Can't find $55,000 Cash Out Refinance in Cleveland

10 Replies

I am about to make  a cash offer on a duplex in Cleveland.  I would like to follow the BRRRR strategy, get my money out of the deal and subsequently purchase another investment property.  I've tried quite a few lenders - mostly private and been told the loan amount is too small for the market.

The purchase price is $32,000.  The property needs $31,500 worth of work.  I'll be all in for $63,500.  The ARV will be $80,000.  Each unit will rent for $650. Once I've improved the value of the property, I'd like to cash-out refinance 75% - 80% of the value.   I've had trouble finding a lender who will do the deal.  Lenders are telling me minimum loan amounts in Cleveland (and areas like Detroit) are in the range of $100,000.  

I'd like a longer term loan.  I'm not sure one or two years seasoning on a short-term loan is going to change the situation.

I have enough cash to do 2 deals like this before needing to cash-out refi, but I haven't been able to find a portfolio loan that would work either.  

Any ideas?

BTW, Private lenders have asked about my experience.  I've flipped 3 mobile homes, but only 1 in my name.  The other 2 in the name of a partner.  I flipped a home 14 years ago.

    Id suggest really being careful what neighborhoods you are investing in, esp from out of state.  

    Other than that, sorry I cant be of help

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    @Jay Hinrichs Thank you for the mention!

    @Joe Sullivan

    Loan amounts of less than $50k are more of an issue finding a lender. $100k loan amount minimums are more typical for LLC Financing. Are these properties going to be in your personal name?

    Since the renovation is as much as the purchase price....... 

    I would recommend with delayed financing - (cashing out prior to 6 months) that you structure the renovation costs into your initial investment to recoup those costs sooner;

    You would include on your closing statements (which vary state to state - HUD-1/ALTA statement ) the renovation costs - and have them charged at closing...... This renovation cost now becomes an initial closing cost and can be included with the max that you are able to pull out prior to 6 months.

    So with your your given scenerio of purchase price $32k + renovation costs $31.5k + closing costs on your initial purchase = $63.5k plus closing costs

    An ARV at $80k is 70% LTV for an investment property. So you would be able to cash out $56k as soon as you finish repairs if you paid cash for the property.

    Joe I’ve worked with a Cali investor who is actively acquiring similar properties in CLE - connect with @Sammy Lyon

    I’m an investor in CLE but most of my focus is A/B demand neighborhoods

    Hi @Joe Sullivan ! I’ve done this in Cleveland, with loan amounts in the 30s and 40s. Happy to connect you to great lenders in Ohio. We also are having a happy hour for LA folks who invest in Cleveland in a couple weeks - you can check the marketplace for the event deets posted by @John Koster

    @Jerry Padilla love that you are working with delayed financing. I’d like to connect. I did exactly what @Alexander Felice described in his BP podcast episode and it is real peeps. Just gotta be persistent, creative, gutsy and persistent. 

    Originally posted by @Joe Sullivan :
    I am about to make  a cash offer on a duplex in Cleveland.  I would like to follow the BRRRR strategy, get my money out of the deal and subsequently purchase another investment property.  I've tried quite a few lenders - mostly private and been told the loan amount is too small for the market.

    The purchase price is $32,000.  The property needs $31,500 worth of work.  I'll be all in for $63,500.  The ARV will be $80,000.  Each unit will rent for $650. Once I've improved the value of the property, I'd like to cash-out refinance 75% - 80% of the value.   I've had trouble finding a lender who will do the deal.  Lenders are telling me minimum loan amounts in Cleveland (and areas like Detroit) are in the range of $100,000.  

    I'd like a longer term loan.  I'm not sure one or two years seasoning on a short-term loan is going to change the situation.

    I have enough cash to do 2 deals like this before needing to cash-out refi, but I haven't been able to find a portfolio loan that would work either.  

    Any ideas?

    BTW, Private lenders have asked about my experience.  I've flipped 3 mobile homes, but only 1 in my name.  The other 2 in the name of a partner.  I flipped a home 14 years ago.

       What bank/ Credit Unions are you approaching?  I have several banks in the Detroit area that are doing my cash-out refinancing for 75-80% with no problem no loan minimums. 

      @Keyonte Summers , Are you keeping these properties in your personal name for the financing? A lot of people are ending up purchasing these types of properties for all cash in an LLC because they were told that there is extra protection, but then run into additional issues when they want to get the cash-out.

      You can find banks that will refi in the LLC but the terms are different. I purchase and refi in my personal name and title to the LLC. I already communicate with my institution to tell them this and get in it in writing so they dont call the note.

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