Funding for rentals

13 Replies

Good evening. Hopefully I'll get some responses. But I feel like I've found a great rental market and know the area very well. How does one go about getting funding for low costs rentals. I know most HML prefer to not lend on homes less than 50k. But this market is prime, I believe. There's always a large volume of renters looking for good homes and a limited supply of these homes available. I could be all in on a home at $30k and rent it out between $650-750. PML isn't really an option. Any help or even anyone interested please feel free to comment. Thank you.

What your considering is high risk. You want to purchase rental property without putting any money down except borrowed money, which means you will carry a mortgage for 100% of the cost. That means you probably don't have any savings and most likely living paycheck to paycheck.

Nobody falls up the mountain, despite what the gurus try to sell you. If you want to build wealth, it's going to take some work and sacrifice on your part.

I've had fantastic support from my local credit union for loans under 50K. They are holding the loans in house and have been wonderful to work with. Great rates and they seemed happy to be investing in the community. Good luck!

Hey Nathan thanks for the reply. Not really sure how you came to the assumption that I’m living  pay check to pay check or that I don’t have any savings, which both are false and never was stated in my question. And even so if I required lending for $30k I’m almost certain the payments wouldn’t be a stretch, even if I worked at Walmart Lol. But thanks for taking the time out and responding. 

@Brandon Rose Your best bet is going to be local and smaller regional banks. These lenders often hold their own loans instead of selling them to the secondary market. Because the bank is lending their own money they can make their own rules. Also if properties are that cheap in your area it should be a common request. Someone locally needs to fill it.

Sometimes the thing to do is package more than one property into a loan. We just refinanced 2 packages of three properties each to get the value up.

One reason prices are so cheap could be that there is no financing. Because there is no financing there is limited demand from true cash buyers. This holds the price down. 

@Brandon Rose , I found that having a face to face meeting at my local branch helped a lot. I told them my story, all about my dreams and goals and explained that I was trying to make a difference in neighborhoods where affordable housing was desperately needed. I don't know if that helped because at the end of the day, it was all about the numbers. I did completely fund the first house with credit cards and didn't apply for the loan until I knew that the house would appraise and was ready for tenants. There's no way they would have loaned me anything for it originally because it was in such bad shape.  And I might add that the attorney who handled the closing even remarked that he was shocked that I had been able to obtain such a small loan and with such a good interest rate. 

Originally posted by @Ned Carey :

@Brandon Rose Your best bet is going to be local and smaller regional banks. These lenders often hold their own loans instead of selling them to the secondary market. Because the bank is lending their own money they can make their own rules. Also if properties are that cheap in your area it should be a common request. Someone locally needs to fill it.

Sometimes the thing to do is package more than one property into a loan. We just refinanced 2 packages of three properties each to get the value up.

One reason prices are so cheap could be that there is no financing. Because there is no financing there is limited demand from true cash buyers. This holds the price down. 

ok thanks for that great advice i am going to look into the local bank route and have a sit down with them  

 

Originally posted by @Leigh S. :

@Brandon Rose, I found that having a face to face meeting at my local branch helped a lot. I told them my story, all about my dreams and goals and explained that I was trying to make a difference in neighborhoods where affordable housing was desperately needed. I don't know if that helped because at the end of the day, it was all about the numbers. I did completely fund the first house with credit cards and didn't apply for the loan until I knew that the house would appraise and was ready for tenants. There's no way they would have loaned me anything for it originally because it was in such bad shape.  And I might add that the attorney who handled the closing even remarked that he was shocked that I had been able to obtain such a small loan and with such a good interest rate. 


Thanks for the response. I think I’m going to go that route as well by starting off meeting with the bankers and expressing me plans and how I plan to achieve them. 

 

Lots of ways: sell a car, refinance a car, save up $30k, heloc on your personal residence, personal loan; combination of above. 

I would be more worried about appreciation/depreciation or why you can buy houses for $30k

I want my $30k to turn into $60k and then $90k. That is the real power of good buy and hold investing.

Originally posted by @Craig Jeppesen :

Lots of ways: sell a car, refinance a car, save up $30k, heloc on your personal residence, personal loan; combination of above. 

I would be more worried about appreciation/depreciation or why you can buy houses for $30k

I want my $30k to turn into $60k and then $90k. That is the real power of good buy and hold investing.


honestly the market doesn’t appreciate as well as most markets  that’s why they’re available to easily  but the actual arv is double in most instances  But I’ve been saving up money to acquire a property  but I would like to acquire multiple units at a time which I don’t have the capital for at the time  

 

@Brandon Rose . Hello Brandon, There are several reason I agree with you , as I have done very well on those types of properties. I bought properties like those all the time , and financing was always a problem . I started with one that I had saved enough cash to buy. Most of those properties need a lot of work , and I was willing to do it paying for the remodel as we went. When I finished one it was paid for then I went to the next , trying to staying away from debt. I have now $35,000 a month of rent rolls per month . I have a 99.5 % occupancy and less than 1% service calls .I have been complimented for reviving neighborhoods and when neighbors see the end results they start having pride in there homes and start to clean up there own houses . We will not rent our rentals unless we would be proud to live in them ourselves . I know not everyone will agree , and that is ok , but your plan is a good one. Stay out of debt as much as possible . I love the first of the month , but keep enough of working capital (one mistake I made often) . Good luck and you can make in that market and be successful. Thanks

Originally posted by @Charles Faul :

@Brandon Rose. Hello Brandon, There are several reason I agree with you , as I have done very well on those types of properties. I bought properties like those all the time , and financing was always a problem . I started with one that I had saved enough cash to buy. Most of those properties need a lot of work , and I was willing to do it paying for the remodel as we went. When I finished one it was paid for then I went to the next , trying to staying away from debt. I have now $35,000 a month of rent rolls per month . I have a 99.5 % occupancy and less than 1% service calls .I have been complimented for reviving neighborhoods and when neighbors see the end results they start having pride in there homes and start to clean up there own houses . We will not rent our rentals unless we would be proud to live in them ourselves . I know not everyone will agree , and that is ok , but your plan is a good one. Stay out of debt as much as possible . I love the first of the month , but keep enough of working capital (one mistake I made often) . Good luck and you can make in that market and be successful. Thanks

 Thanks for the encouragement. Makes me feel even more confident about taking this route. Just sent out 214 direct mail pieces to owners in that town. I can’t even imagine $35k a month lol. But that’s definitely a goal. I’m willing to dedicate the time and efforts to get there. Thanks again for the reply. Hopefully I can reach out to you if I have any problems or questions. I’d really appreciate it.