Financing Sub $100k loans

Akron, Ohio
Creative Real Estate Financing
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Financing Sub $100k loans

Patrick ZepedaPro Member
Investor · Portland, OR · Member since 2021 · 21 posts · 10 votes

Hi all!

I have been looking at properties (BRRRR and rentals) in Ohio, and want to finance / refinance with a DSCR loan as I ionly want to invest as an LLC. Problem here is, DSCR loans have a minimum loan amount of $100k, and most of these properties are sub $100k with 75% LTV. How do you all finance long term loans for these kind of properties?

Thank you!

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Remington LymanBusiness Member
Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
3y
Quote from @Patrick Zepeda:

Hi all!

I have been looking at properties (BRRRR and rentals) in Ohio, and want to finance / refinance with a DSCR loan as I ionly want to invest as an LLC. Problem here is, DSCR loans have a minimum loan amount of $100k, and most of these properties are sub $100k with 75% LTV. How do you all finance long term loans for these kind of properties?

Thank you!


 I can refer you to some lenders in Ohio that will go lower

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  • Tony Severance
    Lender · Fort Worth, TX · Member since 2022 · 90 posts · 37 votes
    3y

    @Patrick Zepeda Most DSCR lenders have a $100K minimum loan amount. However, some will go down to $75K and others will even go down to $55K. Just find a lender who will fund loans at the levels you need. Let me know if you need more info.

    0Reply
  • Dan GandeeBusiness Member
    Investor · Eugene, OR · Member since 2021 · 93 posts · 117 votes
    3y

    Dealt with this exact problem in your market (where I grew up and started investing) and found a few solutions. Local credit unions we started with and asked them if we would deposit say $50K into their bank account (and let it sit) would they fund a $50K deal on portfolio. That worked some of the times. Next, we reached out to smaller hard money lenders and asked them if any of their clients would be open to first position on our projects or BRRR's. That route seemed more effective. All in all we ended up finding a PML who stayed with us until we moved all of our assets out of Ohio and back to the west coast where we could catch faster appreciation and bigger flip mark ups. DSCR we could only get down to $75K no matter how we sliced it at the time. Good luck!

    [email protected]458-209-0163
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  • Brandon BeardtPro Member
    Lender · La Crescenta, CA · Member since 2021 · 261 posts · 157 votes
    3y
    Quote from @Patrick Zepeda:

    Hi all!

    I have been looking at properties (BRRRR and rentals) in Ohio, and want to finance / refinance with a DSCR loan as I ionly want to invest as an LLC. Problem here is, DSCR loans have a minimum loan amount of $100k, and most of these properties are sub $100k with 75% LTV. How do you all finance long term loans for these kind of properties?

    Thank you!


    Hi Patrick, you just have keep shopping around! You're in the same boat with many investors investing in areas where property values are sub $100K. These lower loan amounts are not as attractive for institutional lenders as there's little profit from it on their end compared to offering higher loan amounts, hence why they have their minimums. On my end, for DSCR, the lowest minimum appraised value I've seen required is $75K.

    [email protected]818-726-2418
    0Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    3y
    Quote from @Patrick Zepeda:

    Hi all!

    I have been looking at properties (BRRRR and rentals) in Ohio, and want to finance / refinance with a DSCR loan as I ionly want to invest as an LLC. Problem here is, DSCR loans have a minimum loan amount of $100k, and most of these properties are sub $100k with 75% LTV. How do you all finance long term loans for these kind of properties?

    Thank you!


     I can refer you to some lenders in Ohio that will go lower

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
    Reafco512 Reviews
    WebsiteView Page
    1Reply
  • Patrick ZepedaPro Member
    OP
    Investor · Portland, OR · Member since 2021 · 21 posts · 10 votes
    3y

    Thank you all! @Tony Severance @Brandon Beardt

    @Dan Gandee I'll send you a message. I'm up in Portland trying to make this happen...

    @Remington Lyman I actually work with one of your co-workers haha JJ?

    2Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    3y
    Quote from @Patrick Zepeda:

    Thank you all! @Tony Severance @Brandon Beardt

    @Dan Gandee I'll send you a message. I'm up in Portland trying to make this happen...

    @Remington Lyman I actually work with one of your co-workers haha JJ?


     Yup!

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
    Reafco512 Reviews
    WebsiteView Page
    0Reply
  • Allan Smith
    Contractor · Nashville, TN · Member since 2014 · 1k+ posts · 1k+ votes
    3y

    Yes you would need to talk to more lenders. But also, you might just have to buy a few with a hard money lender at once, and then refinance and the loan will be a much larger amount

    1Reply
  • Dell J.
    Member since 2010 · 210 posts · 158 votes
    3y

    I have used personal loans to buy cheap properties. Quick and no closing cost.

    1Reply
  • Mike Klarman
    Specialist · NJ · Member since 2022 · 1k+ posts · 653 votes
    3y

    Well, for most lenders the min loan amount is not 100k.  

    For DSCR loans the min as-is value is 100k, the min loan amount is 70k.

    For Bridge loans, most require the initial advance (the portion of the loan dedicated to the acquisition) be at least 50k.  That means at 80% leverage you need a min value of 62,500.  Min loan amount here is not 100k either, it's still 75k.  So if you are getting 50k toward the purchase than you will need 25k in rehab to qualify.

    0Reply
  • Tony Severance
    Lender · Fort Worth, TX · Member since 2022 · 90 posts · 37 votes
    3y

    @Mike Klarman I have seen min DSCR's of 1.2 on loans with a minimum of $75K. What is the min DSCR on the $70K or $75K loans you mentioned above??

    0Reply
  • Mike Klarman
    Specialist · NJ · Member since 2022 · 1k+ posts · 653 votes
    3y

    Min is 1.1

    0Reply
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