How can I finance properties under $50,000

Question

Hi Guys,

I'm 27 years old and I finally saved up $50,000 to begin investing - I wanted to use this cash for multiple down payments on a few rental properties. I'm from Miami, FL but I'm interested in buying out of state.I found a neighborhood in Memphis, TN that I really like, and I found a couple properties that I'm very interested in acquiring - both properties are under $40,000.

I've been told that it's difficult to get conventional financing for a property under $50,000. I was wondering if it would be possible to acquire both properties using a hard money lender, and then do a cash out refinance on both properties at once since technically it would be an $80,000 portfolio.

Do you guys think banks would be willing to do a cash on refinance on two deals worth 80K combined?

Does anyone have another creative suggestion for buying deals under 50K or know if it's possible to get a conventional loan for deals like this?

Thanks!

Curtis

Sean McDonnell · Answer

In order for me to secure financing for a property under $50,000, I had to call twenty different banks.  Finally found a local bank in my area that would finance it.  You just got to put in the time and hustle and you will find one. Good luck!

Caleb Heimsoth · Answer

@Curtis Chavoustie. Yes I’ve done this multiple times. It’s not an issue.  Try chemical bank or US bank. US bank goes as low as 35k and chemical bank has no loan minimum.

John Koster · Answer

Conventional financing is possible.  I have a loan that originated in 2017 for $30K.  I would refer the bank, but they have recently been bought by a larger bank, so I'm not sure the new bank originates loans of that size.  Conventional loans under $50K are not common, but they exist.   I would search smaller local and regional banks as well as credit unions in your area.

Curtis Chavoustie · Answer

Thanks John. Appreciate the response.

Reaching out to multiple banks and credit unions seems to be a recurring theme when looking for unique financing.

Thomas Hatley · Answer

@Curtis Chavoustie Have you tried seller-financing ?  That's how I acquired my first two rental properties.  It can be "sold" to the seller by saying things like " How would you like to stay diversified and in real estate without having to deal with the headaches of landlording " etc. etc.

Kyle Dye · Answer

@Curtis Chavoustie You can check with your credit union, if you are a part of one.

Matt M. · Answer

@Curtis Chavoustie

Try a small bank. I recently connected with a small 3 branch bank that did a 60k cash out and 48k mortgage for me. Went thru their commercial loan guy. Super easy..

David Nacco · Answer

@Curtis Chavoustie Are they worth over 50 after renovation? If so you should read up on the BRRRR strategy, I recommend buying David Greene’s book but all the info is available for free between posts and the forums as well. You could do the initial acquisition with hard money but I would call mortgage lenders and make sure you qualify to refinance out when the time comes

How can I finance properties under $50,000

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