Lowest you've seen lender finance

8 Replies

In the last 5 years what is the lowest amount you've seen a bank, portfolio lender, or Hard money lender finance on a single family. I'm not asking about actual companies or institutions, not just an individual. This more a curiosity question for me, but I am sure others will find the thread helpful.

There are a fair amount of injuries on BP about sub 50k financing. I am curious as to how many lenders out there are actually in that market. 

@Caleb Jordan

Usually loans under $50,000 property has higher risk. However, if the LTV ratio is reasonable say 50%; then short term loan for 1 to 3 years would be reasonable for risk vs. reward

Sometimes, the property has higher value like $75,000 but investors ran out of their person funds and need funds like $20,000 to complete the renovation.

I have a house that I refied as a single family recently, I paid 36k for it, it appraised for 41k, and they gave me 75% LTV @ 5.375% fixed for 30yr.
Originally posted by @Saravanan Saravanan :

@Caleb Jordan

Usually loans under $50,000 property has higher risk. However, if the LTV ratio is reasonable say 50%; then short term loan for 1 to 3 years would be reasonable for risk vs. reward

Sometimes, the property has higher value like $75,000 but investors ran out of their person funds and need funds like $20,000 to complete the renovation.

Thank you for the insight. In your experience, are there any particular types of lenders that are more likely to take on these types of loans.

Originally posted by @John Boychuk :
I have a house that I refied as a single family recently, I paid 36k for it, it appraised for 41k, and they gave me 75% LTV @ 5.375% fixed for 30yr.

 Wow! That is a very low loan. Was this a local bank, credit union, national lender ? Did they charge points or flat fee for orgination?

@Caleb Jordan  

These are some of the loans we funded in house.  

Some already paid off in full.  

Some are 3 to 5 fully amortized loan; payments in progress.

@Caleb Jordan in general, these lower loan amounts are handled by smaller lenders.  PM me and I can make a suggestion here locally.  Thanks!

Originally posted by @Caleb Jordan :
Originally posted by @John Boychuk:
I have a house that I refied as a single family recently, I paid 36k for it, it appraised for 41k, and they gave me 75% LTV @ 5.375% fixed for 30yr.

 Wow! That is a very low loan. Was this a local bank, credit union, national lender ? Did they charge points or flat fee for orgination?

 Actually PrimeLending. I chose to pay a few points to bring down the rate, it would have been closer to 6% without doing so

As a lender we lend on sub 50k deals only if they are value added (rehabs). Sub 50k turnkey properties are too risky from a lender standpoint. Lets use 50k purchase as an example, if you put 25% down thats only 12.5k skin in the deal. If you stop paying in month 2 (lets say this is a NJ property) and I have to foreclose, I'm looking at 3-6 years to get the property back, by the time I get it back i have 36-72 months of unpaid interest, foreclosure and attorney costs. I take a beating on that deal. Risk reward for smaller properties is just not there. At least from my view. We have no issue with short term loans on the smaller properties if they are value added (25k purchase 25k repairs for example) 

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