So, I have $10k that I'm sitting on. I want to buy a single family to hold for passive income. Rent where I live is about $1000/ month for a basic 2bed 1ba and upwards of $1250/mo for a 3bed 1+ bath. An investment loan requires 25% down which means I could only buy a house for 40k, less if you include closing costs, not to mention the lenders I have spoken with won't do a loan on a house that's worth less than 60k anyways. There aren't any houses here that are in rentable shape or minimal repair shape for that price... So, through a bit of research I found out about Fund n' Grow. I set up a call with them, they told me that if I'd spend 6 out of the 10 I have on paying down my revolving credit accounts and 3.5k on their annual membership fee they could get me a 0% business line of credit with a starting limit between 40k and 50k and then I would have access to even more funds if it went well the first time, evaluating every 3 months. Payback is 1% of remaining balance per month. Also, money back guarantee if they can't get me approved for enough funds the first go-around....
It seems like a good deal to me and would allow me to purchase an investment property that needs minimal work (in the 50-75k range) using an investment loan and still have funds to do the rehab.... What do you guys think? Is there a better option?
Never heard of Fund n' Grow, so I'll reserve comments on them/their process etc.. @Doug Kenney I think it's awesome that you took the plunge, giving it a shot, and writing about it for everyone to read and search.
Dealing with loan amounts under $75K is tough for lenders. Lenders want to limit their loss severity so that they are not in a position of total ruin and it's tough if the loan is even $50K-$60K. That's especially true in judicial foreclosure states where a few months in court can run legal bills alone to $20K-$40K.
I think this where "creative financing" comes into play as well as partnering with others to go after more expensive properties, getting friends/family to pitch in, drawing from a heloc, and perhaps using available credit, like from Fund n' Grow.