$100,000 unsecured personal loan with SoFi

62 Replies

Originally posted by @Jay Hinrichs :
Originally posted by @Cara Lonsdale:

SOFI is one of many of these types of unsecured loans.  Prosper is another one.  LendingTree, Lending Club.....the list goes on. 

It's a way of accessing money compared to a hard money lender, but I am not exactly sure why everyone is so excited about it.  11.25% isn't exactly something to jump up and down about.

 well the fact that it cant LEGALLY be used for real estate seems like a moot point  LOL.. but as stated people will violate that every day and twice on Sunday not thinking any thing of it..

and it gives the limited cash high Fico borrower access to cash that helps them with their projects.. just like the guys who go out there and charge you 5k to get you a bunch of zero interest credit cards.. and the CC know that many will not pay them off then they will go to the 20% rate and they have these folks hooked for life in perpetual CC debt.. LOL.

I personally have bank unsecured LOC's of significant amounts but they are in the 5 to 6% range and are renewed annually with one point.. but they are not based on Fico they are based on tax returns.. solid earning good balance sheet and experience. so this sofi thing sounds like you need no experience no balance sheet no tax returns and just a good fico.. so you can see the appeal.

And if you a small player doing a flip at a time I can see it  although your violating the stip..

 I don't know anything about them being illegal to purchase real estate.  They provide for a "big purchase" category, so I am not sure why they wouldn't allow for RE since there is more value to that then buying, say a car or a boat with it.

Like you stated, money and credit are king when it comes to finance.  If you have good credit, you can get just about anything, so that is why I stated my surprise at people with high credit FICOs who entertain these 11+% interest rate offers when there are lower offers out there for them to trade their good credit for.  

What's that old saying...The bank will lend you the money as soon as you show them you don't need it.

@Cara Lonsdale   you did not read @Darrin Carey   post  these loans Specifically state the proceeds CANNOT BE USED for real estate investing or buying securities..

so to do so is to violate the loan terms... (Stip)  and by doing that you put your self in jepordy  of a bad day on the legal front if you can't pay or are caught.. now frankly don't know how you would get caught other than non pay.

I suspect the lenders feel to invest in securities and real estate is too risky.. And for some using the money for a flip and the flip flops like we know they can.. I can see that.

Originally posted by @Jay Hinrichs :

@Cara Lonsdale  you did not read @Darrin Carey   post  these loans Specifically state the proceeds CANNOT BE USED for real estate investing or buying securities..

so to do so is to violate the loan terms... (Stip)  and by doing that you put your self in jepordy  of a bad day on the legal front if you can't pay or are caught.. now frankly don't know how you would get caught other than non pay.

I suspect the lenders feel to invest in securities and real estate is too risky.. And for some using the money for a flip and the flip flops like we know they can.. I can see that.

 Jay, with all due respect (and there is alot there) your earlier post stated that you didn't even know who SOFI was...and now you are speaking to STIPs?

As @Tom Grimer pointed out, SOFI advertises to students as a refi for their student loans.  So, while I agree that if the STIPS or disclosures state that no funds should be used for RE investing, then any use beyond that is illegal, what I was saying is that I don't know anything about specific stips preventing a purchase.  In other words, I couldn't speak to that since I didn't know anything about it.  However, I suggested doubt because I know that many of these lenders advertise to students, so the prevention of using it for student loan purposes didn't make sense to me.

I think you may have just misunderstood what I was trying to say.

I have used a SoFi personal loan before ($50K, no points, 6% interest, 5 year term). You have to certify that you will not use the money for real estate if I recall correctly. I did not use the funding directly to pay for a property or rehab but it did help "facilitate" the ability to safely and successfully perform a BRRR. I paid the loan off with my refinance proceeds.

The thing I like about them is no origination fees and low rates. My understanding is they tend to deal with high credit scores, professional and high wage earners. I heard one of the Exces speak about this in a Podcast. 

Yeah, this may be like the "due on sale" clause with a subject-to...  I doubt they care at all as long as you make the payments, but it is in the terms, so there is at least some risk of an issue if you violate them.

What gets me is that they are just fine letting you use the money for frivolous expenditures and non-assets that are guaranteed to not turn a profit. What's the difference between investing in a stock that goes to zero, or a flip that looses every dollar (both unlikely) vs. someone spending all of the money on day one buying a boat... it may be that they don't want to play the game of setting up all these 7-yr loans and having them paid in full in a couple months... over and over. 

@Seth Hoehn   good point on early payoffs for all we know they get their capital from insurance companies and have stiff defeasance clauses. 

I work at SoFi and what @Daren H. said is accurate! However, there may have been a change in our terms because at the time of posting this, if you go straight to our FAQ section and click on Personal Loans, this is what it says.

What can I use a SoFi Personal Loan for?

You can use a SoFi Personal Loan for any personal, family, or household purpose. Unlike SoFi student loans, this loan is not intended to pay for post-secondary educational expenses. The one thing I know fore sure you can't use the Personal Loan for is paying off Student Loans.

I've recently discovered personal loans too and found myself surprised they aren't talked about on here more.  It is definitely expensive money but seems like a great way to start out with limited cash but excellent credit.  

