Hard money lender

[Wade Barnes]

My son wants to buy his first rental, and he's considering a DSCR loan because he's still in school and can't show much income to get a traditional loan. He needs a 20% down payment, and money for repairs, maybe another $10k for repairs.

What suggestions does the forum have for him.  The Property Purchase price is 30k.  The income/rent amount should be about $650/mo. 

I told him to figure out "how he might Be able to afford it".  Let's leverage the power of all the experienced in there! What's the best way for a young investor to get this deal and not go broke?

[Jay Hinrichs]

Quote from @Erik Estrada:

Quote from @Wade Barnes:

My son wants to buy his first rental, and he's considering a DSCR loan because he's still in school and can't show much income to get a traditional loan. He needs a 20% down payment, and money for repairs, maybe another $10k for repairs.

What suggestions does the forum have for him.  The Property Purchase price is 30k.  The income/rent amount should be about $650/mo. 

I told him to figure out "how he might Be able to afford it".  Let's leverage the power of all the experienced in there! What's the best way for a young investor to get this deal and not go broke?

$30k is tough to finance on a DSCR loan unless you are going with a local bank that offers this.

The lowest I have seen is a minimum purchase price of $75k and minimum loan amount of $50k. He will need 20% down + 6 months reserves + closing costs + 1% liquidity buffer. 

I think if he is finding deals like this, he is better off flipping the contract to a cash buyer and continue to save to buy one in cash or a larger, easier to finance property.  

I am a big proponent of paying cash for low value properties.. generally speaking rents are lower and there is not enough gross rent to cover cap ex over time when U put max debt on them.. Free and clear is the way to go in my mind.