How to finance a rental, they want all cash

5 Replies

Hi guys, I’m having a dilemma, I found what I think it’s a good property in an up and coming area of New York. Property is pretty run Dow. It probably has fines and violations to settle with the city, but I believe it’s a good deal due to the area being renovated. I want to keep it as a rental property but they want all cash AS-IS, I have been Pre-approved for a mortgage a few months back but my credit has declined due to school and a new car. I’m sure I can get still get a mortgage on it but how would I go about buying cash. I was thinking of using a hard money lender, any ideas would be helpful thank you

Most hard money lenders I know are charging 2 points, and 10% interest. They usually want you to put some skin in the game, so you might have to put down 10-30% down payment, depending on the deal and your experience. I invest in the NYC area where land values can easily exceed the physical house value, so run down doesn't mean too much. But you should be very weary of NYC's DOB and ECB violations, they can be a headache to deal with.

@Carlos Araujo : I don't know which part of NY you're investing in, but standard downstate contracts allow for financing even if the deal is not contingent on financing.  Of course, you better be sure that you're getting that mortgage otherwise you are at risk to lose your deposit if financing falls through.  Good luck!

@Randi Plevy Hi I’m looking to invest in Staten Island or in New Jersey. I found what I think it’s a good deal. I’m still running the numbers, but it would be a great rental income for the price. I’m still not sure if I should go after hard money or try to see if they are willing to do a mortgage on it.

@Carlos Araujo

If you need any help running some numbers let me know.  I've been looking in NJ myself and have a decent model setup.  The hard part about where I am looking is the carrying costs (i.e. taxes & insurance).  That makes it hard to cash flow right away and real well. 

@Carlos Araujo Not sure exactly where you are looking but I’m out of queens and we do run into the same issues you state here. I do have some connections as far as getting around the violations but worst case scenario you can do the hard money and cure the violations from proceeds of the hard money loan and refinance within 12 months. Hope this helps!