Getting Creative with SFH Rentals in $30-50k Range

8 Replies

Currently own two SFH that we purchase with cash (and some zero APR credit cards).In the process of getting them both mortgaged (conventional route).

I'd like to hear different methods of financing. I want to have a back up plan should conventional fall through. I also want to have a game plan should all that work but now we have to many for conventional route.

Based on other discussions it seems like a blanket loan will work down the road. Any other options? 

So far I have gone the conventional route on one $100k property, all cash on a sub $30k property, a couple using cash and five year private money loans from family, and one cash and a $15k five year personal loan from Discover.  It was 8.9% but all it took to get was calling them up on a preapproval letter (I get several a month from places) and I figure if I find anything better I will go ahead and pay it off quick.  I have used the 0% 18month card transfers with a 3% fee for improvements and such but don't like them as well.  I am really not that into debt even though it males things proceed faster and I may only get a couple places next year and concentrate on paying everything down.  I haven't decided.

I like the discovery route. Not necessarily as a main source of financing but not bad for rehabbing or purchasing something quickly then flipping it into a more conventional type loan.

I found a private lender for the $30k house which is a FSBO,

but am always looking for the next deal,

I like working with for sale by owner..not as much competition as MLS.

You can always consider financing small amounts using peer to peer lending (P2P).  Sites like Lending Club and Prosper.  I did that with 3 houses.

Credit cards are the best, but you can only get so many cards at one time. I prefer lines of credit for cheaper properties, because:

1. There are no or low closing costs. $3,000 in closing costs is too much for a 20k or 30k property,

2. The interest rates are equal to or lower than fixed-rate financing, generally.

3. You only pay interest on the amounts you are borrowing at the time.

4. There is the risk of interest rates increasing, but this is offset by the lack of closing costs, IMO.

There are a number of banks and credit unions that offer HELOCs on rental properties. Getting a business line of credit is another option.

@Dawn A.  The P2P sounds interesting. Do you find that they are credit score driven? Income driven? or well balanced? Did you get the lower rates or the higher end of rates?

@Wilson Churchill Are you referring to business lines of credit? HELOC? I'm currently looking into getting a HELOC as I have a decent amount of equity in my private home but I dont want to tie it all up.

Do you find getting lines of credit being tough?

Originally posted by @Herschel Kessler :

@Dawn Anastasi The P2P sounds interesting. Do you find that they are credit score driven? Income driven? or well balanced? Did you get the lower rates or the higher end of rates?

 You do need a good credit score in order to get a lower rate.  You need sufficient income such that they believe you will have the ability to repay the loan.

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