Financing Unwarrantable Condo

8 Replies


I own 3 out of 9 units in condo complex (it's a single building complex).  Because that is 33.3% of the units, the complex is no long warrantable according to Fannie Freddie guidelines.  In the past, I was able to get portfolio loans from Credit Unions to finance my purchase of the units. 

There are 2-3 units coming on the market in the near future that I would like to grab as it'll be low overhead and I know the market rents, the building, and am on the board of the HOA.

That said, I am having trouble getting financing.  They'll be around $150k each based on current market prices.  I'm happy getting one or two of them for the time being.  I can't get conventional financing or any more portfolio loans (not a primary residence). 

Any ideas on how to finance? I have a HELOC available with $53k, but not sure what the best approach is to get the other $97k. I'm going to have to think outside the box on this one (maybe credit cards and/or hard money, but those are all very expensive). With decent financing, these will be cash flow positive. I appreciate any feedback/thoughts you can offer.

Funding Strategies (some brainstorming)

  • Down Payments/Cash
    • Self
      • Cash from checking/savings
      • 401k withdrawal
      • Sell property
      • Sell car
      • Credit card advances
    • Banks
      • Personal Loan from
      • HELOC on existing property
      • Home Equity Loan on existing property
      • Refinance existing property
    • Other
      • Hard money lender
      • Personal loan(s)
      • Investors
        • Legal ramifications?

  • Mortgages
    • Bank
      • Conventional mortgage
      • 203k FHA mortgage
      • Investment mortgage (20% down)
    • Credit Union
      • Conventional mortgage
      • 203k FHA mortgage
      • Investment mortgage (20% down)
      • Portfolio loan
    • Other
      • Take mortgage on directly from seller

Welcome to BP John C. 

Is this a long term buy and hold strategy for these units?  You will not be able to count on appreciation with these lending limitations, as the only potential buyers are other investors, who will buy based on cash flow.

I have had success with these types of condo deals using a local savings bank commercial loan officer.  I recommend writing out your business plan which highlights your experience, and ongoing investment roadmap.  Once you establish a local lender, you will be able to purchase deals that larger banks will not touch.

Hi Brian,

Just want to drop a quick note to thank you.  I setup a meeting with a local lender and presented my business plan/numbers.  They agreed to lend on non-warrantable condos based on my cashflow and assets.  This will be a great resource going forward!

Just a thought but if you ever decide to sell you can do so with owner financing.  Nice way to cash flow the units, while freeing yourself from issues with tenants.   It also has the added benefit of being able to get top dollar for a sale without having to jump through any hoops.  Once you sell enough of the units the development will pass owner occupancy guidelines again.

@Mike L. I ended up selling and 1031 exchanging those condos.  Blanket loans can be hairy bc the units are cross collateralized.  One of them was successfully cash out refinanced to facilitate another deal, but the loan terms were not favorable and that was in a better lending environment.  Non owner investments are tough right now bc the clamp down on those guidelines by Fannie/Freddie (they view these investments as risky).  Best shot would be to try Cash Call, independent mortgage broker, local credit union, or private money.