Cash Out Refi on Midwest Investment Props (<50K)

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Cash Out Refi on Midwest Investment Props (<50K)

Rob LaRovere
Rental Property Investor · Tampa, FL · Member since 2015 · 61 posts · 37 votes

Hey BP!

I recently purchased a SFR in Indy with the intention of reselling it; however, I like the pocket it's located in so I am considering making it a personal rental instead.

1. Do you know of any companies that will refi on homes worth <50k? I purchased the home for ~20k, it's value is closer to 40-45k, and it will rent for 700-725/mo.

2. Are there any companies that don't won't require seasoning since I have 100% equity? Is my equity really relevant in this?

3. Do you have any other suggestions that I should consider?

I reached out to Lima One, but it looks like the minimum they lend is 50k. In order to break through the 50k threshold, there is a second house that I am reselling that I am considering keeping instead. The numbers are similar to the property above, therefore I believe it will qualify for Lima One's portfolio loan assuming I meet any season requirements.

Thanks in advance and Happy Holidays!

-Rob

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y

Lenders are out there that do less than 50k  .. however if you just paid 20k your going to be hard pressed to say its worth 50k and take out more than you put in.. you need to own it for a time and probably show some improvements.. cash out refi above basis is very very risky in these low end high risk rental Niche's and lenders know it.

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  • Brent Coombs
    Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
    8y

    @Rob LaRovere, keeping both at this time makes sense to me. First, I suggest: make sure they're both rented! (Once you get the loan, you're still at liberty to sell thereafter, right? If they then call in the loan - so what? It would be very petty of them to call in the whole loan if for example, you later sell just one of the properties. It might pay to establish rapport with Loan Officer/s).

    I've heard tell of Lenders who will give less than $50k investment mortgages. Sorry, I don't know which ones, but it might be worth a closer look? Yes, happy holidays!...

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    Lenders are out there that do less than 50k  .. however if you just paid 20k your going to be hard pressed to say its worth 50k and take out more than you put in.. you need to own it for a time and probably show some improvements.. cash out refi above basis is very very risky in these low end high risk rental Niche's and lenders know it.

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    2Reply
  • Anthony Walker
    Investor · Terre Haute, IN · Member since 2017 · 4 posts · 2 votes
    8y
    Check with a local Fifth 3rd bank. They gave me a loan on a rental I financed with them for 38k.
    1Reply
  • Rob LaRovere
    OP
    Rental Property Investor · Tampa, FL · Member since 2015 · 61 posts · 37 votes
    8y
    Originally posted by @Anthony Walker:

    Check with a local Fifth 3rd bank. They gave me a loan on a rental I financed with them for 38k.

     Thanks for the pointer, I will reach out to them!  

    0Reply
  • Rob LaRovere
    OP
    Rental Property Investor · Tampa, FL · Member since 2015 · 61 posts · 37 votes
    8y
    Originally posted by @Jay Hinrichs:

    Lenders are out there that do less than 50k  .. however if you just paid 20k your going to be hard pressed to say its worth 50k and take out more than you put in.. you need to own it for a time and probably show some improvements.. cash out refi above basis is very very risky in these low end high risk rental Niche's and lenders know it.

    Do you have any suggestions on lenders that do less that 50k that aren't hard money? 

    I appreciate the feedback and you bring up a good points.  I am thinking that if I can pull out 25k per property, which would still be below market value, and rent them for 700/mo I would consider that a win.  I would be protected since it would be below market value, I would get a few extra $ to do some minor upgrades (none of the majors need attention), and I would have the opportunity to grow my personal portfolio. What are your thoughts on that for a refi?  Thanks!

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  • Rob LaRovere
    OP
    Rental Property Investor · Tampa, FL · Member since 2015 · 61 posts · 37 votes
    8y
    Originally posted by @Brent Coombs:

    @Rob LaRovere, keeping both at this time makes sense to me. First, I suggest: make sure they're both rented! (Once you get the loan, you're still at liberty to sell thereafter, right? If they then call in the loan - so what? It would be very petty of them to call in the whole loan if for example, you later sell just one of the properties. It might pay to establish rapport with Loan Officer/s).

