Having an issue that I'm hoping someone has an answer to, as I've been unsuccessful thus far in finding the answer myself. I have a goal of turning several of the vacant, dilapidated properties in my neighborhood. Most of them are two bedroom homes- that when fixed up- will appraise in the high $80ks, ones with more square footage in the low $90ks. I have private money in place, but I can't find lenders that will refinance/lend at those lower price points for one individual property. 

One deal I have in place is the seller (who lives 2 hours away) owes $9k on the original lien, but the home needs $23k in work. I have a private money lender who will pay off the existing loan plus provide the funds for the renovation. We want to then refinance, but not pull all the cash that we could and have a note for $50k to maximize the cashflow, as we would be doing a 50/50 split of the profits. Does anyone know a lender who will work with us on this for a relatively normal interest rate?

"Does anyone know a lender who will work with us on this for a relatively normal interest rate?"

Nope, but I know how to find them.

• Look at turnkey retail listings going for ballpark your target refinance loan amount.
• Call listing agent.
• "Hi Agent Sally, my name is Daniel. I don't have an agent. I was at your open house for 123 Main St last weekend and am very interested in the house, but my lender says they will not do loan amounts that small. Is there someone you could refer me to, so I can get preapproved with them and write an offer?"

Good agent with wonky property will already have done the research to find someone that can lend on it. Any lender doing $40k purchase mortgages will generally also be willing to go for a $40k rate/term refi.

@Daniel Harnsberger   Are you looking for a private lender for the refinance or a bank?  A bank is going to give you whatever the market interest rate is, unless you pay a bunch of points and junk fees to drive it down.

Have you tried your smaller local credit unions?  In my area, $50k is usually the cutoff point, but I have a couple lender friends who will do me a favor and write a $30k deal, knowing that they're going to get tons of return business from me.

@Chris Mason and @Michael Ablan - thank you so much for the feedback. I think I've found our lender now. Much appreciate.