Low Mortgage Financing (Under 35k)

12 Replies

Hey BP'ers!

So this is my first "real" post...and that's because i'm working on my first deal! I'm super excited. However I hit a bump. I'm having issues finding a bank that will let me finance my deal. I have 20% to put down but not enough to purchase outright. 

So which path do I travel down? 

-Find a more expensive deal

-Take out 20k more for repairs (Houses only sell for 55k max in that area) 

- Keep trying banks (Does anyone know of any that would finance?)

- Wait and save more money to make a better deal? 

I don't know of a bank that will finance 35k long term. Not saying they are not out there, but I just haven't heard of a bank doing it. 

I think you are better off getting a line of credit instead. 

If you have a good deal, no reason to pass up on it just bc you can't get the financing you thought you could get. There are thousands of ways to go about this business. 

@Phillip Tomasso You want a line of credit .the interest rate will be around 10% though but you get one great benefit . If you pay with cash using an unsecured credit line you get the deed free and clear wIthout any strIngs attached and can borrow against to do a refi after the property Is seasoned

@Dennis M. Alright so 10% interest but it wont have as many boundaries as a mortgage? How hard is it to get a line of credit like that? Should I open it through my LLC? ...Just so I have it clear - This would be similar to paying for the house in cash I would own it outright? Is there a negative tax benefit to it? Or is it better to write off 10% of interest vs 5%?

Talk to your small local community banks and find out what they offer for business and personal lines of credit . If you buy the property with all cash then yeah you have 100% equity and are in a good position . You can always refinance after a year and use the cheap refi loan money to pay off the high interest line of credit . I've bought a multifamily on lines of credit and have the deed free and clear .. just waiting to brrr it in 8 months and use the refi loan money to buy another multi free and clear

@Phillip Tomasso Like Dennis mentioned above, local credit unions / banks might work. Also other options like a HELOC on your primary home or rental properties. Or even a cross collateral / blanket loan across multiple properties with small amount of equity in each. I did that once with three rentals, for a $50k loan.

Good luck!

- Tom

@Tom S. I appreciate it....This will be my first deal though...and I'm not sure I feel comfortable borrowing against my home.I have a few local banks to call still so fingers crossed. Also the Business line of credit sounded promising.  

Hi @Phillip Tomasso

What's it's end value?

If it is going to be worth 70-80K all done, then take a personal loan out. Buy it cash (at bargain basement prices). Fix it up to standards acceptable to get a loan and then put the mortgage on it. That way you only have the high interest loan for a short period while you get it ready.

If it is going to be less than 50K all done, I don;t know a whole lot of mortgage people that do it. I know a guy that MAY be able to swing a 40K ish one. Also try Lyons Credit Union, they are the only one that does Mobile Homes that I know of so they may have a program that low.

Good Luck!

@Mike Cumbie That could be a great lead for me!! Ill give them a call tomorrow! Also sent you a "Friend Request" it's good to see someone else local! 

The purchase price is going to be 29k but needs between 2-3k in repairs so figured 35k to be safe. Its on Austin st off of Lyell....So not a lot of hope of that nbrhood turning around - Even when projecting 30 years from now. 

@Phillip Tomasso - I agree with Dennis and the line of credit. Being that you are a new investor, it may be challenging for you to get a business line of credit since you have no LLC history. Getting a personal line of credit should be fairly simple at any bank. If you have excellent credit and show high income from your day job, you should have no problem getting it within 2-3 weeks. I would suggest putting in applications to several banks at the same time, this could affect your credit score by a small margin due to the hard inquiries, but you should be able to get approved for all of them at the same time. So if you apply to 3 separate banks at the same time for $20k per bank, you could get approved for a total of $60k. It's better to have more credit available in case you need to make repairs after the purchase.