One thing to know about Sofi if you are starting out is their underwriting will auto reject if you have less than four trade lines on your credit history.   That was my case, 750+ credit but only two cards and a credit builder loan on my history so I was locked out.  For comparison, Lending Club approved me for up to $36,000 at 13.5% and Prosper maxed out at $15,000 with similar rate.  Considering that I am only four months into a job after a six month employment gap for travel, and reported my annual income as $34k that seems pretty darn generous for completely unsecured money. 

Another company similar to SoFi is called Upstart. I don't know offhand their terms and conditions regarding using the money directly for real estate, but I was able to secure a 15.8K loan from them at an 8.6% APR over three years (monthly payment is just under $500) with a good credit score (700+) and solid W2 income (60K+ annually). In this instance, I did try SoFi first and they turned me down.

Just some food for thought for others.

Glad lots of folks have found this interesting. I have lines of credit at both a local credit union on a regional bank. Just ask some banks around you, they almost all have unsecured personal loans and lines of credit. 

If you want to get started in real estate, having your career and credit in order is top priority and allows you access to these sorts of things - if you aren't ready to buy your first house, spend some time increasing your income and credit score so you are better positioned to buy that first house.

As to the legalities, I spoke with them about it as well. I did not use the funds to purchase real estate investments, I used them for home improvements for some of my homes. Without more detail on their part and having spoken with them about it making repairs on my rentals, I don't feel I have broken any rules. If you are concerned about it just talk to them. 

A few other points: there are no pre-payment fees, i got the money within a few days, and I do pay monthly for principle and interest, and it's a 7 year loan (not a balloon) so payments are fairly high. Like anything, this is a tool that can be used for good or bad. If you aren't careful with your income and expenses and time and such it can be a problem (and obviously if you use the money for anything that isn't making you more than 9-12% annually it's a problem). 

And as someone mentioned, they do 10% down on a personal home (owner occupied) with no PMI (I am considering using them for in a few months when I buy a new home). Overall, my feel with SoFi is that they don't have a ton of seemingly unnecessary paperwork and delays and have a modern streamlined approach to lending money.

me and my wife purchased one rental this way. 2 loans - 35k and 25k 7yrs both at 11.74% we are now looking into a heloc to lower the payments and get to cashflow. will probably apply for the same loan for next property.

I see the SoFi ads all the time and ignore them because I felt like "$100,000 personal loan" would come with all sorts of fine print. Thanks for sharing! I'm excited now to look into this for my next project. 

I just learned about sproutfin during a real estate class and there was offers as high as 125,000. 

Originally posted by @Tim Maina :

I work at SoFi and what @Daren H. said is accurate! However, there may have been a change in our terms because at the time of posting this, if you go straight to our FAQ section and click on Personal Loans, this is what it says.

What can I use a SoFi Personal Loan for?

You can use a SoFi Personal Loan for any personal, family, or household purpose. Unlike SoFi student loans, this loan is not intended to pay for post-secondary educational expenses.

The one thing I know fore sure you can't use the Personal Loan for is paying off Student Loans.

It would take a special kind of moron to pay off student debt with a loan at a much higher interest rate.

Originally posted by @Tom Gimer :
Originally posted by @Tim Maina:

I work at SoFi and what @Daren H. said is accurate! However, there may have been a change in our terms because at the time of posting this, if you go straight to our FAQ section and click on Personal Loans, this is what it says.

What can I use a SoFi Personal Loan for?

You can use a SoFi Personal Loan for any personal, family, or household purpose. Unlike SoFi student loans, this loan is not intended to pay for post-secondary educational expenses.

The one thing I know fore sure you can't use the Personal Loan for is paying off Student Loans.

It would take a special kind of moron to pay off student debt with a loan at a much higher interest rate.

 It's not that simple.

@Joe Villeneuve , what would you do with this money?  I have access to similar capital but I wouldn't know what to do with it.  Thanks!

Originally posted by @Logan Allec :

@Joe Villeneuve, what would you do with this money?  I have access to similar capital but I wouldn't know what to do with it.  Thanks!

 What I would do, and you should do, may not be the same thing...and they probably aren't.

1 - you need to establish what you financial goals are, as they pertain to your monthly payments and your total personal debt.

2 -  you need to lay out a series of Milestones, with the order and groupings based on your ability to go from one set (Milestone) to the next.

3 - you need to establish a property profile for flipping/holding that is based on numbers 1 and 2

4 - Then, you need to find the right Micro-Markets that are filled with properties from #3

5 - Camp out there, and work your way through the Milestones until you've executed each one.

It's likely that each Milestone will demand a different Property Profile since you will be working with a different set of goals, and a different set of financial capabilities.  This means you will be investing in different Micro-Markets(s) while in the different Milestones.

These loans are not a new thing guys. They've been in existence for a while. Light Stream is even better IMO. 

I got a Sofi personal loan for $50K at 7.45% interest for 7 years. I should've asked for $100k. But anyways, my aunt lent me $30k at 7% for a year aside from the $40k that I saved up. I'm thinking this should be enough for my first BRRR property in Baltimore.

For those of you that received a SOFI personal loan, how do you prove your income if you are self employed or receive passive income from a variety of real estate investments?

Originally posted by @Ryan E. :

@Joe Villeneuve did you end up using SOFI for a loan? 

 No

This post has been removed.

Two question?
1) so is a personal line of credit?
2) will loan amount show on your credit report?

Originally posted by @Liz C. :

Two question?
1) so is a personal line of credit?
2) will loan amount show on your credit report?

#1 - no it is a fixed rate loan.

#2 - yes

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