Can't get a 30k private loan: on current free and clear SFR

19 Replies

I bought an SFR cash because the comparable sales within a mile were around 70k and the "as is" close now price was 20k. I figured that I could buy it, refi, get my cash back and then refi into a bank loan after 6 months of seasoning. Rents are around 800 a month. Anyone else have similar issues. (property is in St, Louis county, Missouri). If anyone can help my head scratcher on this one... I figured that at least a private lender could do it. And I have come with ZERO answers....

Hey @Michael Zau Was the $70k for rehabbed properties in the area?

Do you plan to do any type of rehab or vale add to the property? 

The bank may be hesitant because they feel the work or money invested would not be enough to obtain that high ARV

@Michael Zau   What's the specific reason a bank can't do it - is it not appraising?  Possibly you might have to wait a year and then order a new appraisal, or keep calling to different banks.

@Tom S.   Loan amount request is too small... I originally only requested 15k and was told it needed to be larger...  I'm now looking into larger priced homes so that I can possibly cross collateralize, put more money down into another home. 

@Blake Edwards I don't care if they fund control , I just want the money for improvements, and acquisition of other properties. 

@Michael Zau   Yes, cross colleralizing is a good strategy.  I've done it before with small local banks, commercial department and they did a $35k one for me against a few other properties.  

most banks or HML wont fool with that low of loan balance.. local banks will for local clients.. but rarely for those that live out of market. too big of risk of failure in those low values assets.. they know the risks. So they redline against investors who are not well known to them..

Originally posted by @Michael Zau :

I bought an SFR cash because the comparable sales within a mile were around 70k and the "as is" close now price was 20k. I figured that I could buy it, refi, get my cash back and then refi into a bank loan after 6 months of seasoning. Rents are around 800 a month. Anyone else have similar issues. (property is in St, Louis county, Missouri). If anyone can help my head scratcher on this one... I figured that at least a private lender could do it. And I have come with ZERO answers....

 A "private" lender is your rich uncle or your buddy from work or someone you met at a networking event. It's their money, they can fund whatever they want...

If what you're really asking about is hard money loans, yup it's hard for a $30k loan to turn a profit that makes it worth the time. 

The good news is that $30k is a range you can toss on a credit card, or a HELOC on your primary residence.

Originally posted by @Jay Hinrichs :

most banks or HML wont fool with that low of loan balance.. local banks will for local clients.. but rarely for those that live out of market. too big of risk of failure in those low values assets.. they know the risks. So they redline against investors who are not well known to them..

 Are you sure redlining is the right word here? :)

Originally posted by @Chris Mason :
Originally posted by @Jay Hinrichs:

most banks or HML wont fool with that low of loan balance.. local banks will for local clients.. but rarely for those that live out of market. too big of risk of failure in those low values assets.. they know the risks. So they redline against investors who are not well known to them..

 Are you sure redlining is the right word here? :)

yup non owner occ redlining.. we all know owner occ redlining is illegal..  but banks can certainly do it on non owner occ. they draw a big red line around areas of foreclosure clusters and wont lend there. LOL 

@Michael Zau    How about just a personal loan for that amount?  Higher rates but it seems like you'll be able to pay it off fairly quickly with the rents.

@Mike Freske   yup.. I hate asking friends for money, but for a potential 1st position at say 12%, it could be win win for at least 6 months

There are certainly lenders out there that will do 25-30k loan minimums on rental properties. They're likely  going to be local smaller banks used to the low price points. Obviously no good for the purchase, but since you already paid cash and I presume will be adding value, it depends what it appraises for. If the price/rent ratio looks good then an assett based lender should be able to do a cash out refi. Sometimes without much seasoning. 

Originally posted by @Michael Zau :

@Mike Freske   yup.. I hate asking friends for money, but for a potential 1st position at say 12%, it could be win win for at least 6 months

 just too small.. so you borrow 20k at 12% for six months investor makes a whopping 1,200 bucks.. hardly worth the effort I think you can see why no one does these.

lenders need to make MINIMUM 3k to 4k per file MINIMUM  junk fee's points etc.. if you don't you cant stay in business.. 

I see lots of refi huds in  my day job.. and I can tell you this for a fact.. 

@Michael Zau

PM me I know a lender in MO that may be able to help. 

I bought a $35K rental in MO last year and they financed it.  I rehabbed it and plan to cash out refi in the summer after the 6 mo seasoning. 

@Michael Zau

@Mike Freske probably meant personal loan or pLOC from institution.

Why not do the rehab then refi only once with a bank for 75% ltv on the 70k. Pending appraisal of course

@Will C. Looking into the refi next week, was thinking private or hard money, I'll have my taxes done so that I can get a bank loan next week. 

Whats your goal

To buy and hold $800 per month pn that price is great up to $80k all in

Or fix and flip

You can do a "white wash"

Just clean it out remove all the crap and carpets etc basically giving next investor a clean slate and buy a little bit bigger property that migjt be easier to lend on

Also look for trust deed investors that take 1st position

Hard money most of the time wants at least $50k

@Will C. Yes, he would have to rehab it first to bring the value up. Then hope it value at $75,000 if he wants to go hard money.

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