    I've heard tell of Lenders who will give less than $50k investment mortgages. Sorry, I don't know which ones, but it might be worth a closer look? Yes, happy holidays!...

     Thanks Brent!

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    my thoughts are local commercial banks.. or credit unions.  just don't be shocked if they want to see the hud and if you just bought them they will only do a % of what you paid for them.. once you own them a year things get smoother I am thinking

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  • Rob LaRovere
    OP
    Rental Property Investor · Tampa, FL · Member since 2015 · 61 posts · 37 votes
    8y
    Originally posted by @Jay Hinrichs:

    my thoughts are local commercial banks.. or credit unions.  just don't be shocked if they want to see the hud and if you just bought them they will only do a % of what you paid for them.. once you own them a year things get smoother I am thinking

     Ok, sounds good.  Thanks.  

    Btw, the Real Dealz episode with Tucker M. sounded good and congrats on your new spot in Vegas.  What made you choose LV instead of Reno?

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    @Rob LaRovere  thanks..  Family in Vegas.. and Reno is well Reno... I like Tahoe area fine and actually will be buying a summer cabin up in the Greaeagle area which is 1 hour north and west in the Seirra Nevada mtns.. spend my summers there.

    plus no income tax in NV  Oregon is 2nd or 3rd highest in the country.. and now that you cant right it off .. for me personally what I save in income tax will more than pay for 2 homes one in Vegas and one in CA.. I no longer need to pay Oregon state income tax and get no write off for it..

    so its income tax  family and tired of the northwest winters.. perpetual grey and rain for 8 months of the year  LOL... well not rain drizzle really.  it was a great place and I will still do bizz here though.. we have some big subdivisions on the burners but I can manage those from afar.

    I really like your area fountain square and Bates... if I was buying cash flow rentals in the US that's where I would be buying them.. I funded about 50 of them last year in those hoods.. its strong there.

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  • Rob LaRovere
    OP
    Rental Property Investor · Tampa, FL · Member since 2015 · 61 posts · 37 votes
    8y
    Originally posted by @Jay Hinrichs:

    @Rob LaRovere  thanks..  Family in Vegas.. and Reno is well Reno... I like Tahoe area fine and actually will be buying a summer cabin up in the Greaeagle area which is 1 hour north and west in the Seirra Nevada mtns.. spend my summers there.

    plus no income tax in NV  Oregon is 2nd or 3rd highest in the country.. and now that you cant right it off .. for me personally what I save in income tax will more than pay for 2 homes one in Vegas and one in CA.. I no longer need to pay Oregon state income tax and get no write off for it..

    so its income tax  family and tired of the northwest winters.. perpetual grey and rain for 8 months of the year  LOL... well not rain drizzle really.  it was a great place and I will still do bizz here though.. we have some big subdivisions on the burners but I can manage those from afar.

    I really like your area fountain square and Bates... if I was buying cash flow rentals in the US that's where I would be buying them.. I funded about 50 of them last year in those hoods.. its strong there.

    Thanks for saying that, and I agree.  Those are some hot areas here in Indy!  I also really like Garfield Park area.  If you're ever in the area, I would love to treat you to a meal.

    Graeagle is beautiful, awesome choice.  I actually grew up in Reno and went to college at the University of Nevada, Reno.  Now, when I visit family, I am amazed at the changes and the dramatic increase in home values.  With Tesla and other companies jumping over the mountain to Northern Nevada, it's done wonders for the city and I hope to see it continue.  Just yesterday I actually saw a fundraiser for a new tiny home development to help the homeless.  Pretty cool.  

    That's great, all those reasons make sense... Not having state income tax is definitely a big plus. I hope you love it!

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