10% down on investment property?

10 Replies

This is probably a scenario best addressed with some combination of your credit cards, HELOC, private money from folks you've networked with, other stuff like that. A HML doing a loan that small @ 90% LTV would charge fees through the roof, if they did it at all.

Originally posted by @Chris Mason:

This is probably a scenario best addressed with some combination of your credit cards, HELOC, private money from folks you've networked with, other stuff like that. A HML doing a loan that small @ 90% LTV would charge fees through the roof, if they did it at all.

Just to expound on that a bit. You're in Los Angeles, OP. You shouldn't have to look very far to find someone with an untapped $100k+ HELOC. Hell, I have one (but I don't do non-institutional financing as it could screw with my "day job" that I'm licensed to do, so don't hit me up :P ). Some homeowner in your area took out the HELOC, did the home improvements, paid it off, and now just has the HELOC sitting there unused. Meanwhile, that homeowner is google searching "how to increase my passive income." You've just got to convince them to draw on it at 6% (or w/e), lend to you at 12%, and collect that 6% profit margin as passive income that costs them nothing out of pocket. This will likely be your best bet to avoid the crazy fees a HML would charge on a loan this small.

Originally posted by @Chris Mason :

This is probably a scenario best addressed with some combination of your credit cards, HELOC, private money from folks you've networked with, other stuff like that. A HML doing a loan that small @ 90% LTV would charge fees through the roof, if they did it at all.

Mission impossible  and probably a very poor investment to boot.. buying that low end of property from afar .. make zero sense financially. risk far out weigh the rewards.. unless your stealing it.. IE its really worth 90k and you can flip it in 6 months.. but for rental. be careful lot of pic's are broken in that dirt. 

 

@Chris Mason Appreciate the advice, Chris. I'm pretty new to this, so those options hadn't occurred to me. So far, the best I've been able to find for an investment property is 85% LTV.

As for the credit option, I was told I couldn't use a credit card for any part of the financing (unless I withdrew cash, put in personal account and waited two months for seasoning - but the interest rate / fees for withdrawing cash from my cc would be pretty high if I did that). Is there another way to make this option work better?

How would I go about finding someone with a HELOC? Is there some sort of list or other resource...or would I just find someone (not you! :-) ) through networking?

I am also looking for property with seller financing available as well.

Thanks again for your valuable input!

@Brianna M. Have you been out to Memphis yet to check out the areas? A property at that price point (unless like Jay said, you're getting an extremely good deal you can flip) is going to be in a pretty rough area. I know everyone's investment goals are different, but I personally try to stay in the $80-120K range in Memphis as these areas tend to be decent working class neighborhoods. You also may have trouble getting conventional financing for 10% down. I'd look for owner or private financing, or get a HELOC if that's an option.

@Danielle Wolter Thanks for the reply, Danielle!Very helpful to hear a specific price range.

It’s been a few years since I’ve visited Memphis to see family. I’m due for a trip. Not super familiar with the good vs bad vs decent areas, outside of the research I’ve done on BP and other online sources.

What zips/neighborhoods have you (or others you've heard of) had success with for buy and hold property?

@Brianna M. I'm currently buying a property in Colonial Acres (38117) but also really like certain parts of Raleigh, Whitehaven, Bartlett (if I can find a good deal), parts of east Memphis, the University area, just to name a few. I try to stay in areas where rents are typically above $800 for a 3/1 or 3/2. 

Hey @Brianna M. , @Danielle Wolter is spot on about Memphis. Those lower priced areas tend to be bad areas where the returns are rarely ever realized. Stick to properties that rent for a minimum of $800 and you will be in the better areas as a general rule. As far as financing goes, most banks will require 20% down and private lenders and or hard money lenders are definitely more flexible on down payment requirements but rates and terms will be less favorable (especially hard money). It is key to network and build relationships with those private money individuals, start with your immediate network of people. Like @Chris Mason mentioned a lot of people have untapped resources in the form of IRA's and HELOCS and just need someone with the knowledge to teach them how!