, TN · Member since 2015 · 82 posts · 25 votes
I've got a house under contract for under 100k and just found out that i can't get a conventional loan under that, so i'd have to use a FHA loan. I was planning on fixing the house up with my own money and then renting it, but i really don't want to be stuck living there for 2 years with FHA.. If i were to find a portfolio lender would they be able to help in this situation? My other idea was to try for the Homestyle loan at 100k to qualify for conventional financing and have the money to repair, but i dont know how easy that process is. Please message me or comment with any helpful information, as this is my first purchase, so i'm new to this all.
Rental Property Investor · Lindon, UT · Member since 2015 · 862 posts · 438 votes
10y
You'll need a conventional alternative as hard money lenders will not lend on an owner occupied property. Some bank lenders will do smaller loan sizes under $50k, but not may.
Jacksonville, FL · Member since 2015 · 280 posts · 53 votes
10y
Yes, a hard money lender may be what you need here but this is a more expensive alternative. Because of the cost, HM is better for short term financing (let's say 6 months).
Some have longer repayment terms. No prepayment penalty is something you need to make sure of.
Now, remember that most HML do 65/70% of ARV. So, if you're paying $90k, your ARV needs to be $140k or better.
May I ask the reason why you can't get a Conventional loan? If it's due to "loan size" I can help as we do smaller loans than most banks/lenders out there. If the property needs a lot of work you may want to investigate a Conventional Renovation loan but if it's in good shape we may be able to help.
Investor · Alpharetta, GA · Member since 2015 · 241 posts · 185 votes
10y
You could try and contact lenders that are not quite HM - but not a bank with strict lending rules. For example- I have contacted Colony American Finance (from their ads I see on my Facebook pages). Turns out - they lend either 70% ARV and you provide the repair costs or 80% of total costs ( no ARV calculated I believe). They mentioned to me they charge 2 points, and 9.95% interest - but prefer longer term financing. Maybe they can work something out with you. The other ad I see these days is Flip For Funding. Don't know much about them, other than their marketing of unsecured financing and I have left a message with them twice to call me ( they keep sending me e-mails instead - which makes me a bit suspicious of their operation). Either way- it's worth a few phone calls. I would use hard money as an extreme last resort - due to their 4-5 points and 15%+ interest.
Rental Property Investor · Lindon, UT · Member since 2015 · 862 posts · 438 votes
10y
You'll need a conventional alternative as hard money lenders will not lend on an owner occupied property. Some bank lenders will do smaller loan sizes under $50k, but not may.
Investor · Atlanta, GA · Member since 2014 · 389 posts · 250 votes
10y
Look for a branch of Movement Mortgage -- they're expanding rapidly in Atlanta and do all kinds of mortgages, including some that they fund in-house.
The kicker with the lower purchase prices is that the loan amount to closing cost ratio is too high (or the other way around, whichever), and that's become illegal (a response to the predatory lending practices before the crash). If you end up needing to borrow less than $50k (after putting in your downpayment percentage), and the closing costs are around $3.5-$4k, you're getting close to 10% and that's too high. The part of the closing costs that goes to the lender is really where they make the money, so they won't/can't lower that.
Property Manager · Cumming, GA · Member since 2015 · 261 posts · 199 votes
10y
I recently refinanced a place through Fidelity Bank out of Gwinnett. Jeff Zuloff(spelling?) was the mortgage person and mentioned he could do smaller loans during our conversations. He said down to 40k.
Investor · Atlanta, GA · Member since 2014 · 389 posts · 250 votes
10y
@Troy Durrette -- I am in process of a "cash-out" refi with Movement Mortgage, and checked them out before moving forward. There's a positive profile on Bloomberg, and other positive info. The guy I'm working with was hired away from Wells Fargo. I haven't really seen much negative info at all.
Investor · Chattanooga, TN · Member since 2015 · 82 posts · 25 votes
10y
I've contacted a few other lenders in the past 24 hours and have come to the conclusion that the person who told me you can't get conventional under 100k probably said that because he thought it would be a waste of time for him, because a few other lenders said they can do it.
Investor · Ball Ground, GA · Member since 2014 · 55 posts · 16 votes
10y
Most conventional lenders won't do loans under $100k because it's not worth their time.
We refinanced our rental ($55k loan) a few months back and the (now previous) mortgage company wouldn't even entertain the idea. I spoke with a buddy of mine who is a mortgage broker and he said what I stated above. He ended up doing the refi for us because we had just purchased our new home through him back in April and he knows I'll be sending more deals his way in the future.
Lender · Central Point, OR · Member since 2015 · 11 posts · 5 votes
10y
It's not true at all that big banks won't do loans under $100k. I do them all the time, one recently for less than $60k. You just need to find an originator who values the relationship and doesn't judge you based on the deal.
Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
10y
I looked up national lenders b2r, colony, Visio, for 75ltv 30 yr amortization. The terms and rates differ but it's not that great with 6.5 percent for a few points.